Core Viewpoint - Open Source Securities initiates coverage on China Overseas Property (02669) with a "Buy" rating, projecting net profit for 2025-2027 at 1.61 billion, 1.76 billion, and 1.96 billion yuan, respectively, with corresponding EPS of 0.49, 0.54, and 0.60 yuan, indicating a current PE of 9.5, 8.7, and 7.8 times [1] Group 1 - The company is a subsidiary of China State Construction Group under China Overseas Group, with stable land acquisition and a significant increase in market share [1] - The scale of projects under management continues to grow, with an exit from loss-making projects and the delivery of high-end residential properties, leading to an improvement in profitability [1] - Since its listing, the company has maintained growth in both revenue and profit, with a compound annual growth rate (CAGR) of 23.1% and 25.7% for revenue and profit from 2019 to 2024, respectively [1] Group 2 - The revenue from basic property management accounts for over 70% of total revenue, remaining the primary source of income for the company [1] - In 2024, profit growth is expected to outpace revenue growth, with gross margin and net margin increasing by 0.7 percentage points and 0.5 percentage points to 16.6% and 10.8%, respectively, primarily due to the improvement in gross margin from basic property management [1] - The company has maintained a dividend payout ratio of around 30% from 2019 to 2023, which is expected to increase to 35.8% in 2024, although this remains relatively low compared to mainstream property companies [1]

Macro Economic Overview - The "14th Five-Year Plan" emphasizes the use of more proactive fiscal policies to support employment and foreign trade, and to improve people's livelihoods [3][4] - Recent policies focus on industrial internet applications and the development of new energy sectors, indicating a shift towards digitalization and innovation [3][4] Fixed Income Market - As of August 2025, the total bond custody amount reached 174.54 trillion yuan, with a net increase of 15,060.06 million yuan, indicating a slight decrease in growth compared to previous months [9][10] - The leverage ratio in the bond market slightly increased to 106.88%, reflecting a cautious optimism in the market [13][14] Pharmaceutical Industry - The pharmaceutical sector is entering a new growth phase driven by innovation and optimization of centralized procurement, with major companies like Heng Rui Pharmaceutical and China Biologic Products showing robust revenue growth [17][18] - The recent adjustments in the national medical insurance directory are expected to benefit innovative drugs, leading to potential rapid growth for companies involved [18][19] Non-Bank Financial Sector - The performance of non-bank financial companies is primarily driven by property and equity investments, with significant contributions from the property insurance sector [21][22] - The net profit growth of listed insurance companies improved in the first half of 2025, largely due to the profitability of property insurance [21][24] Agricultural Sector - The price of white feather chicken increased due to supply disruptions and rising demand, with the average selling price reaching 7.17 yuan/kg in August 2025 [30][31] - The egg market faces pressure from high production capacity, limiting the potential for price increases despite some upward movement in prices [32][33] Machinery Industry - The valuation of global robotics companies is being redefined, with Figure's recent funding round valuing the company at 39 billion USD, indicating a bullish outlook for the robotics sector [37][38] - Key components in robotics are expected to see significant valuation increases, with potential PE ratios reaching 200 times as the industry matures [38][39] Consumer Services Sector - The upcoming National Day holiday is expected to boost travel bookings, with a steady increase in pre-booking trends observed [42][45] - The tea and coffee sector continues to show strong performance, with leading brands expanding their market presence despite some overall industry slowdowns [43][45] Real Estate and Construction - China Overseas Property is experiencing growth in both scale and profitability, with projected net profits increasing from 16.1 billion yuan in 2025 to 19.6 billion yuan by 2027 [47][48] - The company is focusing on high-quality expansion and has seen a significant increase in managed area and new contract signings [49][50] Electronics Industry - The domestic high-power server power supply market is growing, with companies like Oulu Tong positioned as leaders in this space, benefiting from the rise of AI applications [51][52] - The demand for higher power server supplies is expected to increase, with new products in development to meet the needs of advanced AI servers [53]

Investment Rating - The investment rating for the real estate development sector is "Buy" for key companies such as Poly Developments, China Merchants Shekou, and Binhai Group, while "Hold" is given to companies like Vanke A and China Overseas Development [6][35][60]. Core Insights - The real estate development sector's price-to-book ratio (PB) is 0.85, with a historical percentile of 31.46% as of September 19, 2025, indicating a relatively low valuation compared to historical levels [1][11]. - The property service sector has a price-to-earnings ratio (PE) of 47.78, with a historical percentile of 75.95%, suggesting a higher valuation compared to historical averages [2][38]. - Recent policy changes in major cities like Beijing, Shanghai, and Shenzhen have led to increased transaction volumes in the new housing market, particularly in Shanghai, where transaction intensity increased by 62.5% post-policy implementation [3][70]. Summary by Sections Real Estate Development Sector - As of September 19, 2025, the real estate development sector has seen a 5.2% increase in stock prices from September 1 to September 19, outperforming the CSI 300 index by 5.05 percentage points [1][29]. - Key companies in the A-share market with the highest stock price increases include Binhai Group (+34.68%), New Town Holdings (+31.77%), and Huafa Group (+0.99%) [1][31]. - In the H-share market, China Jinmao (+63.25%), Jianfa International Group (+49.68%), and China Overseas Hongyang Group (+48.88%) led the gains [1][31]. Property Service Sector - The property service sector experienced a 4.1% increase from September 1 to September 19, 2025, outperforming the CSI 300 index by 3.97 percentage points [2][49]. - The top-performing A-share companies in the property service sector include Nandu Property (+67.33%), New Dazheng (+46.07%), and China Merchants Jinling (+14.70%) [2][55]. - In the H-share market, the leading companies were China Resources Vientiane Life (+52.36%), Jianfa Property (+42.22%), and Greentown Service (+35.34%) [2][55]. Policy Impact and Market Dynamics - Since August 2025, favorable policies have been introduced, including measures in Beijing, Shanghai, and Shenzhen, which have significantly boosted new housing transactions [3][68]. - The average daily transaction volume for new homes in Shanghai surged by 62.5% following the policy changes, indicating a strong market response [4][70]. - The report highlights that the real estate market is gradually stabilizing, with core cities expected to benefit from urban renewal initiatives [5][79].

Investment Rating - The report assigns a "Buy" rating for China Overseas Property (02669.HK) for the first time [6]. Core Views - The company is expected to see continuous improvement in profitability due to an increase in managed project scale and the exit of loss-making projects, alongside the delivery of high-end residential projects [6]. - Revenue and profit have maintained growth, with a compound annual growth rate (CAGR) of 23.1% for revenue and 25.7% for profit from 2019 to 2024 [7]. - The company has a strong market position, with a significant share in the property management sector, particularly in first-tier cities [8]. Summary by Sections Company Overview - China Overseas Property is a subsidiary of China State Construction Group and has nearly 40 years of experience in real estate management [18]. - The company has a robust management team with extensive industry experience, and it has maintained a stable shareholding structure with China Overseas Group holding 61.18% [20][22]. Financial Performance - The company reported a revenue of HKD 14.024 billion in 2024, a year-on-year increase of 7.3%, with a net profit of HKD 1.511 billion, up 12.5% [10][42]. - The gross margin and net margin improved to 16.6% and 10.8%, respectively, driven by an increase in the gross margin of core property management services [42]. Growth and Expansion - As of the end of 2024, the company managed an area of 431 million square meters, a year-on-year increase of 7.4%, with a significant portion of projects coming from related parties [8][68]. - The company signed new contracts covering an area of 74.1 million square meters in 2024, with a contract value of HKD 4.44 billion, reflecting a 21.6% increase in average contract price [8]. Diversification of Services - The company has diversified its value-added services, with household value-added services growing at a CAGR of 28.6% from 2019 to 2024 [9]. - Non-household value-added services have faced challenges due to a downturn in real estate sales, but the company plans to focus on engineering services for future growth [9]. Dividend Policy - The company has maintained a stable dividend payout ratio, increasing to 35.8% in 2024, although this remains lower compared to mainstream property companies [54][56].

Core Viewpoint - The company reported a revenue increase of 3.7% year-on-year for H1 2025, with a net profit growth of 4.3%, and declared an interim and special dividend of HKD 0.10 per share [1] Group 1: Financial Performance - In H1 2025, the company achieved a revenue of 7.1 billion, a year-on-year increase of 3.7%; gross profit was 1.2 billion, up 4.7%; and net profit attributable to shareholders was 770 million, reflecting a 4.3% increase [1] - The company’s overall gross margin improved to 17.0%, an increase of 0.2 percentage points year-on-year [3] Group 2: Business Segments - The company’s core property management, owner-added value, and non-owner-added value businesses generated revenues of 5.6 billion, 610 million, and 860 million respectively, with year-on-year growth rates of +8.3%, -11.6%, and -5.9% [2] - The company’s property management area under management reached 440 million square meters as of June 30, 2025, with residential properties accounting for 72.6% [2] Group 3: Market Position and Strategy - China Overseas Property's total sales in August were 18.4 billion, a slight decrease of 0.3% year-on-year, while cumulative sales from January to August were 150.3 billion, down 16.5% year-on-year [1] - The company has increased its focus on non-residential property management, with 59% of new property management orders in H1 2025 coming from non-residential projects [2] Group 4: Dividend and Receivables Management - The company declared a total interim and special dividend of 300 million, with a payout ratio of 39%, an increase of 4.8 percentage points year-on-year [3] - As of June 30, 2025, the company’s total trade receivables amounted to 3.5 billion, with a net value of 3.2 billion after impairment, indicating manageable receivables [3]

Investment Rating - The report maintains a "Buy" rating for the company [6] Core Views - The company's revenue for 2025H1 increased by 3.7% year-on-year to 7.1 billion HKD, with a net profit attributable to shareholders of 770 million HKD, reflecting a 4.3% year-on-year growth [1] - The property management growth remains resilient, supported by the expansion of management scale, despite a short-term adjustment in developer-related businesses [2][3] - The company has improved its profitability, with an overall gross margin of 17.0% in 2025H1, up by 0.2 percentage points year-on-year [3] Summary by Sections Financial Performance - For 2025H1, the company achieved a revenue of 7.1 billion HKD, a gross profit of 1.2 billion HKD, and a net profit of 770 million HKD, with respective year-on-year growth rates of 3.7%, 4.7%, and 4.3% [1] - The company declared an interim and special dividend of 0.1 HKD per share, with a payout ratio of 39%, an increase of 4.8 percentage points year-on-year [3] Business Segments - The revenue from core property management, owner-added value, and non-owner-added value businesses for 2025H1 was 5.6 billion HKD, 610 million HKD, and 860 million HKD, with growth rates of +8.3%, -11.6%, and -5.9% respectively [2] - The company has a managed area of 440 million square meters, with residential properties accounting for 72.6% [2] Profitability and Efficiency - The gross margins for core property management, owner-added value, and non-owner-added value services were 15.5%, 35.2%, and 13.4% respectively, with year-on-year changes of +0.1 percentage points, +5.0 percentage points, and -0.7 percentage points [3] - The company has effectively controlled accounts receivable, with a total of 3.5 billion HKD in trade receivables, representing 45.4% of revenue [3] Forecast and Valuation - The company’s net profit forecasts for 2025-2027 have been adjusted to 1.61 billion HKD, 1.77 billion HKD, and 1.91 billion HKD, reflecting downward revisions of 4%, 5%, and 6% respectively [3] - The valuation remains attractive, supported by stable performance and growth prospects in property management [3]

Core Viewpoint - Bank of America Securities reports that major property management companies in mainland China achieved an 8% revenue growth in the first half of the year, with core profit growth being similar, indicating a stable growth rate [1] Industry Summary - The industry participants performed better than expected in terms of profit margins and operational cash flow management during the first half of the year [1] - There is a cautious outlook for the industry due to ongoing issues with fee collection that are unlikely to be resolved in the short term [1] Company Recommendations - China Resources Vientiane Life (01209) is the only "Buy" recommendation from Bank of America in this sector, with the target price raised from 44 HKD to 45 HKD, maintaining its status as the firm's top pick [1] - The earnings forecast for the property management sector has been slightly lowered due to rapid increases in impairment losses among Chinese real estate property management companies [1] - Country Garden Services (06098) has an unstable earnings situation, but its dividend outlook remains stable, leading to an increase in the target price to 6.3 HKD while maintaining an "Underperform" rating [1] - China Overseas Property (02669) has had its earnings forecast reduced, with the target price lowered to 5.2 HKD [1]

Investment Rating - The report maintains a "Positive" rating for the real estate sector [2][3][34] Core Viewpoints - The investment side remains weak, with a year-on-year decline of 12.9% in investment from January to August 2025, and a more significant drop of 19.5% in August alone [1][20] - The sales side is also experiencing a downturn, with a cumulative sales area decrease of 4.7% year-on-year from January to August 2025, and a sharper decline of 10.6% in August [21][34] - Funding sources are showing a narrowing decline, with total funding sources down 8.0% year-on-year from January to August 2025, but domestic loans have turned positive [35] Investment Analysis Summary Investment Side - From January to August 2025, total real estate development investment reached 603.09 billion yuan, down 12.9% year-on-year, with August alone seeing a 19.5% decline [3][20] - New construction area decreased by 19.5% year-on-year, while the completion area fell by 17.0% [20][21] - The report predicts a continued weak investment environment, with forecasts of a 11.0% decline in investment, 15.1% in new construction, and 20.0% in completions for 2025 [20] Sales Side - Cumulative sales area from January to August 2025 was 570 million square meters, down 4.7% year-on-year, with a 10.6% drop in August [21][34] - The total sales amount for the same period was 5.5 trillion yuan, reflecting a 7.3% decrease year-on-year, with August sales amounting to 544.9 billion yuan, down 14.0% [21][34] - The average selling price of commercial housing decreased by 2.6% year-on-year, with a slight increase in August compared to July [33][34] Funding Side - Total funding sources for real estate development enterprises amounted to 6.4 trillion yuan from January to August 2025, down 8.0% year-on-year [35] - Domestic loans showed a year-on-year increase of 0.2%, with August seeing a 1.1% rise [35] - The report indicates that while funding remains slightly tight, it is expected to improve gradually due to recent policy relaxations [35]

Company Information [Company Information Overview](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E8%B5%84%E6%96%99%E6%A6%82%E8%A7%88) This chapter provides detailed company information for China Overseas Property Holdings Limited as of August 25, 2025 (interim report date), including board members, committee compositions, authorized representatives, company secretary, independent auditor, registered and principal office addresses, principal share registrar, legal counsel, principal bankers, investor relations contact, stock code, and the 2025 financial calendar - The Board of Directors comprises executive directors (including Chairman, CEO, Vice President, CFO), non-executive directors, and independent non-executive directors[6](index=6&type=chunk) - The Company has established an Audit Committee, Nomination Committee, Remuneration Committee, and Sustainability Steering Committee to ensure effective corporate governance[6](index=6&type=chunk) Company Information Overview Data | Metric | Date | | :--- | :--- | | Interim Results Announcement | August 25 | | Ex-dividend Date for Interim and Special Dividends | September 19 | | Closure of Register of Members | September 23 to September 25 | | Record Date for Interim and Special Dividends | September 25 | | Payment Date for Interim and Special Dividends | October 10 | Chairman's Report [Financial Performance Overview](index=5&type=section&id=%E8%B4%A2%E5%8A%A1%E4%B8%9A%E7%BB%A9%E6%A6%82%E8%A7%88) In the first half of 2025, China Overseas Property Holdings Limited's revenue increased by **3.7%** to **RMB 7,089.5 million**, and operating profit grew by **3.4%** to **RMB 1,029.7 million**; profit attributable to ordinary equity holders increased by **4.3%** to **RMB 769.1 million**, with basic and diluted earnings per share at **RMB 23.42 cents**; the Board announced an interim dividend of **HKD 9.0 cents per share** (a **5.9% YoY increase**) and a special dividend of **HKD 1.0 cent per share** to celebrate the 10th anniversary of listing Financial Performance Overview Data | Metric | first half of 2025 (RMB million) | first half of 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | **7,089.5** | **6,838.4** | **+3.7%** | | Operating Profit | **1,029.7** | **995.4** | **+3.4%** | | Profit Attributable to Ordinary Equity Holders | **769.1** | **737.5** | **+4.3%** | | Basic and Diluted Earnings Per Share | **RMB 23.42 cents** | **RMB 22.45 cents** | **+4.3%** | | Interim Dividend | **HKD 9.0 cents per share** | **HKD 8.5 cents per share** | **+5.9%** | | Special Dividend | **HKD 1.0 cent per share** | - | - | - Average Return on Equity decreased from **33.8%** in 2024 to **28.8%** in 2025[11](index=11&type=chunk) [Macroeconomic and Industry Outlook](index=5&type=section&id=%E5%AE%8F%E8%A7%82%E7%BB%8F%E6%B5%8E%E4%B8%8E%E8%A1%8C%E4%B8%9A%E5%B1%95%E6%9C%9B) Despite insufficient global economic growth momentum and frequent geopolitical conflicts, China's economy maintained stable growth and high-quality development; the real estate market is in an adjustment period, and the property management industry faces intensified competition, but policy support for urban renewal, smart property management, the silver economy, and green and low-carbon initiatives provides new growth opportunities for quality property management companies - Insufficient global economic growth momentum, protectionism, and unilateralism are impacting the international economic order, compounded by frequent geopolitical conflicts[12](index=12&type=chunk) - China's economy has a solid foundation, numerous advantages, strong resilience, and great potential; the momentum of stable economic growth remains unchanged, and high-quality development is steadily advancing[12](index=12&type=chunk) - The real estate market is still in an adjustment process, the property management industry is under overall pressure, market competition is intensifying, and the industry is shifting from incremental growth to existing stock, returning to its service essence[12](index=12&type=chunk) - Policies such as diversified services, smart property management, the silver economy, and green and low-carbon initiatives provide new opportunities for property management companies to expand into new businesses and create new growth points[12](index=12&type=chunk) - The government encourages property management companies to participate in urban renewal and long-term operational management after the renovation of old residential areas, providing strong support for property management companies to undertake urban operation services[14](index=14&type=chunk) [Strategic Planning and Brand Building](index=6&type=section&id=%E6%88%98%E7%95%A5%E8%A7%84%E5%88%92%E4%B8%8E%E5%93%81%E7%89%8C%E5%BB%BA%E8%AE%BE) 2025 marks the final year of the Group's '14th Five-Year Plan' strategic blueprint, with China Overseas Property aiming for 'China Overseas-style Property Management Modernization' as its mid-to-long-term strategic goal, pursuing a synergistic balance of 'service-oriented, efficiency-first, and scale-based'; the Company positions itself as an explorer of urban operation services, a promoter of full-产业链 development, a guardian of a better life, and a builder of co-construction, co-governance, and shared benefits, proposing the brand proposition of 'Good Times, Good Property, Good Community' ('Three Goods') to enhance service quality and customer experience - 2025 marks the final year of the Group's '14th Five-Year Plan' strategic blueprint, with China Overseas Property, as a leading property management company, further solidifying its leading position[15](index=15&type=chunk) - Adopting 'China Overseas-style Property Management Modernization' as its mid-to-long-term strategic goal, solidifying the foundation of high-quality development and market-oriented approach[15](index=15&type=chunk) - Forming four core role definitions centered on serving a better life: explorer of urban operation services, promoter of full-产业链 development, guardian of a better life, and builder of co-construction, co-governance, and shared benefits[15](index=15&type=chunk) - Proposing the brand proposition of 'Good Times, Good Property, Good Community' ('Three Goods'), reflecting the ability to manage properties, serve people, and foster a sense of ownership[16](index=16&type=chunk) [Business Development and Innovation](index=7&type=section&id=%E4%B8%9A%E5%8A%A1%E6%8B%93%E5%B1%95%E4%B8%8E%E5%88%9B%E6%96%B0) China Overseas Property continues to deeply cultivate residential, non-residential, and urban service sectors, focusing on community space operations, real estate value-added services, and community living services as three major operating models, providing diversified urban convenience services around the full life cycle needs of community families; the Company also seizes the main theme of high-quality development, focusing on four major business segments: real estate services, smart operation and maintenance, energy management, and material procurement, and successfully expanded into overseas markets by signing an execution agreement for the urban operation project in the Central Business District of Egypt's New Administrative Capital - Based on property management service contracts, continuously deepening the quality and efficiency of basic services in residential, non-residential, and urban service sectors, and continuously improving project execution quality[17](index=17&type=chunk) - Focusing on community space operations, real estate value-added services, and community living services as three major operating models, providing diversified urban convenience services around the full life cycle needs of community families[17](index=17&type=chunk) - Seizing the main theme of high-quality development, focusing on strategic emerging industries as development engines, and concentrating on four major business segments: real estate services, smart operation and maintenance, energy management, and material procurement[17](index=17&type=chunk) - Breakthrough progress in overseas market expansion, with the signing of an execution agreement for the urban operation project in the Central Business District of Egypt's New Administrative Capital[19](index=19&type=chunk) - Building a unique 'one trunk, multiple branches, multi-industry synergy' business logic for China Overseas Property, achieving value preservation and appreciation of buildings in managed projects[19](index=19&type=chunk) [Market Position and Benchmark Projects](index=9&type=section&id=%E5%B8%82%E5%9C%BA%E5%9C%B0%E4%BD%8D%E4%B8%8E%E6%A0%87%E6%9D%86%E9%A1%B9%E7%9B%AE) The Group has entered **163** cities, has **37,902** employees, manages **2,301** property projects, and serves an area exceeding **436 million square meters**; the Company focuses on non-residential and urban services, successfully winning bids for multiple key universities, top-tier hospitals, and transportation hub projects; in Hong Kong and Macau, China Overseas Property firmly holds the leading position as the largest property management service provider and the largest Chinese-funded property service enterprise, achieving **100%** coverage of fresh food wholesale markets under the Hong Kong Agriculture, Fisheries and Conservation Department; the Company continues to build a 'Three Highs, Three Sustainables' benchmark project service system to enhance service levels - The Group has entered **163** cities, has **37,902** employees, manages **2,301** property projects, and serves an area exceeding **436 million square meters**[21](index=21&type=chunk) - Expanding high-quality incremental projects, focusing on non-residential and urban services, successfully winning bids for multiple key universities and top-tier hospitals, and implementing several urban service projects[21](index=21&type=chunk) - Firmly holds the leading position as Hong Kong's largest property management service provider and the largest Chinese-funded property service enterprise in Hong Kong and Macau, ranking first in Hong Kong's property management market share[23](index=23&type=chunk) - Achieved **100%** coverage of fresh food wholesale markets under the Hong Kong Agriculture, Fisheries and Conservation Department, and cumulatively served **19** public hospitals in Hong Kong[21](index=21&type=chunk) - Continuously building the China Overseas benchmark project service system, having cumulatively evaluated and certified **66** projects in **48** cities nationwide, featuring 'Three Highs' (high-quality operational capability, high industry and customer recognition, high proportion of new technology application) and 'Three Sustainables' (replicable experience, upgradable technology and equipment, green and renewable environmental protection)[23](index=23&type=chunk) [Corporate Responsibility and Future Outlook](index=11&type=section&id=%E4%BC%81%E4%B8%9A%E8%B4%A3%E4%BB%BB%E4%B8%8E%E6%9C%AA%E6%9D%A5%E5%B1%95%E6%9C%9B) China Overseas Property serves over **100** Fortune Global 500 enterprise clients, has received numerous industry accolades and strong recognition from the capital market, and actively practices sustainable development, integrating ESG into its operations; looking ahead, the Company will celebrate its 10th anniversary of listing, planning to accelerate expansion into urban service sectors, promote digital transformation and smart property management construction, driving the transformation of traditional property management towards modern services through technological innovation and cross-industry collaboration, and comprehensively enhancing its core competitiveness - Serving over **100** Fortune Global 500 enterprise clients, received numerous industry accolades such as '2025 China Property Management Listed Company Leading Enterprise — High-Quality Development' and '2025 China Property Service Capability Top 100 Enterprise TOP 1'[24](index=24&type=chunk) - Ranked among the constituent stocks of the MSCI China All Shares Small Cap Index, continuously included in the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect lists, and the Hang Seng Property Management & Services Index, receiving strong recognition from the capital market[24](index=24&type=chunk) - Adhering to and practicing sustainable development philosophy, promoting ESG integration throughout all aspects of operations through continuous project renovation, and received honors such as '2025 China Property ESG Sustainable Development Leading Enterprise'[24](index=24&type=chunk) - In the future, it will accelerate expansion into urban service sectors, continuously improve project operation and management capabilities, expedite digital transformation and smart property management construction, and strengthen risk prevention and mitigation capabilities[27](index=27&type=chunk) - Achieving 'China Overseas-style Property Management Modernization' through 'technological innovation and cross-industry collaboration', comprehensively promoting the modernization of ecosystem collaboration, service systems, technology application, brand building, talent teams, and fundamental management[28](index=28&type=chunk) Management Discussion and Analysis [Business Review](index=14&type=section&id=%E4%B8%9A%E5%8A%A1%E5%9B%9E%E9%A1%BEM) In the first half of 2025, the Group's GFA under management modestly increased by **5.0 million square meters** to **436.1 million square meters**, with **84.0%** of new orders from independent third parties; overall revenue increased YoY by **3.7%** to **RMB 7,089.5 million**, primarily driven by property management services, but residential and non-residential value-added services declined due to weak consumption; through strict cost control, gross profit margin improved to **17.0%**, operating profit increased by **3.4%** to **RMB 1,029.7 million**, but net impairment losses on financial and contract assets increased Business Review Data | Metric | first half of 2025 (RMB million) | first half of 2024 (RMB million) | YoY Change | | :--- | :--- | :--- | :--- | | New Contracted Area | **31.8 million square meters** | - | - | | Of which from Independent Third Parties | **84.0%** | - | - | | Total New Contracts Value | RMB **2,257.8 million** | - | - | | Area Withdrawn | **26.8 million square meters** | - | - | | Net Increase in GFA Under Management | **5.0 million square meters** | - | - | | GFA Under Management at Period End | **436.1 million square meters** | - | - | Business Review Data | Revenue Type | first half of 2025 (RMB thousand) | first half of 2024 (RMB thousand) | YoY Change | | :--- | :--- | :--- | :--- | | Overall Revenue | **7,089,474** | **6,838,434** | **+3.7%** | | Property Management Services | **5,596,379** | **5,165,905** | **+8.3%** | | Non-Residential Value-Added Services | **857,815** | **911,541** | **-5.9%** | | Residential Value-Added Services | **607,989** | **687,441** | **-11.6%** | | Parking Space Sales Business | **27,291** | **73,547** | **-62.9%** | Business Review Data | Metric | first half of 2025 (RMB thousand) | first half of 2024 (RMB thousand) | YoY Change | | :--- | :--- | :--- | :--- | | Direct Operating Costs | **5,887,056** | **5,690,146** | **+3.5%** | | Gross Profit | **1,202,418** | **1,148,288** | **+4.7%** | | Gross Profit Margin | **17.0%** | **16.8%** | **+0.2%** | | Operating Profit | **1,029,749** | **995,442** | **+3.4%** | | Profit Attributable to Ordinary Equity Holders of the Company | **769,147** | **737,524** | **+4.3%** | - Selling and administrative expenses reduced by **18.6%**, primarily through headcount control and effective reduction of other administrative expenses under a lean management structure[40](index=40&type=chunk) - Net impairment losses on financial and contract assets increased compared to the same period last year, primarily due to a more prudent impairment rate of **8.5%** adopted for trade receivables based on aging (2024: **6.7%**)[40](index=40&type=chunk) [Segment Information](index=18&type=section&id=%E5%88%86%E9%83%A8%E8%B5%84%E6%96%99) The Group's business is divided into four segments: property management services, non-residential value-added services, residential value-added services, and parking space sales business; both revenue and gross profit from property management services achieved growth, with gross profit margin slightly improving; revenue from non-residential value-added services decreased, and gross profit margin slightly narrowed; revenue from residential value-added services decreased, but due to increased business volume in high-margin community asset management services, gross profit margin increased; both revenue and profit from parking space sales business significantly decreased [Property Management Services](index=18&type=section&id=%E7%89%A9%E4%B8%9A%E7%AE%A1%E7%90%86%E6%9C%8D%E5%8A%A1) In the first half of 2025, revenue from property management services increased by **8.3%** to **RMB 5,596.4 million**, accounting for **78.9%** of total revenue; GFA under management increased to **436.1 million square meters**, with independent third-party and non-residential projects accounting for **39.1%** and **27.4%**, respectively; through strict cost control, lump sum basis gross profit margin slightly increased to **13.6%**, commission basis gross profit margin remained at **100.0%**, overall gross profit margin was **15.5%**, and segment gross profit increased by **8.6%** to **RMB 866.5 million** Property Management Services Data | Metric | June 30, 2025 (million square meters) | Proportion | December 31, 2024 (million square meters) | Proportion | | :--- | :--- | :--- | :--- | :--- | | Total GFA Under Management | **436.1** | **100.0%** | **431.1** | **100.0%** | | From Independent Third Parties | **170.6** | **39.1%** | **169.8** | **39.4%** | | Non-Residential Projects | **119.3** | **27.4%** | **123.6** | **28.7%** | | Residential Projects | **316.8** | **72.6%** | **307.5** | **71.3%** | Property Management Services Data | Revenue Type | first half of 2025 (RMB thousand) | Proportion | first half of 2024 (RMB thousand) | Proportion | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Property Management Services Revenue | **5,596,379** | **78.9%** | **5,165,905** | **75.5%** | **+8.3%** | | Lump Sum Basis Revenue | **5,473,133** | **97.8%** | **5,049,756** | **97.8%** | **+8.4%** | | Commission Basis Revenue | **123,246** | **2.2%** | **116,149** | **2.2%** | **+6.1%** | Property Management Services Data | Contract Type | June 30, 2025 (million square meters) | Proportion | December 31, 2024 (million square meters) | Proportion | | :--- | :--- | :--- | :--- | :--- | | Lump Sum Basis | **361.6** | **82.9%** | **357.1** | **82.8%** | | Commission Basis | **74.5** | **17.1%** | **74.0** | **17.2%** | Property Management Services Data | Metric | first half of 2025 (RMB thousand) | Gross Profit Margin | first half of 2024 (RMB thousand) | Gross Profit Margin | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Property Management Services Gross Profit | **866,507** | **15.5%** | **797,917** | **15.4%** | **+8.6%** | | Lump Sum Basis Gross Profit | **743,261** | **13.6%** | **681,768** | **13.5%** | **+9.0%** | | Commission Basis Gross Profit | **123,246** | **100.0%** | **116,149** | **100.0%** | **+6.1%** | - Profit from property management services segment increased by **4.4%** to **RMB 751.5 million**[53](index=53&type=chunk) [Non-Residential Value-Added Services](index=23&type=section&id=%E9%9D%9E%E4%BD%8F%E6%88%B7%E5%A2%9E%E5%80%BC%E6%9C%8D%E5%8A%A1) Revenue from non-residential value-added services decreased by **5.9%** to **RMB 857.8 million**, accounting for **12.1%** of total revenue; the downturn in the mainland real estate industry led to reduced demand for pre-delivery services, sales inspection services, and consultancy services, but increased maintenance and engineering services for large government projects in Hong Kong and Macau mitigated the decline; gross profit margin slightly decreased to **13.4%**, and segment gross profit decreased by **10.2%** to **RMB 115.1 million** Non-Residential Value-Added Services Data | Service Type | first half of 2025 (RMB thousand) | first half of 2024 (RMB thousand) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | **857,815** | **911,541** | **-5.9%** | | Engineering Services | **560,645** | **491,667** | **+14.0%** | | Pre-delivery Services | **242,354** | **299,133** | **-19.0%** | | Sales Inspection Services | **46,811** | **87,139** | **-46.3%** | | Consultancy Services | **8,005** | **33,602** | **-76.2%** | - Gross profit margin was **13.4%** (2024: **14.1%**), primarily reflecting the impact of lower gross profit margins from engineering projects in Hong Kong and Macau due to changes in business mix[57](index=57&type=chunk) - Segment gross profit decreased by **10.2%** to **RMB 115.1 million**, and segment profit decreased by **5.4%** to **RMB 84.2 million**[57](index=57&type=chunk) [Residential Value-Added Services](index=24&type=section&id=%E4%BD%8F%E6%88%B7%E5%A2%9E%E5%80%BC%E6%9C%8D%E5%8A%A1) Revenue from residential value-added services decreased by **11.6%** to **RMB 608.0 million**, accounting for **8.6%** of total revenue, primarily affected by weak domestic consumption; despite the decrease in revenue, but due to increased business volume in high-margin community asset management services, gross profit margin increased to **35.2%** (2024: **30.2%**), driving an increase in segment gross profit by **2.9%** to **RMB 213.8 million** Residential Value-Added Services Data | Service Type | first half of 2025 (RMB thousand) | first half of 2024 (RMB thousand) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | **607,989** | **687,441** | **-11.6%** | | Community Asset Management Services | **330,390** | **310,710** | **+6.3%** | | Home Living Services and Commercial Services Operations | **277,599** | **376,731** | **-26.3%** | - Gross profit margin increased to **35.2%** (2024: **30.2%**), primarily attributable to increased business volume in high-margin community asset management services[59](index=59&type=chunk) - Segment gross profit increased by **2.9%** to **RMB 213.8 million**, and segment profit increased by **2.2%** to **RMB 202.7 million**[59](index=59&type=chunk)[60](index=60&type=chunk) [Parking Space Sales Business](index=26&type=section&id=%E5%81%9C%E8%BD%A6%E4%BD%8D%E4%B9%B0%E5%8D%96%E4%B8%9A%E5%8A%A1) Revenue from parking space sales business significantly decreased by **62.9%** to **RMB 27.3 million**, primarily due to a decrease in the number of parking spaces sold from **1,254** units in 2024 to **365** units in 2025; segment profit also decreased accordingly to **RMB 7.0 million** Parking Space Sales Business Data | Metric | first half of 2025 | first half of 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Number of Parking Spaces Sold | **365** units | **1,254** units | **-70.9%** | | Segment Revenue | RMB **27.3 million** | RMB **73.5 million** | **-62.9%** | | Segment Profit | RMB **7.0 million** | RMB **13.9 million** | **-49.6%** | [Liquidity, Financial Resources, and Debt Structure](index=26&type=section&id=%E6%B5%81%E5%8A%A8%E8%B5%84%E9%87%91%E3%80%81%E8%B4%A2%E6%94%BF%E8%B5%84%E6%BA%90%E5%8F%8A%E5%80%BA%E5%8A%A1%E7%BB%93%E6%9E%84) The Group adopts a prudent financial management policy; as of June 30, 2025, net current assets increased to **RMB 4,922.5 million**; bank balances and cash slightly decreased by **2.4%** to **RMB 5,666.1 million**, of which RMB accounted for **89.6%**; short-term unsecured bank borrowings remained at **RMB 50.0 million**, with a weighted average annual interest rate of **2.7%** Liquidity, Financial Resources, and Debt Structure Data | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Net Current Assets | **4,922.5** | **4,476.4** | **+10.0%** | | Bank Balances and Cash | **5,666.1** | **5,803.5** | **-2.4%** | | Short-term Unsecured Bank Borrowings | **50.0** | **50.0** | **0%** | | Weighted Average Annual Interest Rate on Borrowings | **2.7%** | - | - | - Of the bank balances and cash, RMB accounted for **89.6%**, while HKD/MOP accounted for **10.4%**[63](index=63&type=chunk) [Exchange Rate Fluctuation Risk](index=27&type=section&id=%E6%B1%87%E7%8E%87%E6%B3%A2%E5%8A%A8%E9%A3%8E%E9%99%A9) The Group's primary property management business in China uses RMB for settlement, forming a natural hedging mechanism; although currency translation for Hong Kong and Macau operations may affect net assets and financial performance expressed in RMB, the Group currently does not enter into or trade financial instruments for hedging purposes; the Company will closely monitor exchange rate fluctuations and consider hedging policies when appropriate - The Group's primary property management business in China uses RMB as the settlement currency for revenue, receivables, payables, and expenses, thus having a natural hedging mechanism[64](index=64&type=chunk) - Exchange rate fluctuations may still affect net assets and financial performance expressed in RMB due to currency translation for Hong Kong and Macau operations after consolidation[64](index=64&type=chunk) - Currently, the Group does not enter into or trade financial instruments, including derivative financial instruments, for hedging or speculative purposes[64](index=64&type=chunk) - The Group will closely monitor exchange rate fluctuations and consider appropriate currency hedging policies to mitigate significant exchange rate risks[64](index=64&type=chunk) [Capital Expenditure, Commitments, and Contingent Liabilities](index=27&type=section&id=%E8%B5%84%E6%9C%AC%E5%BC%80%E6%94%AF%E3%80%81%E6%89%BF%E6%93%94%E5%8F%8A%E6%88%96%E7%84%B6%E8%B4%9F%E5%80%BA) In the first half of 2025, the Group's capital expenditure was **RMB 78.1 million**, primarily for additions to renovations, vehicles, machinery and equipment, furniture, fixtures, office equipment, right-of-use assets under lease, and software systems; as of June 30, 2025, capital commitments were **RMB 8.2 million**, primarily related to capital investment in joint ventures and acquisition of software systems; contingent liabilities include counter-indemnities for performance guarantees provided to fellow subsidiaries and banks of approximately **RMB 366.5 million**, and corporate guarantees provided to fellow subsidiaries of **RMB 100.0 million** Capital Expenditure, Commitments, and Contingent Liabilities Data | Item | first half of 2025 (RMB thousand) | first half of 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Capital Expenditure | **78,147** | **103,557** | | Additions to Property, Plant and Equipment | **25,141** | **18,042** | | Additions to Intangible Assets | **25,878** | **47,748** | | Right-of-Use Assets under Lease | **27,128** | **37,767** | Capital Expenditure, Commitments, and Contingent Liabilities Data | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Total Capital Commitments | **8,199** | **8,869** | | Capital Investment in Joint Ventures | **2,550** | **2,550** | | Intangible Asset Additions

Group 1 - The core viewpoint of the article is that Morgan Stanley reports initial signs of stability in the performance of mainland property management stocks in the first half of the year, with expectations for rapid growth in the second half [1] - The firm forecasts profit growth for the industry to be 4%, 9%, and 11% year-on-year for the years 2025 to 2027, respectively [1] - It is believed that issues related to property developers will gradually dissipate after this year and will no longer be a major obstacle for the industry [1] Group 2 - Future growth drivers for the industry are expected to come from third-party projects and value-added services unrelated to property developers [1] - With the normalization of growth, shareholder returns will become the basis for valuation [1] - The rating for Wanwu Cloud (02602) has been upgraded from "in line with the market" to "overweight," with a target price increase from HKD 22.51 to HKD 29.21, reflecting the company's turnaround from loss to profit and attractive dividend yield [1] Group 3 - Some individual stocks have moderate profit outlooks and lack catalysts for revaluation, leading to adjustments in ratings for China Overseas Property (02669), Country Garden Services (06098), and China National Trade (600007.SH) to "in line with the market" [1] - The rating for Sunac Services (01516) has been downgraded to "underweight," with a target price reduction from HKD 1.72 to HKD 1.01, due to weak profit and dividend outlook [1]