Summary of Country Garden Services (CGS) Conference Call Company Overview - Company: Country Garden Services (6098.HK) - Industry: Property Management Services Key Results Highlights - Core Profit: FY24 core profit decreased by 23% year-over-year (yoy) to Rmb3.0 billion, slightly above expectations, with inline topline performance and moderate gross profit margin (GPM) deterioration, which was better than feared [1] - Cash Profile: Operating cash flow (OCF) to core profit ratio improved to 1.3X, with gross cash balance increasing by 40% to Rmb18 billion due to enhanced fee collection and reduced accounts receivable (AR) from related developer Country Garden Holding (CGH) [1] - Shareholder Returns: Declared a dividend per share (DPS) of Rmb0.296 for FY24, implying a 55% payout against net income and a 33% payout against core profit, with a 5% yield [1] Management Guidance for FY25 - Management believes the worst is over, expecting core profit to bottom out from FY25 onwards, with potential high single-digit to teen-level percentage growth in core business topline [2] - Ongoing restructuring of non-core segments is anticipated to stabilize by FY26, with solid OCF expected to remain above 1X of net profit [2] Challenges and Risks - Business Recovery: Recovery remains challenging due to lower visibility on contracted project handovers from CGH and CGS's weak market positioning compared to leading players [3] - Quality Scale Expansion: Concerns about CGS's ability to achieve quality scale expansion amid intensified competition and terminations of low-margin contracts [5] - Impairment Risks: Potential for further impairment losses from receivables and goodwill, with Rmb15.4 billion in net goodwill as of FY24 [5] Financial Performance - Revenue: FY24 revenue increased by 3% yoy to Rmb43.993 billion, with managed gross floor area (GFA) expanding by 8% to over 1 billion sqm [9] - Segment Performance: - Community value-added services (2C VAS) grew by 12% yoy, while Three Supplies & Property Management (TSPM) segment saw a 25% increase [10] - City services and commercial operational services (COS) segments faced declines in topline and margins [8] Financial Metrics - Gross Margin: FY24 gross margin was 19%, down 1 percentage point (ppt) yoy [9] - SG&A Expenses: SG&A as a percentage of revenue increased by 1 ppt yoy to 11% [9] - Net Profit: Reported net profit of Rmb1.808 billion, a significant increase of 519% yoy, but core net profit decreased by 23% [9] Investment Thesis - CGS is rated as a "Sell" due to expected slower recovery compared to peers, challenges in project handovers, and potential business contraction across multiple segments [12] - The target price is set at HK$5.2, reflecting a downside of 19.5% from the current price [11] Conclusion - CGS is navigating a challenging environment with a focus on restructuring and improving cash flow, but faces significant risks related to market positioning, project execution, and potential impairments. The outlook remains cautious with a recommendation to sell based on current performance and future expectations.
碧桂园服务_2024 财年毛利率好于预期；最糟糕时期已过，但增长复苏仍未见曙光；建议卖出