Everbright Securities has issued a research report providing forecasts for Binjiang Service (HKEX: 03316). The report projects the company's operating revenue for 2026-2028 to be RMB 4.55 billion, RMB 4.98 billion, and RMB 5.42 billion respectively, with corresponding growth rates of 11.1%, 9.4%, and 8.8%.

Net profit attributable to shareholders is forecast at RMB 660 million, RMB 710 million, and RMB 770 million for those years. Earnings per share for the three-year period are estimated at RMB 2.38, RMB 2.58, and RMB 2.77.

Valuation and Target Price

Based on a relative valuation method, the report assigns the company a reasonable 2026 price-to-earnings ratio of 12 times, corresponding to a target price of approximately HK$32.78. An absolute valuation method suggests a reasonable price of about HK$40.44 per share.

Combining both valuation approaches, a target price of HK$32.78 is given. In light of superior sales performance from its related party, Binjiang Group, the company's strong regional brand reputation, and its high dividend payout ratio, which collectively indicate significant investment value, Everbright Securities has initiated coverage with a "Buy" rating.

Key Investment Highlights

The firm is a high-end residential property manager deeply entrenched in Hangzhou. As of the end of 2025, its total managed area reached 82.63 million square meters, with 87% being residential properties.

Over the past five years (2020-2025), it achieved a compound annual growth rate of 33.7% in revenue and 22.1% in net profit. For 2025, revenue was RMB 4.10 billion, a year-on-year increase of 14.1%, with net profit of RMB 600 million, up 9.0% year-on-year, demonstrating a sustained rapid growth trajectory.

Strong Support from Related Party

Binjiang Group, also deeply rooted in Hangzhou, has consistently shown robust sales. In 2025, it achieved full-caliber sales of RMB 101.8 billion, ranking 10th in the CRIC sales ranking for mainstream real estate enterprises, indicating its rising industry status and influence.

The group has been the top-selling developer in Hangzhou for multiple consecutive years, with its market share gradually increasing. In 2025, its sales in Hangzhou reached RMB 48.3 billion, capturing a 22.0% market share in the city.

Operational Efficiency and Shareholder Returns

The company provides high-quality property management services with high fee collection rates from its premium clientele. Despite industry-wide challenges with accumulating receivables, its net trade receivables stood at a relatively modest RMB 410 million in 2025.

In terms of profitability, benefiting from its asset-light operational model, the company maintains a high overall return on equity, with an average ROE of 34.8% and an average return on assets of 13.4% over the past three years (2023-2025).

Its dividend payout ratio reached 75% in 2025, significantly higher than leading peers in the sector, highlighting attractive investment value.

Growth Potential from Value-Added Services

Hangzhou ranked second globally for high-net-worth individual growth at 108% between 2014 and 2024. In 2025, Hangzhou's per capita consumption expenditure led the Yangtze River Delta region, and its average property service fees are notably higher than other second and third-tier cities.

Leveraging its strong position in Hangzhou, Binjiang Service achieved an average property management fee of RMB 4.2 per square meter per month in 2025. The high-net-worth clients in its managed mid-to-high-end residential properties possess strong latent consumption power and greater demand for value-added services compared to standard residences and clients, positioning the company's future 5S value-added services as a key growth engine.

Risk Factors

Potential risks include expansion falling short of expectations, cost control challenges, and slower-than-anticipated development of value-added services.