CICC has reiterated its earnings forecast for POLY PPT SER (06049), maintaining an Outperform rating and a target price of HK$42.7. This implies a 13x 2026 target P/E and 22% upside potential. The stock currently trades at 10.8x 2026 P/E with an expected 2025 dividend yield of 4.8%.
Key insights from CICC include: 1. **Strategic Expansion in "Big Property"**: During the 14th Five-Year Plan period, the company proactively implemented its "Big Property" strategy, achieving strong growth and capability accumulation in non-residential markets. Highlights include: - 25%+ CAGR in property management revenue for public services and commercial-office segments from 2021-2024. - Non-residential GFA under management reached 510 million sqm by 2024, contributing over 40% of total property management revenue. - Leading market expansion capabilities, with annualized non-residential contract value hitting RMB2.75 billion in 2024, covering 40+ non-residential segments.
CICC believes the company has largely completed its "Big Property" layout and is transitioning from breadth to depth, focusing on operational upgrades and profitability.
2. **Growth Potential in Scenic Area Operations**: - Scenic operations present a promising avenue for property management firms, benefiting from tourism growth (China Tourism Academy forecasts cultural tourism consumption to exceed RMB10 trillion by 2030, with 8%-10% annual growth during the 15th Five-Year Plan). - Unlike traditional property management, scenic operations allow firms to shift from low-margin fixed fees to profit-sharing models. For example, POLY PPT SER’s Shenzhen Xichong project generates modest property fees but could see significantly higher margins with ticket revenue sharing and secondary tourist spending.
By end-2024, the company managed over 100 Grade-A scenic projects, including three operational ones. CICC expects continued success in flagship projects to strengthen its foothold in scenic operations and integrate them with urban management services.
**Risks**: Potential delays in market expansion or cost control challenges.