Goldman Sachs: Expects A-LIVING's profits to bottom out and rebound, rating upgraded to "Neutral"

Goldman Sachs released a research report stating that it has upgraded the investment rating of A-LIVING from "Sell" to "Neutral," and correspondingly lowered its revenue forecast for this year by 5% to reflect the impact of exiting underperforming projects. Revenue is expected to remain flat from 2026 to 2027, and the core net profit forecast for 2025 to 2027 has been adjusted, with reductions of 1% to increases of 4%. The target price has been raised from HKD 2.45 to HKD 3. Goldman Sachs pointed out that the company has optimized its business portfolio and restructured in recent years, exiting underperforming property management projects and urban service contracts, and reducing its risk exposure to highly leveraged related developer Agile Group, Greenland Holdings, and government clients with low receivable visibility. It is expected that starting next year, recurring revenue and profitability will improve, supporting stable free cash flow generation and shareholder return prospects. A-LIVING turned a profit in the first half of the year, recording a net profit of RMB 350 million, compared to a net loss of RMB 1.6 billion in the first half of 2024, mainly benefiting from a reduction in impairment losses on receivables. Goldman Sachs expects the company's earnings to rebound, with controllable downward pressure on profit margins in property management and urban services, and management has indicated that it may consider distributing special dividends in the future