According to the report released by Nomura, the target price for CG Services (06098) has been lowered by 25.9% from HKD 5.4 to HKD 4, with a rating of 'Neutral'. The mid-term performance forecast for the company in 2024 shows a 2% increase in revenue, but a 3.7% and 5.8% decrease in gross margin and operating profit margin respectively, resulting in a 39% and 32% decline in net profit and adjusted net profit.

The bank pointed out that the decline in CG Services' performance in the first half of 2024 is in line with expectations, and its weak cash flow is a cause for concern. The net cash inflow from operating activities of the company has dropped significantly by 88%, with only CNY 0.27 billion, accounting for 1% of the mid-term revenue and 15% of the adjusted net profit. The main reason is the increase in difficulty in collecting property management fees. Nomura believes that the widening gap between cash flow and revenue/profit indicates a high risk of impairment losses, which is one of the factors affecting the company's profitability.