According to Zhitong Finance APP, CICC released a research report stating that in the first half of the year, against the backdrop of sequential improvement in the overall consumer industry, key commercial management operators have shown some differentiation in same-store operating performance. From a medium to long-term perspective, supported by core project location advantages, bilateral stickiness between customer base and brands, and commercial management operators' own operational capabilities, leading companies are expected to consolidate their competitive barriers. In the second half of the year, the industry possesses marginal positive catalysts, including potential support for operators' same-store retail sales growth year-over-year under the low base effect from Q3 last year, with some high-end operators reporting that their July-August same-store retail sales year-over-year continue the improvement trend since Q2. On the policy front, supportive consumption policies have maintained a positive stance since the second half of last year. CICC's main viewpoints are as follows:
Key Commercial Management Operators' 1H25 Performance Meets Market Expectations Key commercial management operators announced 1H25 performance data: China Resources Mixc's core net profit grew 15% year-over-year, while key Hong Kong-based property holding developers' core net profit declined 4-9% year-over-year, meeting market expectations.
Both High-End and Mass Market Commercial Management Operators Showed Improved Same-Store Retail Sales Growth in First Half In 1H25, high-end commercial management operators' average same-store retail sales growth rate improved by 8.6 percentage points compared to full-year 2024 to 2.2%, while mass market operators saw a slight increase of 0.1 percentage points to 7.6%. The former mainly benefited from the year-over-year slowdown in the rate of change of luxury consumption outflows, with some operators benefiting from increased concentration of luxury brands and introduction of popular new consumer brands. The latter was still primarily driven by customer traffic growth (sample operators' average customer traffic grew 26% and 21% year-over-year in 2024 and 1H25 respectively, compared to average retail sales growth of 18% and 18%).
Rental Income Year-over-Year Performance Diverged Relative to Retail Sales Changes; Operating Efficiency Enhancement Trends Continue Hang Lung Properties and Swire Properties' mainland shopping centers achieved average rental income growth of +0.5% and +0.5% year-over-year in 2024 and 1H25 respectively, showing significant resilience compared to retail sales, possibly benefiting from steady increases in fixed rental adjustments. Mass market operators' rental income growth has been slower than retail sales since 2024, with rent-to-sales ratios of 13.7%, 13.3%, and 12.7% in 1H24, 2024, and 1H25 respectively. In terms of operating efficiency, asset-heavy operators' gross margin increased 0.3 percentage points year-over-year to 73.9%, with efficiency improvements continuing.
Dividend Distribution Capabilities and Willingness to Reward Shareholders Remain Positive In 1H25, China Resources Mixc, Swire Properties, and Hang Lung Properties distributed interim dividends at 100%, 46%, and 38% of their core net profit attributable to shareholders respectively, with dividend per share amounts remaining flat or increasing. Related companies have guided that their full-year 2025 dividend policies will remain stable (corresponding to full-year expected payout ratios of 100%, 91%, and 85%). Benefiting from their business models and improving operational fundamentals, these targets have certain dividend capability assurance.
Development Trends Look Favorable From a medium to long-term perspective, quality commercial management operators continue to benefit from the "Matthew effect." In the first half of the year, against the backdrop of sequential improvement in the overall consumer industry, key commercial management operators have shown some differentiation in same-store operating performance. From a medium to long-term perspective, supported by core project location advantages, bilateral stickiness between customer base and brands, and commercial management operators' own operational capabilities, leading companies are expected to consolidate their competitive barriers.
In the short term, attention should be paid to operating performance under base effects, supportive consumption policy catalysts, and incremental supply trends. In the second half of the year, the industry possesses marginal positive catalysts, including potential support for operators' same-store retail sales growth year-over-year under the low base effect from Q3 last year, with some high-end operators reporting that their July-August same-store retail sales year-over-year continue the improvement trend since Q2. On the policy front, supportive consumption policies have maintained a positive stance since the second half of last year.
Attention should be paid to the timing of industry supply peaking, with the number of new shopping centers opened by key commercial management operators expected to decline 36% in 2025 compared to 2024.
In terms of targets, we recommend China Resources Mixc (01209) and Swire Properties (01972), which offer dual returns of growth and dividends and are expected to provide positive operational signals. We also suggest accumulating Hang Lung Properties (00101) on dips to capture relative performance during the Fed rate-cutting window. Current related targets are trading at 2025 dividend yields of 5.0%, 5.4%, and 6.5% respectively.
Risk Factors Domestic demand recovery pace may fall short of expectations; industry competition may deteriorate beyond expectations.