Binjiang Services reported solid 1H24 results with revenue/NP grew 39%/15% YoY. GP margin (GPM) narrowed 1.2ppts since furnishing services with lower margin accounted for higher proportion in revenue. Tax rate hiked 6ppts due to provision for withholding tax. We think the Company has balanced sources to support GFA growth which is healthier than peers amid the challenging environment. We maintain BUY with TP trimmed by 4% to HK$32.94, representing 15x 2024E P/E.

Solid results in 1H24. Revenue grew 39% YoY to RMB1.65bn buoyed by 1) reliable performance of basic PM that grew 26% YoY, 2) strong output in Owner VAS segment that rose 159% YoY given that furnishing services sustained high growth momentum. VAS to developers contracted 10% YoY given less property development business from parentco. GPM narrowed by 1.2ppts to 25.6% since furnishing services with lower margin took a larger proportion in revenue. Tax rate hiked 6ppts to 30.5% due to the provision of withholding tax, which led to a 3.3ppt contraction in NP margin, representing a 15% YoY increase in NP. The Company highlighted that the sustainability of the growth of furnishing services is secured by RMB 1.27bn of contract liabilities. We think this will bring continued pressure on margins.

Balanced sources foster healthy GFA growth. Managed-GFA expanded 30% YoY in 1H24. Of the net increase, 35% came from parentco. and 65% from third parties. The net increase of GFA from parentco. grew 13% YoY, while that from third parties grew 29% YoY, collectively driving a 23% YoY rise in total net increase of managed GFA. The Company sustained stable growth from both sources, avoiding over-reliance amid challenging environment (reduction of development scale and intensifying completion of third party projects), which we view as a healthy expansion strategy. The Company expects to deliver 20-30% growth in managed-GFA in 2024E.

Growth of receivables in normal range. Total receivables increased 44% YoY, slightly outpacing revenue growth of 38%. Given the seasonal nature of PM fee collections, the rate is considered normal.

Valuation. We lowered our forecasts on NP by 7-13% in 2024-25E to reflect challenging environment and intensifying competition in third party expansion. Combined with adjustment of FX rate applied, our TP was lowered by 4% to HK$32.94, representing 15x 2024E P/E. We maintain BUY rating given the Company's balanced sources of growth. Risks: AR impairment, and slower-than-expected GFA expansion.