Orient Securities: Maintaining Poly Property's (06049) “Buy” Rating and Adjusting Target Price to HK$38.50
The Zhitong Finance App learned that Orient Securities released a research report stating that it maintained the “buy” rating of Poly Industries (06049) and adjusted the target price to HK$38.50. The original target price was HK$42.08. The bank expects the company's EPS to be 3.01/3.11/3.25 yuan in 2026-2028, and the original forecast is 2.94 yuan for 2026; net profit to mother is expected to increase by 7.5%, 3.4%, and 4.6% respectively in 2026-2028. Relying on the central enterprise brand and nationwide service network, the company expands third-party and non-residential businesses. Lean management and value-added business structure optimization are expected to support steady profit growth. Referring to the 2026 average PE of comparable companies, the corresponding target price is HK$38.50, calculated at HK$1 to RMB 0.85974.
Orient Securities's main views are as follows:
The main property management business is growing steadily, and third-party and non-residential expansion is accelerating
The company released its 2026 interim report. The first half of 2026 achieved operating income of 8.829 billion yuan, up 5.2% year on year; net profit to mother of 933 million yuan, up 4.8% year on year; basic earnings per share of 1.691 yuan, up 4.5% year on year.
During the reporting period, revenue from property management services was 7.080 billion yuan, up 11.9% year on year; of these, revenue from third-party projects was 3.290 billion yuan, up 18.4% year on year, accounting for 46.5% of property management revenue. Commercial, public and other property management revenues increased by 21.8% and 14.7% respectively. The third-party Xintuo contract amount is 1,406 billion yuan per year. The core 50 cities and projects above 10 million yuan account for 80.8% and 55.1% respectively, and the quality of project development continues to improve.
Value-added business actively adjusted the structure, and profit quality improved
During the reporting period, revenue from community value-added services decreased by 14.4% year on year, but gross margin increased 6.85 percentage points to 46.78%, showing the effect of withdrawing from low-profit businesses; revenue from value-added services for non-landlords fell 16.7% year on year, mainly affected by co-sales and shrinking office leases, and gross margin increased 1.57 percentage points to 12.78%. The gradual cultivation of new businesses such as housing repair and energy management is expected to support the stabilization of value-added businesses.
Lean management results are evident, and cost optimization frees up profit margins
During the reporting period, administrative expenses fell 2.0% year on year to 436 million yuan, and the administrative expenses ratio fell from about 5.3% to 4.9%. Regional integration, regional management, centralized procurement, and digitalization continue to advance. The bank expects the management rate to drop to 5.0% and the community value-added gross margin to rise to 46.8% in 2026. This level will continue in 2027, supporting profit through fee cuts and business structure improvements.
Cash reserves are abundant, and repayment and cash flow performance still need to be improved
Cash and bank balances at the end of the period were $12.337 million; the net cash outflow from operating activities in the first half of the year was $482 million, and the net outflow for the same period last year was $200 million, mainly affected by the increase in accounts receivable and the pace of payments.
The bank pointed out that in the first half of the year, the company's net profit to mother increased 4.8% year-on-year, and third-party property management revenue increased 18.4%, and the share rose to 46.5%. The contribution of market-based projects increased, and its dependence on related developers decreased.
Risk warning: Third-party project expansion is slowing down, related companies' operations fall short of expectations, and real estate sales are declining.