CICC has released a research report maintaining an "Outperform Industry" rating for Yuexiu Property (00123). Considering the resilience of the company's core sales foundation, the target price is set at HK$5.9 per share. This corresponds to a price-to-book ratio of 0.39x and 0.38x for 2026 and 2027, respectively, indicating a potential upside of 59% from the current share price.

The main viewpoints from CICC are as follows:

**2025 Performance Meets Market Expectations** The company announced its 2025 results: revenue was flat year-on-year at RMB 86.46 billion, the gross profit margin was 7.8%, and the sales and management expense ratio remained stable at 4.5%. Core net profit reached RMB 260 million, overall aligning with market expectations.

**Financing Advantages of Local State-Owned Property Developers Remain Solid** The scale of interest-bearing debt was largely stable at year-end, standing at RMB 104.8 billion. Short-term debt and domestic borrowings accounted for 26% and 71% of this total, respectively. During the period, the comprehensive financing cost decreased by 44 basis points to 3.05%. The company issued three domestic bonds totaling RMB 2.9 billion (with coupon rates of 1.95%-2.5%) and one offshore Dim Sum bond of RMB 2.85 billion (with a coupon rate of 3.3%).

**Investment Focused on Six Core Cities; Secured Major Guangzhou Site with Group Early in the Year** In 2025, the company acquired a total of 25 residential land parcels covering approximately 2.78 million square meters, with equity investment amounting to RMB 24.4 billion, implying an acquisition intensity of 38%. It strengthened cooperation with established benchmark enterprises and resource-oriented companies. Combined investment in the six key cities—Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, and Fuzhou—accounted for 96.3% of the total. As of the end of 2025, the company's land bank totaled 18.55 million square meters, corresponding to an unsold gross development value (GDV) of RMB 332.8 billion, with 75% of this GDV located in the six core cities. Furthermore, in February of this year, the group, together with the company, acquired the Guangzhou Zhujiang New Town Racecourse project for RMB 23.6 billion (consolidated by the group). This is a large-scale mixed-use development involving ultra-luxury retail, office space, high-end residential units, and serviced apartments.

**Monitoring the Launch and Sales Pace of Subsequent Key Projects** In 2025, the company achieved sales of RMB 106.2 billion, with the Greater Bay Area and East China contributing 31% and 26%, respectively. Meanwhile, the average selling price increased by 23% year-on-year to RMB 36,000 per square meter. Projects such as Shanghai Feiyun Yuefu and Beijing Heyue Wangyun contributed sales of RMB 15.9 billion and RMB 9.5 billion, respectively, receiving widespread market acclaim. It is estimated that the company holds saleable resources with a value exceeding RMB 200 billion. If the new home market stabilizes and the project launch pace accelerates, the company could potentially maintain an annual sales scale of around RMB 100 billion.

Risk warnings include new home market sales performance falling short of expectations and the realization of land acquisition profits being lower than anticipated.