Country Garden Services 6098

[winston]

vested

Country Garden Services shares slump in Hong Kong after profit warning

By Ronnie Harui

Country Garden Services Holdings Co.’s shares 6098, slumped Monday after the company issued a profit alert for 2022.

For 2022, Country Garden Services’ unaudited profit before tax, net profit and net profit attributable to shareholders are expected to fall by about 34%-40%, 45%-51% and 51%-57%, respectively, the residential property-management service provider said in a filing to the Hong Kong stock exchange late Friday.

The company also said its consolidated revenue and core net profit attributable to shareholders for 2022 are expected to rise by more than 40% and 5%, respectively.

Source: Market Watch

https://www.marketwatch.com/story/count ... eid=yhoof2

[winston]

vested

Country Garden Services (6098 HK)
Issues Profit Alert For 2022 - Results Below Expectation Due To Impairment Of Goodwill

CGS’ core attributable net profit is expected to grow 5% yoy, beating our expectation.

Attributable net profit is expected to decline by 51% to 57% yoy, below our expectation.

Impairment of goodwill and other intangible assets arising from M&A companies is the
major reason behind the underperformance.

We lower our 2022/23/24 forecast of attributable net profit by 61%/46%/43% respectively.

Cashflow is less affected. Maintain BUY with a lower target price of Rmb19.84.

Source: UOBKH

https://research.uobkayhian.com/content ... 97199c491f

[winston]

vested

CG SERVICES Annual Net Profit RMB1.943B, Down 51.8%; Final & Spec Div RMB37.21 Cents

CG SERVICES (06098.HK) announced annual result ended December 2022.

Turnover rose 43.4% year-on-year to RMB41.367 billion.

The net profit amounted to RMB1.943 billion, down 51.8%. EPS was RMB57.68 cents.

A total dividend of RMB37.21 cents was declared, including a final dividend of RMB14.4 cents and a special dividend of RMB22.81 cents.

Only a final dividend of RMB29.95 cents was declared in 2021.

Dividend History
Announce Date Event Particular
2022/08/24 Interim No Dividend
2022/03/29 Final D:RMB 0.2995(equivalent to HKD 0.3521)
2021/08/25 Interim No Dividend
2021/03/22 Final D:RMB 0.2187(equivalent to HKD 0.2658)

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... t-news/HK6

[winston]

vested

CG SERVICES Aims 2023 Rev. & Profit Growth Not Less than 10%, Sees GM Uptick

CG SERVICES (06098.HK)'s targeted revenue and profit growth for this year will not be less than 10%, said the CFO Huang Peng at the results teleconference, assuming the gross margin to bounce back this year, against the backdrop of higher epidemic expenses last year, cost input for extensive stalling businesses and slower refunds of some businesses.

Related News: CG SERVICES Annual Net Profit RMB1.943B, Down 51.8%; Final & Spec Div RMB37.21 Cents

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... t-news/HK6

[winston]

vested

CG Services (6098 HK)
2022: Results At High End Of Guidance; Special Dividend Came As Surprise

CGS’ attributable net profit was Rmb1,943m, decreasing 51.8% yoy, which is at the high
end of earnings guidance.

The special dividend of Rmb0.23/share came as a surprise.

CGS’ capability of market expansion remained strong in 2022; however, risks of receivables are still rising.

Management prudently targets low double-digit growth in 2023.

Maintain BUY with an unchanged target price of Rmb19.84.

Source: UOBKH

https://research.uobkayhian.com/content ... 287816eec7

[winston]

not vested

Take a breather on M&A

Country Garden Services’ FY22 results were disappointing with core profit down 49% yoy on significant impairment losses related to previous M&As.

Management said CGS is turning more cautious on M&As and will focus on improving organic growth and cost efficiency.

We estimate EPS growth of 10-15% p.a. over FY23-25F.

Maintain Add with lower TP of HK$18 (previously: HK$34.8) due to lower earnings growth. We remove CGS from our high conviction list.

FY22 core profit dropped 49% yoy

CGS’s FY22 core profit dropped 49% yoy to Rmb2,085m, mainly due to
1) Rmb1bn of amortisation of intangible assets,
2) Rmb2.4bn of impairment losses on goodwill and receivables,
3) poor performance of VAS to developers and
4) 6% pt decline in gross profit margin (GPM) to 24.8%.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 79AAE59D1B

[winston]

vested

Country Garden Services (6098 HK) - FY23 a reset after kitchen sinking year

Country Garden Services Holdings (CGS) is one of the market leaders in the property management services sector with a sizeable total contracted GFA of 1,602m square metres (sqm) (excluding its Three Supplies and Property Management segment), as at 31 Dec 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 compound annual growth rate (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, we do not expect management to meet its revenue targets given the still 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
Organic growth should drive revenue

CGS guided for more than 10% growth in managed GFA, revenue and core profit in FY23F, driven by organic growth and slight improvement in GPM.

CGS intends to be more cautious on M&As and to focus on organic growth and integration of existing projects. It also aims to reduce its reliance on CG.

It expects no equity financing and share disposals from major shareholders.

Management expects operating cashflow-to-core profit ratio to exceed 1x and no significant impairment losses in FY23F. Add with a TP of HK$18.0.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... A38F003B01

[winston]

vested

CG SERVICES: GM Reviving; Rev. Growth May be Snagged by Macro & Consumption Recovery

CG SERVICES (06098.HK)'s gross margins are reviving but have not returned to record highs, said the company's CFO cum Joint Company Secretary Huang Peng at the shareholder meeting.

Various comprehensive hidden costs led to additional investment last year, said Huang.

Despite an expected rebound this year, the company's revenue growth may be snagged by the overall macro and consumption recovery.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/analy ... 268913/all

[winston]

vested

CG Services – BUY

We maintain BUY on Country Garden Services (CGS) Holdings with a target price of HK$13.86.

The minister of MOHURD announced exploring the establishment of Housing Maintenance Fund (HMF) system on 26 June.

The Ningbo government recently announced the rules of HMF, mentioning that local governments will provide 50% subsidy for fully-funded account of HMF.

We think with more local governments offering subsidies, the HMF will grow at a faster-than-expected pace and will boost the demand of AEI works of aged residential communities.

Major property management companies have established properties maintenance services and are expected to be a major beneficiary.

Besides, with further weakening of sales recovery and China’s households on the verge of deleveraging, we think the is a rising possibility of the government further easing policies.

With the re-rating of PM companies, CGS will also be a key beneficiary as a leading POE.

Currently CGS is trading at 9.2x 2024F PE (close to 1.5SD below mean), and 4.1% 2024F dividend yield.

CGS targets a double-digit growth in revenue, and GFA expansion on track in 1H23, and expects lower risks of impairment loss on goodwill in 2023.

Share Price Catalyst
Event:
a) easing of demand-side industry policies;
b) faster-than-expected implementation of HMF.

Timeline: 3Q23-4Q23

Source: UOBKH