BINJIANG SER-滨江服务：Solid 1H24 with balanced sources of growth, maintain BUY

Investment Rating - The report maintains a BUY rating for Binjiang Services with a target price (TP) trimmed by 4% to HK $32.94, representing a 15x 2024E P/E [2][4]. Core Insights - Binjiang Services reported solid 1H24 results with revenue and net profit (NP) growing 39% and 15% year-over-year (YoY) respectively. The gross profit margin (GPM) narrowed by 1.2 percentage points due to a higher proportion of lower-margin furnishing services in revenue [2][5]. - The company has balanced sources of growth, with managed gross floor area (GFA) expanding by 30% YoY in 1H24, driven by both parent company and third-party contributions [2][5]. - The sustainability of growth in furnishing services is supported by RMB 1.27 billion in contract liabilities, although this may continue to exert pressure on margins [2][5]. Financial Performance Summary - Revenue for 1H24 reached RMB 1.65 billion, with property management services growing by 26% YoY and the Owner Value-Added Services (VAS) segment increasing by 159% YoY [2][5]. - The net profit margin contracted by 3.3 percentage points to 16.1% due to a 6 percentage point increase in the tax rate, resulting in a 15% YoY increase in NP [2][5]. - Total receivables increased by 44% YoY, slightly outpacing revenue growth, which is considered normal given the seasonal nature of property management fee collections [2][5]. Growth Projections - The company expects to deliver 20-30% growth in managed GFA for 2024E, indicating a positive outlook despite a challenging environment [2][5]. - Forecasts for net profit have been lowered by 7-13% for 2024-25E to reflect the challenging environment and intensifying competition [2][6]. Valuation Metrics - The report provides a valuation of 15x 2024E P/E, with a target price of HK$ 32.94, indicating a significant upside potential from the current price of HK$17.00 [4][6]. - The earnings summary shows a consistent growth trajectory with revenue projected to reach RMB 3.485 billion in FY24E, reflecting a 24.1% YoY growth [3][8].