CICC: Maintains target price of CHINA RES MIXC (01209) at 40.0 Hong Kong dollars, rating "Outperform" industry.

CICC released a research report stating that it maintains its profit forecast for CHINA RES MIXC (01209). It maintains an outperform rating and a target price of 40.0 Hong Kong dollars per share, corresponding to a 21 times 2025 target core P/E and 8% upside potential. The company is trading at 19.5 times 2025 core P/E, corresponding to a 5.1% dividend yield (assuming normal + special dividends reaching 100% in 2025). The bank expects CHINA RES MIXC's core net profit in 1H25 to increase by about 13% to 2.0 billion yuan, in line with market expectations. CICC's main points are as follows: Impressive operational performance of shopping centers in the first half of the year The bank expects retail sales at China Resources Wanzhong Shopping Center to increase by 15-20% year-on-year from January to June, with high single-digit growth in same-store sales. Luxury shopping centers are outperforming slightly in same-store sales growth compared to the overall performance. The trends in overall year-on-year and same-store sales in June are similar to those in the first half of the year, with luxury shopping centers showing slightly weaker performance in same-store sales. Despite the high base period last year (1H24 retail sales same-store +7.6%, including luxury +4.0%), the bank expects China Resources Wanzhong to continue to outperform its full-year guidance set at the beginning of the year (single-digit same-store growth), outperforming national retail sales growth (5% year-on-year for January to June), and peers in operational performance. This is mainly due to its strong market position and attractive brand portfolio bringing continuous increase in foot traffic. In terms of expansion, the bank expects China Resources Wanzhong to have opened five new shopping centers in the first half of the year (including two corporate projects and three third-party projects, one of which is a takeover of an existing third-party project), and signed contracts for five new third-party shopping centers, with progress in openings and expansions expected to meet expectations. Property management sector may follow industry trends and face certain pressures The bank expects the annualized contract value of new third-party contracts for China Resources Wanzhong in the first half of the year to be around 400 million yuan (compared to around 1 billion yuan for the whole of last year). Considering the larger base of basic property management income, the bank believes that income growth may slow down year-on-year (basic property management income year-on-year +15% in 1H24). Additionally, considering that sales and completion in the real estate market are still in a downward trend in the first half of the year, the bank expects non-owner value-added service income and profits to continue to face downward pressure. In terms of cash flow, considering that both the to-C and to-B collection rates in the property management industry have been under pressure year-on-year in the first h...