Performance has grown steadily, and profitability has remained stable. In the first half of 2024, Poly Property achieved revenue of 7.87 billion yuan, up 10.2% year on year; net profit to mother was 0.85 billion yuan, up 10.8% year on year. The gross margin was about 20.5%, down 0.71 pp from year on year. Among them, the gross profit margin for property management services was 16.8%, down 0.24pp; the gross profit margin for value-added services for non-owners was 18.1%, down 1.53 pp year on year; the gross profit margin for community value-added services was 38.9%, up 0.73 pp year on year; and the net profit margin of 10.9% remained the same as the same period last year.

The business layout was optimized, and the quantity and quality of outreach increased simultaneously. In the first half of 2024, the company's property management service sector achieved revenue of 5.59 billion yuan, an increase of 16.1% over the previous year; of this, revenue from third parties was about 2.32 billion yuan, accounting for 41.4%, an increase of 0.5 pp over the previous year. The company's contract management area and management area were 0.95 billion square meters and 0.76 billion square meters, respectively, of which third-party projects accounted for 63.2% and 64.9%, respectively. The annual contract amount for newly developed third-party projects during the period was about 1.2 billion yuan, and the annual contract amount for newly contracted third-party projects was about 1.07 billion yuan. The company continued to optimize the quality of expansion. The four core economic belts accounted for 77.0% of the single-year contract amount for newly expanded third-party projects, an increase of 10.5 pp over the previous year; 35 projects with a single annual contract amount exceeding 10 million yuan were obtained during the period, accounting for 64.3%, an increase of about 5.7pp over the previous year.

Optimize the layout of the property system and accelerate the expansion of non-residential business. Under the leadership of the Big Property Strategy, the company vigorously promoted non-residential business to accelerate market development in commercial, public and other non-residential property sectors. The single-year contract amounts for new commercial and office projects signed with third parties during the period were $430 million and 620 million yuan respectively. At the end of the period, residential management area was 0.3 billion square meters, commercial and office buildings were 0.036 billion square meters, and public and other properties were 0.42 billion square meters. Non-residential businesses accounted for 60.6%, and revenue increased by 15.4%, 16.8%, and 25.7% respectively.

The performance of value-added services declined slightly, and the overall operating situation was stable. In the first half of 2024, the company's non-owners' value-added service sector revenue was 1.03 billion yuan, down 2.1% year on year, accounting for 13.1% of total revenue, mainly due to a decrease in the number of co-marketing projects, while office rental revenue declined slightly due to market fluctuations, and other revenue increased 17.4% year on year. The three accounted for 52.1%, 16.7% and 31.2% respectively. The revenue of the community value-added service sector was 1.25 billion yuan, a year-on-year decrease of 1.8%, accounting for 15.9% of total revenue. The overall scale was stable under fluctuations in the consumer market.

Profit forecast and rating: The compound growth rate of the company's net profit to mother is expected to be 10.5% in 2024-2026. Considering that the company's large property system drives the company's management scale to continue to grow, it relies on the outstanding advantages of central enterprises to maintain a “buy” rating.

Risk warning: Risks such as value-added services falling short of expectations, management scale expansion falling short of expectations, etc.