League of Nations Minsheng Securities: Stable and progressive dividends highlight leading property companies to welcome good layout opportunities

The Zhitong Finance App learned that Guolian Minsheng Securities released a research report saying that the real estate market is still in the continuous adjustment stage, and some property companies have achieved steady growth in performance through efficient management and high-quality expansion. The bank believes that in terms of basic property management, the basic housing property management infrastructure of leading property enterprises is supported, and the scale is expected to maintain moderate growth by increasing the orderly expansion of non-residential and third-party projects; in terms of diversified business, leading property companies are actively shrinking inefficient businesses, focusing on areas where resource endowments and industrial chain collaboration are expected to improve overall operational efficiency. Property companies are highly willing to pay dividends, increase dividend rates, enhance dividend attributes, highlight sector investment value, recommend leading property management companies with high dividends, high dividends, scale advantages, and high operating efficiency.

The main views of the League of Nations Minsheng Securities are as follows:

Profit statement: Revenue growth is slowing down, profits are under pressure, central state-owned enterprises and high-quality private enterprises are showing resilience

56 sample listed companies in 2024:1) Total revenue of 281.62 billion yuan, +4.5% year-on-year, and the increase was 3.7 pct narrower than in 2023. Among them, the revenue of private enterprises and unextended real estate companies was +15.3% year-on-year. Country Garden Service, Wanwuyun, and Greentown Service ranked in the top three in terms of revenue. 2) Total net profit to mother was 10.78 billion yuan, -20.0% year-on-year. Among them, net profit of central state-owned enterprises was +9.8% year-on-year, and private enterprises and unextended real estate enterprises were +5.0%. China Resources Vientiane Life, Country Garden Services, and CNOOC Property ranked in the top three for profit. 3) The overall gross profit margin was 19.0%, -1.4 pct year on year. Among them, the gross margin of central state-owned enterprises dropped the least. 4) The overall sales and management cost ratio was 8.0%, -0.7 pct year on year, showing results in cost reduction and efficiency.

Balance sheet: The repayment cycle is rising, property companies focus on repayment, and there is plenty of cash

56 sample listed companies in 2024:1) The number of accounts receivable turnover days was about 106 days, an increase of 1 day over 2023, and the overall repayment cycle was lengthened. Among them, central state-owned real estate enterprises take about 62 days, mixed-ownership real estate enterprises for 78 days, private enterprises that have not been extended for 76 days, independent real estate enterprises for 119 days, and private enterprises that have already been extended for 147 days. 2) Total net cash of $108.15 billion, -2.9% year-on-year. The overall cash level is still quite abundant, and there is a basis for continuous dividends.

Business structure: The main business consolidates growth and slows down, and central state-owned enterprises are leading the industry

Revenue of 34 listed property companies in 2024:1) Property management services +9.7% YoY, with central state-owned real estate enterprises +16.4% YoY, mixed ownership +13.3%, private enterprises not exhibiting +5.7%, private enterprises and extended property enterprises +5.7%. 2) Community value-added services were -7.1% year-on-year, including central state-owned enterprises -5.4%, mixed-ownership enterprises 6.5%, private enterprises that have already been extended -2.9%, and private enterprises that have not been exhibited -1%. 3) Value-added services for non-owners were -23.0%, including central state-owned enterprises -9.6%, mixed-ownership enterprises -21.6%, private enterprises and unextended property enterprises 23.8%, and private enterprises and extended property enterprises -45.7%. Looking at the revenue structure, the share of property management services continued to rise to 70.6%, the share of community value-added services fell to 11.2%, and the share of value-added services for non-owners fell to 6.3%.

Buybacks are active, dividends are generous, and the dividend attributes of real estate companies are prominent

In 2024, 56 listed real estate companies (32 dividends in total): 1) Dividends increased dramatically. The total dividend in 2024 was 13.27 billion yuan, +31.0% year-on-year. Some property companies paid special dividends, and the dividend ratio was high; 2) Continued repurchases. Some property companies are making strong repurchases. For example, Dexin Service Group and Jinke Services repurchase ratios reached 5.84% and 4.21% respectively. 3) Undervalued valuation+high dividends. Currently, property enterprise valuations are at a low level. Supported by abundant cash flow and high dividend ratios, the dividend rate of some leading real estate companies can reach 10% or more, highlighting the dividend attributes.

Risk warning: Policy effects fall short of expectations, sales from related parties fall short of expectations, and market expansion falls short of expectations.