CICC has released a research report stating that, considering the positive momentum of GREENTOWN SER's (02869) quality and efficiency improvements alongside potential pressure from receivables impairments on the financial statements, it has raised its core operating profit forecasts for 2026-2027 by 4% and 5% to RMB 2.16 billion and RMB 2.37 billion, respectively. Conversely, net profit attributable to shareholders was lowered by 2% and 4% to RMB 990 million and RMB 1.09 billion, respectively. The firm maintains an Outperform rating and a target price of HK$6.0, implying a target 2026 P/E of 17x and 41% potential upside. The company currently trades at 12x and 11x 2026/2027 P/E. Key views from CICC are as follows:
The company's 2025 results were largely in line with expectations. GREENTOWN SER reported 2025 revenue of RMB 19.2 billion, a 7% year-on-year increase. Core operating profit grew 25% year-on-year to RMB 1.88 billion. Net profit attributable to shareholders was RMB 880 million, representing a 30% increase compared to the restated figure for the previous year and a 12% increase compared to the pre-restated figure, essentially meeting expectations. The company announced a full-year dividend of HK$0.24, with a payout ratio of 76% and a dividend yield of 5.0%.
Core business developed steadily with comprehensive improvement in profitability. The gross floor area under management by the end of 2025 increased 11% year-on-year, driving a 10% revenue growth in the core property services segment. Newly secured annualized contract value for the full year reached RMB 4.0 billion, up 7% year-on-year. The gross profit margin for all three major business segments improved compared to the previous year, leading to a 0.5 percentage point increase in the overall gross margin, while the sales and administrative expense ratio decreased by 0.9 percentage points.
Cash flow remained robust with ample cash on hand, while provisions for receivables impairment increased. Full-year operating cash flow recorded an inflow of RMB 1.53 billion, up 4% year-on-year. Cash and fixed deposits on the balance sheet totaled RMB 7.0 billion, a 17% year-on-year increase. The company recognized an additional RMB 550 million in trade receivables impairment (compared to RMB 220 million in the same period last year), of which RMB 350 million was written off and RMB 190 million was added to provisions. This increased the cumulative provision ratio by 2.4 percentage points year-on-year to 12.4%.
Progressing towards a new three-year high-quality development phase, a proactive shareholder return stance is expected to continue. The company will continue its strategic plan for high-quality development, focusing on deepening operational efficiency. The target is to achieve a 45% growth in core operating profit by 2028 compared to 2025. For 2026, the target is 15% growth in core operating profit, supported by an expected 10% growth in the core property services segment, with gross margin and sales/administrative expense ratio each improving by 0.5 percentage points. Regarding shareholder returns, the company's payout ratio was between 72-76% for 2023-2025, with cumulative annual share repurchases accounting for 9-22% of that year's net profit attributable to shareholders. It is anticipated that this proactive approach to shareholder returns will likely continue.
The impairment trend is expected to remain relatively stable. The write-off of long-aged receivables was the primary reason for the increase in provisions for the year. After the write-offs, the balance of trade receivables at the end of 2025 grew 5% year-on-year to RMB 5.1 billion, with the aging distribution remaining broadly stable compared to the previous year. It is believed that the scale of new impairment provisions in 2026 may see a moderate increase compared to 2025.
Risk warnings include newly secured contract values falling short of expectations and a worse-than-expected deterioration in collection rates.
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