JPMorgan released a research report stating that since June, many residential owners in Chongqing have requested a reduction in management fees, which is on the rise. Currently, most of the requests have not been successful, and similar requests have not been seen in other areas of mainland China. JPMorgan believes that the impact is still under control, but if this situation spreads to other cities, it may bring profit pressure to property management companies.

JPMorgan also pointed out that the process of reducing management fees is not easy, and the gross profit of most property management companies is currently at a low level in the middle unit, so it is believed that there is not much room for adjustment. The bank said that this may be one of the means by which property owners demand that management companies improve their service levels, but they will closely monitor the situation.

Among the major companies, Jinke Services (09666.HK) has the largest layout in Chongqing, and if this situation expands across the country, China Resources MIXC (01209.HK) will be the least affected, and Greentown Services (02869.HK) will be the most affected.

The bank said that as an industry, it would not be surprising if some short-term pressures arise from the above situation, but the state of the residential property market is the greater driving force of stock prices. The bank still prefers Poly Property Services (06049.HK).