Zhi Tong Cai Jing·2025-08-27 07:37Core Insights - Morgan Stanley reports that China Overseas Development (00688) saw a 17% year-on-year decline in core net profit to 8.8 billion RMB, which is 4% higher than the bank's estimate, primarily due to a 4% decrease in revenue and a 25% drop in EBIT [1] Financial Performance - The company's dividend per share decreased by 17% to 0.25 HKD, while the payout ratio remained unchanged [1] - Gross margin stood at 17.4%, down 4.7 percentage points year-on-year, but improved by 3.6 percentage points compared to the previous half [1] - Core net profit margin fell by 2.8 percentage points to 10.2%, although it improved by 4.1 percentage points on a half-year basis [1] Balance Sheet and Debt - The balance sheet remains healthy, with the net debt ratio slightly decreasing from 29% to 28% [1] - The cash coverage ratio for short-term debt is 4.9 times, projected to be 4.3 times by the end of 2024, indicating strong performance, one of the best in the industry [1] Property Valuation - China Overseas' investment property valuation appears high, with a book value of 210 billion RMB against an annual investment property income of 7 billion RMB, resulting in an implied capitalization rate of 3.3%, which is still considered low [1] - Market consensus predicts a low single-digit percentage decline in net profit for the fiscal year 2025, with potential further downward adjustments to earnings forecasts [1]