CICC issued a research report stating that based on C&D INTL GROUP's (01908) steady sales performance, the firm maintains its 2025 earnings forecast largely unchanged while slightly raising its 2026 earnings forecast by 2% to RMB 5.1 billion, representing year-over-year growth of 10%/8% respectively. The firm maintains its Outperform rating and raises the target price by 7% to HK$21.4 (corresponding to 8.5x/7.8x 2025/26 P/E, 1.4x/1.2x 2025/26 P/B, and 16% upside potential), primarily considering market risk appetite adjustments. The current stock price corresponds to 7.3x/6.7x 2025/26 P/E and 1.2x/1.1x 2025/26 P/B.

CICC's main viewpoints are as follows:

H1 2025 Performance Slightly Exceeds Market Expectations C&D INTL GROUP announced H1 2025 results: revenue increased 4% year-over-year to RMB 34.2 billion, reported gross margin improved 1.0 percentage point year-over-year to 12.9% (13.3% for full year 2024), and net profit attributable to shareholders increased 12% year-over-year to RMB 910 million, slightly exceeding market expectations, mainly due to improvements in settlement gross margin and settlement equity ratio. The company did not declare an interim dividend, consistent with its previous dividend policy.

Continued Deep Cultivation in Key Core Cities with Leading Land Acquisition Intensity The company acquired 26 new land parcels in the first half, with total land payments of RMB 49.5 billion and land acquisition intensity reaching 70% (approximately 42% in 2024), corresponding to additional total saleable value of RMB 98.7 billion. From the structure of new land parcels, aside from the Fujian market where the company has long been established, the vast majority are located in top-tier first and second-tier cities (Beijing/Hangzhou/Shanghai/Chengdu/Xiamen account for about 80% of new saleable value, with Beijing/Hangzhou/Shanghai each exceeding RMB 20 billion in single-city saleable value). In terms of land acquisition strategy, the company prioritizes liquidity while balancing profitability. The firm estimates that the net profit margin at the project level for new land acquisitions in H1 2025 is approximately 7-9%. As of end-H1 2025, the company's unsold saleable value totaled approximately RMB 249.6 billion, of which projects acquired in 2022 and later account for 81%, maintaining a healthy saleable value structure.

Financial Indicators Remain Robust with Significant Financing Advantages As of end-H1 2025, the company's net debt ratio was 33.4%, net debt ratio excluding pre-sales decreased 0.8 percentage points from end-2024 to 58.8%, and cash-to-short-term debt ratio maintained at a high level of 4.1x. The company's debt structure remained robust at mid-year, including RMB 45.3 billion in major shareholder loans and RMB 41.1 billion in financial institution borrowings, with short-term debt accounting for only 15% of interest-bearing debt. The average financing cost decreased further by 39 basis points from end-2024 to 3.17%, continuing to reach historical lows.

2025 Sales Ranking Expected to Continue Steady Progress According to CRIC, the company's H1 2025 total sales amount ranking improved by one position compared to 2024 to sixth place. The firm estimates the company's H1 2025 total supply was approximately RMB 160-170 billion (with new launches accounting for about 40%), and H2 2025 plans to launch new saleable value exceeding RMB 100 billion. Assuming H2 2025 overall absorption rate remains consistent with H1 2025, full-year sales amount is expected to achieve the previous target (RMB 150 billion full-scale in 2025), with overall sales performance expected to continue outperforming peers.

Full-Year Performance Expected to Achieve Steady Growth The company's H1 2025 overall settlement revenue and profit achieved steady growth. Looking at the full year, on one hand, the company's first-half settlement scale proportion has historically been low, and the firm expects this pattern may continue this year. On the other hand, as of end-H1 2025, the company's consolidated sold but unsettled amount was RMB 206.5 billion, with relatively abundant settlement resources (1.6x the firm's projected 2025 property development revenue). The firm expects full-year settlement volume to remain relatively stable, with settlement profit margin improving year-over-year, driving steady profit growth.

Risk Factors: Industry recovery slower than expected, sales absorption below expectations, settlement scale and profit margin below expectations.