Investment Rating - The report maintains a "BUY" rating for New Hope Services with a target price of HK$2.79, reflecting an upside potential of 86.9% from the current price of HK$1.49 [1][3]. Core Insights - New Hope Services reported a net profit (NP) increase of 6% year-on-year (YoY) for FY23, with earnings slightly below expectations. The company achieved revenue growth of 10.7% YoY, totaling RMB1,261 million [1][6]. - The company raised its dividend payout ratio to 60% from 48% in FY22, resulting in a dividend yield of 12%, which positively impacted the share price by 6% following the announcement [1][6]. - New Hope Services has a strong cash position, with a cash balance of RMB1.15 billion, exceeding its market capitalization of HK$1.21 billion, indicating robust cash collection capabilities [1][3]. Financial Performance - FY23 revenue was RMB1,261 million, up 10.7% YoY, while net profit reached RMB215 million, reflecting a 6% increase YoY. The net profit margin slightly decreased to 17.1% [1][6]. - The gross profit margin narrowed to 34.9%, down 2.9 percentage points, attributed to increased competition in the third-party market and the exit from higher-margin non-owner value-added services [1][6]. - The company anticipates revenue growth of 10-20% and net profit growth of 5-10% in the upcoming periods [1][6]. Operational Highlights - The Basic Property Management segment's revenue contribution increased to 37.9% in FY23 from 31.3% in FY22, with expectations to stabilize around 40% [1][6]. - The catering services business experienced significant growth, achieving a 44% YoY revenue increase in FY23 and securing three new contracts valued at RMB65 million in Q1 2024 [1][6]. Valuation Metrics - The company is currently trading at a price-to-earnings (P/E) ratio of 5x for 2024E, while the target price is based on a P/E of 8x for 2024E [1][3]. - The report indicates a projected P/E of 4.6 for FY23, with a forecasted P/E of 4.8 for FY24 [2][12].
12% dividend yield with cash balance ＞ mkt cap; Maintain BUY