CICC Maintains Outperform Rating on POLY PPT SER (06049) with Target Price of HK$42.7

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CICC has reiterated its earnings forecast for POLY PPT SER (06049), maintaining an Outperform rating and a target price of HK$42.7. This implies a 13x 2026 target P/E and 22% upside potential. The stock currently trades at 10.8x 2026 P/E with an expected 2025 dividend yield of 4.8%.

Key insights from CICC include: 1. **Strategic Expansion in "Big Property"**: During the 14th Five-Year Plan period, the company proactively implemented its "Big Property" strategy, achieving strong growth and capability accumulation in non-residential markets. Highlights include: - 25%+ CAGR in property management revenue for public services and commercial-office segments from 2021-2024. - Non-residential GFA under management reached 510 million sqm by 2024, contributing over 40% of total property management revenue. - Leading market expansion capabilities, with annualized non-residential contract value hitting RMB2.75 billion in 2024, covering 40+ non-residential segments.

CICC believes the company has largely completed its "Big Property" layout and is transitioning from breadth to depth, focusing on operational upgrades and profitability.

2. **Growth Potential in Scenic Area Operations**: - Scenic operations present a promising avenue for property management firms, benefiting from tourism growth (China Tourism Academy forecasts cultural tourism consumption to exceed RMB10 trillion by 2030, with 8%-10% annual growth during the 15th Five-Year Plan). - Unlike traditional property management, scenic operations allow firms to shift from low-margin fixed fees to profit-sharing models. For example, POLY PPT SER’s Shenzhen Xichong project generates modest property fees but could see significantly higher margins with ticket revenue sharing and secondary tourist spending.

By end-2024, the company managed over 100 Grade-A scenic projects, including three operational ones. CICC expects continued success in flagship projects to strengthen its foothold in scenic operations and integrate them with urban management services.

**Risks**: Potential delays in market expansion or cost control challenges.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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