Country Garden Services 6098

[winston]

not vested

COUNTRY GARDEN SERVICES (6098 HK)

Recommendation : BUY
Fair Value : HKD 64.03


SCALE MATTERS.

Share price retreated 43% from peak
M&A activities should reduce concentration risks with Country Garden Holdings
Lower fair value estimate of HKD64.03

Country Garden Services Holdings (CGS; stock code: 6098 HK) is a market leader in the property management services sector with a sizeable total contracted GFA of 1,120m sqm (as at 30 Jun 2021, including GFA from Justbon Services which it acquired).

We believe CGS is able to benefit from significant economies of scale and strong brand equity. CGS also has the ability to offer a diverse range of value-added services to its customers, and has shown its ability to grow its scale and GFA under management via mergers and acquisitions.

Management has set an ambitious top-line target over the medium term, with an aim to achieve over RMB100b in revenue in 2025, which would represent a CAGR of ~50% from FY20’s RMB15.6b revenue base.

Source: OCBC

[winston]

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CG SERVICES Not Intend to Place Shrs when Shr Price Below $40

CG SERVICES (06098.HK) got entangled in the market-concerned share placing of COUNTRY GARDEN (02007.HK), its sister company.

CG SERVICES' management reportedly held an emergency investor meeting yesterday, at which the CFO cum joint company secretary Huang Peng, made clear the company has no intention of placing when its share price is below $40.

Related News: UBS Expects CN Developers' Earnings to Erode in 1H; Non-SOE Developers May Cut Div. Payout

The CFO said CG SERVICES has not had any placing plan by the year end, reiterating the adequate operating capital of the company and absence of guarantee to COUNTRY GARDEN.

Source: AAStocks Financial News

[winston]

not vested

Nomura Downgrades CG SERVICES (06098.HK) to Reduce, Trims TP to $15.1

Nomura lowered the FY22-24E earnings for CG SERVICES (06098.HK due to slower management scale growth and margin fall.

Therefore, the company was downgraded from Buy to Reduce, with target price cut from $43.2 to $15.1 given an unavoidable connection with China's weak home market sentiment.

CG SERVICES' stock price jumped only 18% from the 5-year low after nearly three weeks of decline.

Meanwhile, the firm chose to raise capital by placing at the moment despite having no outstanding debt maturities by end-2022, which was worrying in Nomura's view.

Related News - CICC: Local CN Govts Scale Up Measures to Secure Home Delivery; Homebuyers' Sentiment May Gradually Recover

Investors may be more edgy about market liquidity. The broker was concerned if CG SERVICES' project deliveries will be delayed, which in turn will dampen the firm's newly-added projects under management.

Source: AAStocks Financial News

[winston]

not vested

July 27, 2022

JPM Downgrades CG SERVICES (06098.HK) to Neutral, COUNTRY GARDEN (02007.HK) to Underweight

The proposed share placement of COUNTRY GARDEN (02007.HK) at a price close to the five-year trough will likely induce investors' apprehension over its liquidity conditions, reported JPMorgan.

Still, as one of the five model companies with recent onshore bond approval, COUNTRY GARDEN may still be one of the survivors among private developers, should the government continue to support its refinancing activities.

Regardless, the broker anticipated that investors' concerns triggered by the share placement will likely weigh on the share price performance of the stock in near-term, while also dragging down the share price of its sister company CG SERVICES (06098.HK).

The rating for COUNTRY GARDEN was downgraded from Overweight to Underweight, with its target price axed from $7.6 to $2.5.

CG SERVICES was downgraded from Overweight to Neutral, with its target price chopped from $58 to $21.

Source: AAStocks Financial News

[winston]

not vested

Country Garden Services (6098 HK) - Factoring in slower growth assumptions

Country Garden Services Holdings (CGS) is a market leader in the property management services sector with a sizeable total contracted gross floor area (GFA) of 1,437.9m square metres (sqm) (excluding its Three Supplies and Property Management segment), as at 31 Dec 2021.

We believe CGS is able to benefit from significant economies of scale and strong brand equity.

CGS also has the ability to offer a diverse range of value-added services to its customers and has shown its ability to grow its scale and GFA under management via mergers and acquisitions (M&A).

Management has set an ambitious top-line target over the medium-term, with an aim to achieve over CNY100b in revenue in 2025, which would represent a CAGR of ~36% from FY21’s CNY28.8b revenue base.

Although we like CGS for its market leading position within the property management services sector, its growth potential will be adversely impacted by the subdued physical real estate market in China and challenges faced by its sister company which it depends on for growth. BUY.

Source: OCBC

[winston]

not vested

Country Garden Services (6098 HK)

Country Garden Services Holdings (CGS) is a market leader in the property management services sector with a sizeable total contracted GFA of 1,609m sqm (excluding its Three Supplies and Property Management segment), as at 30 Jun 2022.

We believe CGS is able to benefit from significant economies of scale and strong brand equity. CGS also has the ability to offer a diverse range of value-added services to its customers and has shown its ability to grow its scale and GFA under management via mergers and acquisitions (M&A).

Management has set an ambitious top-line target over the medium-term, with an aim to achieve over CNY100b in revenue in 2025, which would represent a CAGR of ~36% from FY21’s CNY28.8b revenue base.

Although we like CGS for its market leading position within the property management services sector, its growth potential will be adversely impacted by the subdued physical real estate market in China and challenges faced by its sister company which it depends on for growth. BUY.

Source: OCBC

[winston]

not vested

Chairman offers $5b stake in Country Garden Services

Share placement for 237 million shares with a value of HK$5.06 billion.

The shares will be offered at a fixed price of HK$21.33 apiece, according to Bloomberg.

Yang's holding company has agreed not to sell any further shares in Country Garden Services for 90 days after the transaction.

In the past six months, Country Garden Holdings had four share placements to raise a total of HK$15.43 billion to fill a hole created by cratering sales this year.

Country Garden Holdings planned to sell 1.78 billion shares at HK$2.70 per share, representing a nearly 15 percent discount from the stock's closing price a day earlier, according to the filing on December 7.

Source: AP

https://www.thestandard.com.hk/section- ... n-Services

[winston]

not vested

Takeaways from virtual conference

CGS’s FY22F net profit growth could be slower than management’s previous guidance due to weak VAS growth in 2H22F.

CGS was close to meeting its end-FY22F managed GFA target of c.900m sq m, thanks to the delivery from its sister company, as well as from M&A.

Management expects improvements in cash collection to lead to a higher operating cash flow to net profit ratio. Reiterate Add with a TP of HK$34.8.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 8F2EB35C06

[winston]

not vested

BREAKINGVIEWS-China property gets $650 mln vote of no confidence

13 Dec 2022

By Yawen Chen

Controlling shareholder YangHuiyan is cashing in a 7% stake in Country Garden's 2007.HKservices arm 6098.HK for the first time, even though she doesn't seem to need the money.

Yang offloaded the shares, worth about $650 million, at an 11% discount to their last closing price on Friday. That unnerved shareholders, who knocked 17% off the services unit's market value and deducted 5% from its affiliate's shares too.

The Industrial and Commercial Bank of China 601398.SS plans to extend it $300 million to help pay down offshore debt, Chinese media reported on Monday, on top of over 300 billion yuan ($43 billion) of credit pledged by banks, plus $618 million from a December share placement.

Country Garden Holding's bonds and shares have both rallied, with the latter up 25% in the last 30 days even after Yang's stake sale.

The real estate services unit, which provides security, landscaping and maintenance, has been relatively insulated, with revenue jumping 74% to around $2.8 billion in the first six months. That makes the sale's timing tricky to explain.

Country Garden Holdings has no direct ownership of the services company, so technically the funds wouldn't be funneled back to the developer even if it needed them.

Yang, who controls both entities, may have personal financial issues. Alternatively she may doubt Beijing's intervention, which has focused on completing pre-sold apartments, will significantly revive property sales and prices in the current economic context.

Neither is a good look for people seeking signs the real estate market has touched bottom.

Source: Reuters

[winston]

vested

The Board wishes to inform shareholders and potential investors of the Company that, based on the preliminary review of the unaudited consolidated management accounts of the Group for the twelve months ended 31 December 2022 and the information currently available to the Company, for the twelve months ended 31 December 2022, the unaudited consolidated revenue and core net profit attributable to the shareholders of the Company* are expected to record an increase by more than 40% and 5% respectively as compared to that for the corresponding period in 2021, while unaudited profit before tax, net profit for the period and net profit attributable to the shareholders of the Company are expected to decrease by approximately 34% to 40%, 45% to 51% and 51% to 57% respectively as compared to that for the corresponding period in 2021.

Such decrease was mainly attributable to the following factors:
(i) the Group took prevention and safety measures in response to the repeated COVID-19 pandemic in 2022, which resulted in additional pandemic prevention expenses;
(ii) some businesses and commercial activities of the Group were difficult to carry out normally
during the COVID-19 pandemic lockdown, which had a certain negative impact on the
revenue and profit;
(iii) impairment of goodwill and other intangible assets arising from some acquisition/merger companies of the Group.

http://iis.aastocks.com/20230303/10621680-0.PDF