Strong Performance and Strategic Expansion Drive Buy Rating for Binjiang Service Group Co. Ltd.

In a report released yesterday, Miao Zhang from CMB International Securities maintained a Buy rating on Binjiang Service Group Co. Ltd. (3316 – Research Report), with a price target of HK$32.86.

Miao Zhang has given his Buy rating due to a combination of factors that highlight the strong performance and strategic direction of Binjiang Service Group Co. Ltd. The company’s revenue for FY24 grew significantly by 28% year-over-year, surpassing CMBI’s estimates, primarily due to the expansion of managed gross floor area (GFA) and a robust renovation business. Although net profit was slightly below expectations due to a decline in gross margin and additional withholding tax, the core net profit still showed a healthy growth of 21% year-over-year.
Miao Zhang also noted the company’s impressive expansion in third-party managed GFA, which grew by 21% and outpaced industry averages. This growth is supported by high-end services and stable deliveries from the parent company. Additionally, the company has increased its basic payout ratio, resulting in attractive dividend yields for shareholders. Despite some risks, such as potential slower third-party expansion and receivables impairment, the company’s strategic focus on expanding into high-tier cities outside Zhejiang and its commitment to shareholder returns underpin the Buy rating, with a target price of HK$32.86.

According to TipRanks, Zhang is a 4-star analyst with an average return of 17.5% and a 93.75% success rate.