Core Viewpoint - S&P has granted Yuexiu Property (00123.HK) an investment-grade rating with a "stable" outlook, following a similar upgrade from Fitch two months prior, indicating strong institutional recognition of the company's financial health [1][2]. Financial Performance - In the first half of 2025, Yuexiu Property maintained a "green" status under the "three red lines" policy, with a debt-to-asset ratio of 64.6% and a net debt ratio of 53.2%, both significantly below regulatory thresholds [1]. - The company reported cash reserves of 44.64 billion yuan, with a coverage ratio of 1.7 times for short-term debts due within one year, enhancing its financial safety cushion [1]. - Operating cash flow remained positive, with a net inflow of 4.1 billion yuan in the first half of 2025, demonstrating the company's robust cash-generating capabilities [1]. Debt Management - Yuexiu Property optimized its debt maturity structure, reducing total interest-bearing liabilities to 103.86 billion yuan, with only 24% due within one year and 76% classified as long-term debt, indicating manageable maturity risk [1]. - The average borrowing cost decreased to 3.16%, down 41 basis points year-on-year, positioning the company among the top five in terms of lowest financing costs within the state-owned enterprise tier [2]. Strategic Positioning - Amid ongoing industry challenges of deleveraging and inventory reduction, Yuexiu Property has established a solid financial foundation characterized by "green" status under the three red lines, low interest rates, and positive cash flow, setting the stage for high-quality growth in the second half of the year [2].

Investment Rating - The report maintains a "Buy" rating for the company [3][8][20] Core Insights - The company is experiencing a decline in performance, but its diversified business segments are showing stable growth, leading to an optimized profit structure [8][9] - The company reported a significant drop in revenue and net profit for 2024, with total revenue of 127.475 billion and a net profit of 10.401 billion, reflecting a year-on-year decrease of 29.5% and 19.1% respectively [7][8] - The core net profit for 2024 was 69.7 billion, down 38.6% year-on-year, which was in line with expectations [8] - The company’s real estate settlement revenue decreased by 35% to 100.8 billion, while its operational and service revenue increased by 7.3% to 26.7 billion, contributing to 70% of gross profit [8] Financial Data and Profit Forecast - The company’s projected revenue for 2025 is 93.681 billion, with a year-on-year decline of 26.5% [7][9] - The projected net profit for 2025 is 5.976 billion, reflecting a significant year-on-year decrease of 42.5% [7][9] - The earnings per share (EPS) for 2025 is estimated at 0.87 yuan, with a price-to-earnings (PE) ratio of 11.0 [7][9] - The company’s net asset return rate is projected to decline to 3.6% in 2025 [7] Business Performance - The company’s sales for 2024 were 1,011 billion, down 41.7% year-on-year, with a sales area of 7.12 million square meters, a decrease of 34% [8] - The company has adopted a cautious approach to land acquisition, securing only 9 plots for a total of 11.5 billion, a 69% decrease year-on-year [8] - The company’s diversified business segments, including shopping malls and property management, have shown stable growth, with operational service revenue increasing by 7.3% [8] Debt and Financial Health - The company remains in a healthy financial position, with a debt-to-equity ratio of 57.2% and a net debt ratio of 51.7% as of the end of 2024 [8] - The company’s financing cost has decreased to 4.0%, reflecting a 24 basis point year-on-year decline [8] - The company has a long debt maturity profile, with an average term of 10.3 years [8]