Summary of Poly Property Services Co. (6049.HK) Conference Call Company Overview - Company: Poly Property Services Co. (POPS) - Ticker: 6049.HK - Market Cap: HK$18.8 billion / $2.4 billion - Enterprise Value: HK$7.2 billion / $922.4 million - Current Price: HK$34.06 - 12-Month Price Target: HK$43.00, implying a 26.2% upside Key Financial Projections - Revenue Growth: Expected to achieve a 7% CAGR from 2026E to 2028E, with PMS revenue growing at 9% CAGR [1][5] - Earnings Growth: Projected earnings to rise at an 8% CAGR during the same period [1][5] - Free Cash Flow: Average free cash flow expected to be Rmb2.1 billion across 2026E-2028E, supporting a 5% annual dividend yield [1][6] - Dividend Payout Ratio: Maintained at approximately 50% [6][8] Strategic Insights - SOE Advantage: POPS is leveraging its State-Owned Enterprise (SOE) background to enhance its expansion capabilities across various verticals, including commercial, residential, and public space [1][3] - GFA Addition: Anticipated that 2G/public space verticals will contribute approximately 65% of net managed Gross Floor Area (GFA) addition from 2026E to 2028E [3][6] - Public Space Segment: The 2G segment is expected to contribute around 60% of new third-party contract value, with a forecasted annual addition of 23 million sqm of GFA [3][6] - Residential & Commercial Segments: Combined annual managed GFA addition projected at 12 million sqm, with a 12% CAGR from 2026E to 2028E [3][6] Operational Efficiency - Cost Control: Focus on balancing service quality and cost control through standardized operational norms and centralized procurement [4][6] - Technology Adoption: Implementation of intelligent facilities management integrated with AI and collaboration with Tencent for smart inspection systems [6][8] Market Positioning - Competitive Differentiators: Targeted service offerings in scenic area operations and urban business park management are seen as key competitive advantages [3][4] - Client Base Expansion: Deepening penetration among SOE clients and new-economy clients such as Netease and JD.com [3][6] Risks and Considerations - Market Risks: Potential risks include weaker-than-expected contracted GFA growth and margin dilution from investments in new verticals [11][12] - Parent Company Support: POPS' growth is supported by its parent company, Poly A, which is expected to deliver approximately 35% of POPS' net managed GFA addition [6][11] Conclusion - Investment Rating: The company maintains a "Buy" rating, supported by strong growth prospects and operational efficiencies [1][11] - Valuation Metrics: POPS trades at a P/E of 10X/9X/9X for 2026E-2028E, with an implied total return of 37% when dividends are considered [5][6]
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