CICC: Maintains GREENTOWN MGMT outperform rating, target price HKD 3.2

According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that it maintains the profit forecasts for Greentown Management Holdings (09979) for 2025 and 2026. It maintains an outperform rating and a target price of HKD 3.2 (corresponding to a 12x price-to-earnings ratio for 2025, an expected dividend yield of 8%, and a 6% upside potential). The company is currently trading at a 11.6x price-to-earnings ratio for 2025 and an expected dividend yield of 8.7%.

CICC's main points are as follows:

Typical relief projects highlight the company's core competitiveness

The Guihu Yuncui project was taken over by China Great Wall Asset after the previous developer encountered financial issues, and Greentown Management was selected as the construction execution party among several bidding construction companies. Faced with complex challenges such as messy pre-project debts, unreasonable planning and design, partially built and sold units, and concentrated owner rights protection, Greentown Management coordinated the interests of all parties comprehensively, regaining the trust of homebuyers and market recognition through superior product quality and comprehensive real-life displays. Since its opening in December 2024, the project has achieved a cumulative sales rate of 65%, and subsequent projects have seen price increases. The benchmark project has also received high recognition from the entrusting party, Great Wall Asset, and both parties continue to explore more project collaborations nationwide.

Operational side maintains a steady bottoming trend

The company's new contract amount in the first half of 2025 increased by 19% year-on-year to RMB 5 billion. The bank believes that the positive momentum is expected to continue throughout the year, with expansion better than last year (in 2024, the total contract amount achieved was RMB 9.32 billion, covering 36.49 million square meters). At the same time, as problematic existing projects are cleared out, and the scale of new projects decreases while quality improves, the difference between the company's financial report revenue (RMB 3.44 billion in 2024) and the new contract amount is expected to gradually narrow. In terms of cash flow, the company's operating cash flow to net profit ratio in the first half of 2025 was 44%, an improvement from 15% in the same period last year. The bank believes that this improving trend is expected to continue into the second half of 2025, with the second half likely to outperform the first half.

Positive willingness to return to shareholders

After the release of the interim results, the company continued to repurchase shares, accumulating a buyback of 10 million shares, accounting for 0.5% of the total share capital; Executive President Mr. Wang Junfeng increased his holdings by 500,000 shares on October 30. The company's attitude towards dividends is positive, and the bank believes that against the backdrop of improved collection situations, it is expected to maintain a per-share dividend comparable to that of 2024 in 2025, implying a dividend yield of 8.7% for 2025