Core Viewpoint - Goldman Sachs reports that Country Garden Services (06098) achieved a core net profit of 1.6 billion RMB in the first half of the year, representing a 15% year-on-year decline, which is equivalent to 53% of the bank's previous full-year forecast [1] Financial Performance - The company's core business revenue growth outpaced its peers, despite a 3 percentage point decrease in gross margin year-on-year [1] - The average core net profit forecast for the company from 2025 to 2027 has been raised by 4% [1] Target Price and Rating Adjustment - Goldman Sachs has increased the target price for Country Garden Services from 5.1 HKD to 6.3 HKD [1] - The rating has been upgraded from "Sell" to "Neutral" [1] Business Restructuring - The company has undergone significant business restructuring over the years, including exiting underperforming contracts and refocusing on core business by reducing non-core operations [1] - The stability of recurring business scale and improved cash flow outlook are highlighted as positive developments [1]

Core Viewpoint - Goldman Sachs reported that Country Garden Services (06098) achieved a core net profit of 1.6 billion RMB in the first half of the year, representing a year-on-year decrease of 15%, which is equivalent to 53% of the bank's previous full-year forecast [1] Financial Performance - The company's core business revenue growth outpaced its peers, but the gross margin decreased by 3 percentage points year-on-year [1] - Goldman Sachs has raised its average core net profit forecast for the company from 2025 to 2027 by 4% [1] Target Price and Rating - The target price for Country Garden Services has been increased from 5.1 HKD to 6.3 HKD [1] - The rating has been upgraded from "Sell" to "Neutral" [1] Business Restructuring - The company has undergone significant business restructuring over the years, including exiting underperforming contracts and refocusing on core business by reducing non-core operations [1] - The regular business scale remains stable, and the cash flow outlook has improved [1]

Core Viewpoint - Country Garden Services has not yet recovered from its downturn, continuing to adjust amidst challenges in the property management sector [1] Financial Performance - In the first half of the year, Country Garden Services reported revenue of 23.19 billion yuan, a year-on-year increase of 10.2%, with a total of 8,108 managed property projects and a managed area of 10.6 billion square meters [1] - Revenue contributions from major business segments showed positive growth: property management service revenue was 13.61 billion yuan (up 6.7%), community value-added services revenue was 2.1 billion yuan (up 5.3%), and the "three supplies and one industry" business surged to 5.07 billion yuan, a year-on-year increase of 51.6% [1] - Despite maintaining a strong scale, the company's profit performance declined, with a gross profit of approximately 4.299 billion yuan (down 3.5%) and a core net profit of about 1.568 billion yuan (down 14.8%), resulting in a gross margin decrease to 18.5% [1] Cash Flow and Financial Management - The company experienced a net cash outflow from operating activities of 870 million yuan in the first half of the year, compared to a projected net inflow of 3.87 billion yuan by the end of 2024, attributed to seasonal expenditures and adjustments in prepayment strategies [2] - As of June 30, 2025, the company had bank and structured deposits of approximately 16.47 billion yuan, with sufficient cash reserves, and all due borrowings were repaid on time [2] - The proportion of revenue from related parties has significantly decreased from 20.3% in 2018 to 1.1% in the first half of 2025, indicating a shift towards independent market operations [2] Market Position and Strategy - The company is preparing for a trend of decreasing property management fees, reflecting ongoing industry challenges and the need for more standardized development [3][4] - Recent government policies aimed at addressing issues in the property service sector are expected to promote more compliant and trustworthy operations, which is seen as beneficial for long-term industry stability [4] - Country Garden Services has made progress in low-fee property markets, entering nearly 20 low-fee communities, and plans to seize opportunities in segmented markets [4] - The management emphasizes a customer-oriented approach for the next three to five years, aiming for reasonable profit margins and aligning service pricing with customer expectations [4] - The company is also investing in smart technology, artificial intelligence, and IoT to enhance service quality, operational efficiency, and customer experience [4]

Core Viewpoint - Country Garden Services is still in a phase of adjustment and has not yet recovered from its previous losses, despite maintaining a strong scale advantage in the property management industry. Financial Performance - In the first half of the year, Country Garden Services reported revenue of 23.19 billion yuan, a year-on-year increase of 10.2% [1] - The total number of managed property projects reached 8,108, with a managed area of 1.06 billion square meters [1] - Revenue from property management services was 13.61 billion yuan, up 6.7% year-on-year; community value-added services revenue was 2.1 billion yuan, up 5.3%; and the "Three Supplies and One Industry" business saw significant growth to 5.07 billion yuan, with a year-on-year increase of 51.6% [1] - The overall gross profit was approximately 4.299 billion yuan, a decrease of 3.5% year-on-year, and the core net profit attributable to shareholders was about 1.568 billion yuan, down 14.8% [1] - The gross margin fell to 18.5% [1] Cash Flow and Financial Management - The company recorded a loss of 108 million yuan from the sale of subsidiaries and incurred an expense of 56.9 million yuan from fair value changes in financial assets [2] - Operating cash flow showed a net outflow of 870 million yuan in the first half of the year, compared to a projected net inflow of 3.87 billion yuan by the end of 2024 [2] - As of June 30, 2025, the company had approximately 16.47 billion yuan in bank and structured deposits, indicating sufficient cash reserves [2] - The company had bank and other borrowings of about 858 million yuan, with all due borrowings repaid on time [2] - The net value of current assets was approximately 12.04 billion yuan, with a current ratio of 1.4 [2] Market Position and Strategy - The company is preparing for a trend of decreasing property management fees, reflecting the industry's need for more standardized development [3] - Country Garden Services has entered nearly 20 low property fee communities and plans to seize opportunities in differentiated market segments [3] - The management aims to return to a customer-oriented approach over the next three to five years, focusing on reasonable profit margins and aligning pricing with customer needs [3] - The company is committed to building an efficient operational system, enhancing service levels, and investing in smart technology and core capabilities to improve service quality and customer experience [3]

Core Viewpoint - Country Garden Services reported a revenue of 23.19 billion yuan for the first half of 2025, reflecting a year-on-year growth of 10.2%, despite a slight decline in gross profit and fluctuations in core net profit due to debt management and operational adjustments [3][4]. Financial Performance - The company achieved a revenue of 23.19 billion yuan, with a gross profit of 4.3 billion yuan, down 3.5% year-on-year, and a core net profit attributable to shareholders of approximately 1.57 billion yuan [3]. - As of June 30, the total number of managed property projects reached 8,108, with a managed area of 1.06 billion square meters, of which approximately 40.2% is located in first- and second-tier cities [3]. Market Environment - The property market is experiencing a downward trend in new projects, with increasing turnover rates and intensified competition [4]. - Recent government policies aimed at addressing issues in the property service sector are expected to promote more standardized and stable industry development, benefiting leading companies [4]. Strategic Focus - The company plans to return to a customer-oriented approach over the next three to five years, aiming for reasonable profit margins and aligning service pricing with customer needs [4]. - The revenue from property management services reached 13.61 billion yuan, up 6.7% year-on-year, while community value-added services and "three supplies and one industry" services saw significant growth [4]. Operational Improvements - The company is enhancing operational quality through service stratification, digital operations, and improved customer relationship management, resulting in a 3.5 percentage point increase in overall charging rates [5]. - The third-party market expansion signed area reached 6.477 million square meters, a 66% increase year-on-year, indicating a shift towards independent market operations [5]. Future Outlook - Despite current performance pressures, the company believes there are substantial opportunities in the market, emphasizing the need to stabilize core business and enhance product offerings for sustainable financial growth [6]. - The management expresses confidence that the capital market will eventually recognize the company's value as it continues to deliver strong performance [6].

Market Overview - The Hang Seng Index closed at 25,201.76 points, down 1.27% [1] - The Hang Seng Tech Index closed at 5,697.53 points, down 1.47% [1] - The China Enterprises Index closed at 9,020.26 points, down 1.40% [1] - The Red Chip Index closed at 4,273.29 points, down 1.62% [1] Top Gainers - Nongfu Spring rose over 7% to 50.250 HKD [1][2] - NIO-SW increased over 4% to 51.700 HKD [1][2] - Shanghai Fudan and WanGuo Data-SW both rose over 1% [1][2] Top Losers - Beike-W fell over 6% to 47.200 HKD [1][2] - Naixue's Tea and Stone Pharmaceutical Group both dropped over 5% [1][2] - Li Ning, Alibaba Health, and Pop Mart fell over 4% [1][2] - JD Logistics, Zhou Hei Ya, and Mengniu Dairy declined over 3% [1][2] - Other notable declines include Zhou Dafu, Dongfang Zhenxuan, and Haidilao, all down over 2% [1][2]

Core Viewpoint - The company acknowledges current performance pressures and transformation pains but emphasizes the existence of significant opportunities within the industry [2][4]. Financial Performance - In the first half of the year, the company achieved revenue growth, with total revenue reaching 23.19 billion yuan, a year-on-year increase of 10.2% [2]. - The total number of managed property projects reached 8,108, with the managed area increasing to 10.6 billion square meters [2]. - However, several financial indicators faced pressure, with gross profit approximately 4.299 billion yuan, a year-on-year decline of 3.5%, and core net profit around 1.568 billion yuan, down 14.8% [2][3]. Business Segments - Core business revenue continued to grow, with property management service revenue at 13.61 billion yuan, up 6.7%, community value-added service revenue at 2.1 billion yuan, up 5.3%, and "three supplies and one industry" service revenue at 5.07 billion yuan, up 51.6% [3]. - The company plans to prioritize cash flow over scale growth, strategically exiting less profitable projects [3]. Industry Outlook - The property industry is currently undervalued, with significant opportunities in areas such as construction, elderly care, smart spaces, and digital home services [4]. - The company is investing in technology, including the deployment of nearly 100 cleaning robots and plans to implement over 1,000 units in South China by the end of the year [5]. Regulatory Environment - Ongoing calls for reduced property fees reflect the industry's need for more standardized development [5]. - Recent government policies aimed at addressing issues in the property service sector are expected to create more opportunities for leading companies [5]. Future Strategy - The company aims to return to a customer-oriented approach and achieve reasonable profit margins over the next three to five years [5]. - It is focusing on building core capabilities in low property fees, having entered nearly 20 low-fee communities this year [5].

Investment Rating - The report maintains an "Overweight" rating for the company [11] Core Insights - The company reported a revenue of 23.19 billion RMB for H1 2025, a year-on-year increase of 10%, while the net profit attributable to shareholders decreased by 31% to 1.0 billion RMB [1][2] - The core net profit was 1.57 billion RMB, down 15% year-on-year, primarily due to increased operational costs and a decline in profit margins [2][3] - The company has significantly increased its dividend payout ratio for 2025 to 60% of core net profit, which is an increase of 27 percentage points from 2024, resulting in an estimated dividend yield of 8.0% [4] Revenue and Profitability - The company's core business revenue grew at a double-digit rate, driven by the expansion of its property management services, particularly in the "Three Supplies and One Industry" segment, which saw a revenue increase of 68% [2] - The overall gross margin decreased by 2.6 percentage points to 18.5%, influenced by higher management expenses and increased investments in service quality [2][3] - The company expects to maintain high single-digit growth in core business revenue and profit for the full year, despite increased uncertainty in profit margins [2] Cash Flow and Dividend Policy - The operating cash flow for H1 2025 was negative 880 million RMB, a decline from a positive 270 million RMB in the same period last year, primarily due to increased upfront investments and a decrease in prepayment activities [3] - The company plans to enhance shareholder returns through a combination of cash dividends, share buybacks, and other measures [4] Earnings Forecast and Valuation - The earnings per share (EPS) estimates for 2025-2027 have been adjusted downwards to 0.81 RMB, reflecting a decrease of 11%-19% from previous estimates [5] - The target price for the company is set at 7.10 HKD, based on an adjusted price-to-earnings (P/E) ratio of 8 times for 2025 [5][7]

Core Viewpoint - Country Garden Services reported a revenue of 23.1855 billion yuan for the six months ending June 30, 2025, representing a year-on-year growth of 10.2%. However, the profit attributable to shareholders decreased by 30.8% to 999.7 million yuan, with basic earnings per share at 0.2982 yuan. The results reflect common challenges faced by property management companies, such as maintaining profitability during scale expansion and achieving transformative development during industry adjustments [1][2]. Group 1 - The company maintains a dual-digit revenue growth through strategies like "three supplies and one industry" integration, market-oriented value-added services, and technology efficiency improvements, showcasing resilience as a leading player [1]. - The decline in gross margin and cash flow pressure indicates the industry's rigid cost constraints and challenges in service premium pricing [1]. - The company plans to return to a customer-oriented approach over the next three to five years, aiming for reasonable profit margins and aligning service pricing with customer needs [1]. Group 2 - The strategic focus of Country Garden Services is evident in its proactive reduction of non-core businesses, increased investment in service quality and digital infrastructure, and reduction of associated risk exposure [2]. - Short-term pain may lead to long-term value creation, with the deepening of service stratification, validation of human-machine collaboration models, and maturation of value-added business ecosystems gradually building differentiated competitive barriers [2]. - The ability to convert management area advantages into sustainable profitability will be a key measure of the company's strategic transformation in the coming six months [2].

Core Viewpoint - Country Garden Services reported over 10% revenue growth in the first half of the year, but profit performance declined, with management emphasizing that the annual operational goals remain unchanged [1][2]. Financial Performance - The company achieved operating revenue of 23.19 billion yuan, a year-on-year increase of 10.2%, with core property management service revenue reaching 13.61 billion yuan, up 6.7% [1]. - Community value-added service revenue was 2.1 billion yuan, growing by 5.3%, while "Three Supplies and One Industry" service revenue surged to 5.07 billion yuan, marking a 51.6% increase [1]. - The core net profit attributable to shareholders was approximately 1.568 billion yuan, which contributed to a decline in stock price [1]. Operational Scale - As of June 30, the total number of property projects managed by Country Garden Services reached 8,108, with a managed area of 1.06 billion square meters, including 90 million square meters from "Three Supplies and One Industry" residential management [1]. - Projects located in first- and second-tier cities accounted for approximately 40.2% of the managed area [1]. Strategic Focus - Management stated that the decline in profit is attributed to temporary factors, including the impact of long-term receivables clearance and strategic contraction in the relatively inefficient sanitation sector [2]. - The company is prioritizing cash flow over scale growth and is actively seeking solutions to improve cash flow from less profitable projects [2]. - Country Garden Services is undergoing digital transformation to enhance customer experience, service quality, and operational efficiency, with nearly 100 self-developed "Zero Resident" cleaning robots already in use [2]. Market Positioning - In response to the trend of reducing property management fees in the industry, Country Garden Services is building core capabilities in low property fee markets and has made progress by entering nearly 20 low property fee communities this year [3]. - The company plans to accelerate differentiation in new business markets within the segmented market [3].