CICC released a research report maintaining its profit forecast for POLY PPT SER (06049) unchanged, expecting net profit attributable to parent company to grow 5% year-on-year for both 2025-26, reaching RMB 1.55 billion and RMB 1.62 billion respectively. The firm maintains its outperform industry rating. Considering changes in market risk appetite, CICC raised its target price by 11% to HK$42.7, corresponding to a 2025 target P/E ratio of 14x and 14% upside potential. The company's stock currently trades at 12x 2025 P/E ratio.

The company announced 1H25 revenue of RMB 8.4 billion, up 7% year-on-year; net profit attributable to parent company reached RMB 890 million, up 5% year-on-year, meeting expectations.

CICC's main viewpoints are as follows:

**Basic Property Management Business Drives Overall Growth**

The basic property segment, accounting for 70-80% of revenue, grew 13% year-on-year, establishing the main tone for overall revenue growth, while the segment's gross profit margin remained relatively stable. Community value-added services revenue and gross profit both remained relatively stable year-on-year, while non-owner value-added services dragged down overall performance, with segment gross profit declining nearly 50% year-on-year. Sales and administrative expenses decreased 9% year-on-year, with expense ratio declining 1 percentage point, supporting net profit growth.

**Third-party Contract Value Grows Against the Trend, New Project Structure Continuously Optimized**

The company's newly expanded third-party projects achieved annual contract value growth of 17% year-on-year to RMB 1.4 billion, with growth achieved across all three major tracks: residential, public services, and commercial office. Core 50 cities' new contract value proportion increased 5 percentage points year-on-year to 85%; core non-residential business proportion increased to nearly 80%; in public service business, the proportion of contracts above RMB 10 million and RMB 20 million both further increased.

**Account Management Remains Relatively Stable**

Trade receivables at end-1H25 increased 10% year-on-year, with over 90% due within one year, maintaining a healthy aging structure. CICC estimates that the comprehensive collection rate remained broadly stable in the first half. According to the company's earnings conference, public service business collection rates showed improvement, while residential and commercial office segments declined somewhat.

**Continues to Promote High-Quality Development and Effectively Reward Shareholders**

CICC believes POLY PPT SER will continue to maintain its competitive advantages in core business tracks, continuously driving overall revenue growth through high-quality project expansion and conversion, while persistently advancing internal efficiency management and maintaining basic profit margin stability. Company management stated during the earnings conference that it will adhere to the full-year target of RMB 3 billion in annual saturated contract expansion, and maintain unchanged full-year revenue and net profit targets.

The company has continuously increased its dividend payout ratio over the past three years, from 20% in 2021 to 50% in 2024. Looking ahead, CICC believes the company will continue to implement an active shareholder return policy.

**Risk Warning:** External expansion performance or cost management effectiveness may be weaker than expected.