According to a research report from CICC, the firm maintains its profit forecasts for MIDEA REAL EST (03990) largely unchanged, projecting the company's core net profit attributable to shareholders to grow 19%/13% year-over-year to RMB 601 million/RMB 682 million in 2025-26. The firm retains its outperform rating and, considering significant improvement in market risk appetite and the company's clear path to performance delivery, has raised its target price by 36% to HK$5.8 per share, corresponding to a 2025 target dividend yield of 5.5% and 23% upside potential. The company is currently trading at a 2025 dividend yield of 6.9%.

CICC's key perspectives are as follows:

**MIDEA REAL EST's 1H25 Performance Meets Market Expectations**

The company announced its 1H25 results: revenue increased 41% year-over-year to RMB 1.997 billion, gross margin declined slightly by 3 percentage points year-over-year to 30.8%, and core net profit attributable to shareholders surged 119.4% year-over-year to RMB 312 million, meeting market expectations. The company declared an interim dividend of HK$0.15 per share, corresponding to a current dividend yield of 3.2%.

**Development Services Integration into Interim Results Supports Significant Revenue and Profit Growth**

In 1H25, the company recorded development services revenue of RMB 505 million and operating profit of RMB 162 million (this business segment did not exist in the same period last year). Beyond continued delivery and revenue recognition from parent company project development services, the company expanded to 4 new third-party residential projects in the first half (located in Guiyang, Wuxi, Xuzhou, and other cities where the company has deep presence), achieving full-cycle contract value of RMB 160 million. Notably, the Wuxi project achieved over 90% sell-through rate at initial launch, with both volume and pricing exceeding client expectations.

**Property Management and Asset Operations Develop Steadily, Real Estate Technology Business Faces Some Pressure**

In the first half, the company's property management under management and contracted areas increased 5% and 4% respectively from end-2024 to 79.46 million square meters and 96.06 million square meters. With steady scale expansion, revenue increased 9% year-over-year to RMB 930 million. The company actively promoted expansion in key non-residential sectors, with non-residential contracted annual saturated revenue reaching RMB 510 million (of which industrial parks and senior living contributed RMB 330 million).

For asset operations, the company achieved revenue of RMB 275 million in the first half, up 14% year-over-year. The occupancy rate of 5 self-held commercial projects reached 91%, with operating profit margin improving 11 percentage points compared to 2024 to 64%. In real estate technology business, first-half revenue declined 9% year-over-year to RMB 287 million, mainly affected by pressure on real estate market fundamentals.

**Committed to Deep Layout Across Real Estate Development Value Chain, Enhancing Core Competitiveness**

After restructuring its listed platform last year, the company remains committed to enhancing full-cycle service and operational capabilities around the real estate value chain, actively undertaking existing real estate development resources from its parent company while strengthening its own expansion capabilities. During the earnings conference, the company indicated it expects development services to achieve approximately RMB 1 billion in revenue for full-year 2025 and remains optimistic about 2026 revenue scale. Property services revenue growth is expected to maintain 8-10% levels in 2025. Overall, 2025 performance growth is expected to remain around 20%.

**Stable Dividend Policy Actively Protects Shareholder Interests**

During the earnings conference, the company stated it will maintain a competitive dividend policy within the industry while continuing the bi-annual dividend distribution model of interim and final dividends. The firm believes that after business restructuring, the company actively rewards shareholders through dividends, and expectations for stable future dividend distributions establish a solid foundation for shareholder returns.

**Risk Factors:** Development management business and real estate technology business affected by industry headwinds beyond expectations; dividend distributions falling short of expectations.