We maintain "Buy" rating and trim TP to HK$9.40. We forecast Greentown Management’s 2024F-2026F EPS to be RMB0.615, RMB0.773 and RMB0.950, respectively, which represents a CAGR of 24.1% during 2023-2026F. We trim our TP to HK$9.40, which implies 14.0x 2024F PER. We maintain our "Buy" rating.
　　Strong 2023 results; and positive surprise on 100% dividend payout ratio. The Company delivered strong 2023 results, with total revenue growth at 24.3% YoY and earnings growth at 30.8% YoY, amid the property downturn cycle. Thanks to its strong earnings growth and cash inflow, the management declared a 100% dividend payout ratio for the financial year of 2023 (80% as final dividend and 20% as special dividend). We believe the high dividend payout ratio brought a positive surprise to the market. Moreover, the management guided that the dividend payout ratio should be stable at above 80% for the next few years.
　　High growth secured by strong contracted GFA expansion. According to the Company's disclosure, Greentown Management achieved newly contracted GFA of 35.28 mn sq.m. in 2023, up by 25.0% YoY. In terms of the project management fee of these newly contracted projects, the total amount reached RMB10.37 bn in 2023, up by 20.5% YoY. Considering that the Company has total unrecognized management fee of over RMB25 bn by the end of 2023, hence, we expect visible growth in the Company's earnings for the next few years.
　　Project management is still a fast-growing industry. We believe that the project management business is a blue ocean market, which is gradually being confirmed. According to the Yihan Zhiku (亿瀚智 库), the newly-contracted GFA for project management in 2023 has reached nearly 170 mn sq.m., increasing by 53.0% YoY.
　　Catalysts: 1) Large newly acquired contracted GFA from urban investment enterprises, AMCs and financial institutions; and 2) improvement in profitability due to economies of scale.
　　Downside risks: 1) Lower-than-expected market penetration rate; 2) slower-than-expected GFA delivery from distressed projects; and 3) default risk from project owners.