Group 1 - The core viewpoint of the report indicates that Country Garden Services (06098) experienced a 15% year-on-year decline in core net profit for the first half of 2025, which is 6% lower than the bank's forecast, despite a 10% increase in revenue [1] - The decline in performance is attributed to a significant increase in administrative expenses, which rose by 23% year-on-year [1] - The management has committed to a dividend payout ratio of 60% for the fiscal year 2025, up from 33% in 2024, suggesting a dividend yield of 6.5% to 7% [1] Group 2 - The report highlights that the property management gross profit was unexpectedly better than anticipated, with revenue and gross profit from property management increasing by 7% and 2% year-on-year, respectively, surpassing the bank's estimates of 3% and 18% [1] - However, the gross margin continued to contract, with all segments except community value-added services experiencing a year-on-year decline in gross margin [1] - The overall gross margin decreased by 2.6 percentage points to 18.5%, and the core net profit margin fell by 2.4 percentage points to 7%, which is 0.8 percentage points lower than the bank's forecast [1] Group 3 - The bank notes that the market consensus for earnings per share for Country Garden Services may be revised downward, as the current market consensus predicts net profit to remain flat year-on-year [2] - However, based on the company's latest dividend target, the forecast for dividends per share is expected to be adjusted upward [2] - After the market initially digests the disappointing performance, the bank believes that the stock price reaction may turn positive due to the increased dividend guidance [2]

Core Viewpoint - Morgan Stanley reports that Country Garden Services (06098) experienced a 15% year-on-year decline in core net profit for the first half of 2025, which is 6% lower than the bank's forecast, despite a 10% increase in revenue. The decline in profit is attributed to a 23% increase in administrative expenses. However, management has committed to a dividend payout ratio of 60% for the fiscal year 2025, up from 33% in 2024, indicating a dividend yield of 6.5% to 7% [1] Group 1 - Country Garden Services' property management gross profit was unexpectedly better than anticipated, with revenue and gross profit increasing by 7% and 2% year-on-year, respectively, surpassing Morgan Stanley's estimates of 3% and 18% [1] - The gross margin for property management decreased by 1.1 percentage points to 21.8% year-on-year, while the gross margin for community value-added services fell by 8.6 percentage points to 30.4%. Overall gross margin declined by 2.6 percentage points to 18.5%, and core net profit margin decreased by 2.4 percentage points to 7%, which is 0.8 percentage points lower than Morgan Stanley's forecast [1] - Accounts receivable showed no improvement, with net accounts receivable days remaining flat at 157 days year-on-year, compared to 147 days at the end of 2024, which is among the highest levels in the industry. Total accounts receivable increased by 8% to 19.9 billion RMB [1] Group 2 - Morgan Stanley indicates that the market consensus for Country Garden Services' earnings per share may be revised downward, as the current market consensus predicts net profit to remain flat year-on-year. However, based on the company's latest dividend target, the forecast for dividends per share is expected to be revised upward [2] - After the market initially digests the disappointing earnings, Morgan Stanley believes that the stock price reaction may turn positive due to the upward adjustment in dividend guidance [2]