Zhi Tong Cai Jing·2025-08-28 02:07Core Viewpoint - The report from CICC maintains the profit forecast for China Overseas Development (00688), projecting a core profit of 15 billion yuan in 2025 (down 4.3% year-on-year) and 16 billion yuan in 2026 (up 6.5% year-on-year). The target price is raised by 10% to HKD 17.2 per share, indicating a 25% upside potential from the current stock price [1]. Group 1: Financial Performance - The company's H1 2025 performance aligns with market expectations, reporting a net profit attributable to shareholders of 8.6 billion yuan and a core net profit of 8.78 billion yuan, a year-on-year decline of 17.5%. The core net profit margin remains at 10.6%, maintaining a double-digit level [2]. - The interim dividend is set at HKD 0.25 per share, corresponding to a payout ratio of 29% based on core net profit, consistent with historical levels [2]. - The company achieved contract sales of approximately 120 billion yuan in H1, a year-on-year decline of about 19%, with first-tier cities and Hong Kong accounting for about 46% of sales [2]. Group 2: Investment and Cash Flow - The company reported sales and other operating cash inflows of approximately 96.9 billion yuan and capital expenditures of about 83.7 billion yuan, maintaining positive operating cash flow. Cash on hand at the end of the period was approximately 108.7 billion yuan, with a cash-to-short-term debt ratio of 4.9 times [3]. - The company reduced interest-bearing debt by approximately 14.1 billion yuan, aligning with cash reserves. The debt-to-asset ratio stood at 53.7% at the end of H1 2025, down from 55.8% at the end of 2024 [3]. Group 3: Commercial Property Operations - The company reported commercial property revenue of 3.54 billion yuan in H1, with shopping center revenue at 1.17 billion yuan. The operational efficiency of shopping centers has improved, with a rental rate of 96.2% for mature projects [4]. - The company is progressing with the issuance of its first publicly offered REITs, which may provide new avenues for asset value release in the future [4]. - The company has indicated a robust outlook for 2025, with increased investment activity since July and expectations for significant urban renewal projects in key first-tier cities [4].