Matters:

The company released its 2024 semi-annual report. In the first half of the year, revenue was 2.77 billion yuan, up 3.3% year on year, and net profit to mother was 0.3 billion yuan, up 2.7% year on year.

Ping An's point of view:

Revenue and profit increased slightly, and profitability continued to improve: in the first half of 2024, the company achieved revenue of 2.77 billion yuan, an increase of 3.3% year over year, and net profit of 0.3 billion yuan to mother, an increase of 2.7% year on year. Among them, revenue from property management services was 1.91 billion yuan, up 12.6% year on year, revenue from community value-added services was 0.65 billion yuan, down 8.8% year on year, and developers' revenue from value-added services was 0.22 billion yuan, down 22.3% year on year. The overall gross profit margin for the first half of the year was 27.2%, up 0.4 percentage points from year on year. Among them, the gross profit margin for property management services was 24.7%, the gross margin for community value-added services increased 2.3 percentage points to 36.2% year on year, and gross margin for developers' value-added services increased 1.1 percentage points year on year to 22.3% year on year.

Newly signed projects were accurately focused, and sustainable social growth services continued to be deepened: in the first half of 2024, the company's residential property management service revenue accounted for 80.9% of property management service revenue, of which third-party revenue accounted for 28.6% of residential property management service revenue; non-residential property management service revenue accounted for 19.1% of property management service revenue, of which third-party revenue accounted for 91.3% of non-residential property management service revenue. The 50 key cities of the newly signed project account for 60%, and the Yangtze River Delta, Bohai Rim, and Sichuan and Chongqing together account for 78%. The share of sustainable community value-added service revenue continued to rise in the first half of the year, accounting for 84.9% of community value-added service revenue, of which group meal revenue was 0.24 billion yuan, an increase of 9.9% over the previous year.

Investment advice: Maintaining the original forecast, the company's EPS is expected to be 0.53 yuan, 0.55 yuan, and 0.57 yuan in 2024-2026, and the current stock price corresponding to PE is 5.0 times, 4.8 times, and 4.6 times, respectively. The company's comprehensive service capabilities continue to increase, management formats are becoming richer, and non-cyclical business continues to advance. It is expected to achieve stable development and maintain a “recommended” rating.

Risk warning: 1) The recovery of the real estate industry falls short of expectations, space for property management development is limited, and there is a risk that the company's operations will be under pressure; 2) market-based expansion competition will intensify, and the risk that the company's business development will be under pressure; 3) the risk that profitability will continue to decline and impairment accruals exceed expectations.