CICC: Keeping CNOOC Property (02669) outperforming the industry rating and lowering the target price to HK$4.2
The Zhitong Finance App learned that CICC released a research report stating that the profit forecast for CNOOC Properties (02669) remains unchanged, and the company's net profit to the mother is expected to be 1.3 billion yuan and 1.3 billion yuan respectively in 2026 and 2027 (year-on-year changes of -5% and 0%, respectively). Maintaining the outperforming industry rating, the target price was lowered by 14% to HK$4.2 (corresponding to 9 times the 2026 target price-earnings ratio, implying 25% upward space), mainly taking into account the impact of changes in market risk appetite and the certainty of the company's profit. The company is currently trading at 7.3 times the 2026 price-earnings ratio.
CICC's main views are as follows:
1H26 results are in line with this forecast
The company announced 1H26 results: revenue of 7.48 billion yuan, up 5% year on year; net profit to mother of 70 million yuan, down 9% year on year, in line with expectations; dividend of 10 HK cents per share for the interim period (ordinary dividend of 9 HK cents per share for the same period last year), corresponding payout ratio of 41%.
Expand high-quality contracts while quitting inefficient projects
In the first half of the year, the total amount of new external development contracts signed by the company in the mainland market was 1.95 billion yuan, up 6.5% year on year; of these, the share of non-residential projects increased 3.1 percentage points to 91% year on year, with Tier 1 and 2 cities accounting for 90%, and 10 million-level projects accounting for 60%. The Group continues to promote the management of loss-making projects and optimize the business structure. The completed and withdrawn projects during the period were about 19.2 million square meters, accounting for about 4% of the area under management at the end of the previous period.
The basic property management business is driving revenue growth, and profitability is under pressure
The 5% increase in total revenue during the period was mainly driven by the property management business. Revenue from the sector increased by 9%, while revenue from the rest of the value-added services sector declined. In terms of profitability, the company's overall gross margin fell 2.0 percentage points to 14.9% year on year, mainly being dragged down by the property management sector. The gross margin of the package manufacturing project fell 2.4 percentage points to 11.1% year on year.
Focus on high-quality development to cope with environmental pressure
On the business side, in the face of the industry's continued fierce competitive environment and pressure from the cost side, the bank believes that the company will adhere to the principle of high-quality development, respond positively to external changes, and maintain the judgment of a slight increase in revenue and a slight decline in net profit throughout the year. On the capital market side, the company's management expressed the importance it attaches to investors' demands at the performance meeting. The guidelines are that from a long-term perspective, the company will steadily increase its dividend payout ratio based on actual operating results, capital expenditure plans, and the market environment.
Risk warning: The results of the new expansion of the project fell short of expectations, and the sustainability of profitability was weaker than expected.