POLY SERVICES(6049.HK)：1H25 EARNINGS IN LINE; NO INTERIM DIVIDEND

Core Viewpoint - The company reported a net profit growth of 5.3% YoY in 1H25, aligning with market expectations for mid-single-digit growth, driven by resilient basic property management (PM) growth and strong third-party expansion [1] Group 1: Financial Performance - Total revenue increased by 6.6% YoY, with basic PM revenue growing by 13.1% YoY, supported by third-party projects and commercial/office projects [1] - Third-party expansion contracts rose by 17.2% YoY to RMB 1.4 billion, with residential and commercial/office segments growing by 32.2% and 18.7% YoY, respectively [1] - Non-owner value-added services (VAS) revenue decreased by 16.1% YoY, primarily due to challenges faced by developers, while community VAS revenue fell by 3.7% YoY [1] Group 2: Basic PM Insights - Basic PM segment revenue rose by 13.1% YoY in 1H25, driven by third-party projects (revenue +19.9% YoY) and commercial/office projects (revenue +29.8% YoY) [2] - The average PM fee increased to RMB 2.47/sq.m/month in 1H25 from RMB 2.33 in 1H24, indicating a decline in fee collection rates [2] - The company plans to implement targeted initiatives to address the challenges posed by local fee caps and higher vacancy rates [2] Group 3: Operational Efficiency - The company achieved efficiency gains with SG&A expenses dropping by 9.1% YoY, resulting in a 0.9ppt reduction in the SG&A ratio [3] - However, a 6.8ppt YoY decline in gross margin from non-owner VAS negatively impacted the overall gross margin, which decreased by 1.1ppt YoY [3] - The net profit margin slightly decreased by 0.1ppt YoY to 10.6% in 1H25, and the company maintained its no-interim-dividend policy, which disappointed some investors [3] Group 4: Investment Outlook - The company maintains a BUY rating and has raised the target price by 2% to HK$54.91, reflecting adjustments in earnings estimates [4]