CR Mixc’s 1H24 revenue grew by 17.1% YoY to RMB7.96bn, below our estimation of c.20%. Property management segment (including VAS) revenue grew by 13.8% YoY, below our estimation of 23%, while commercial segment revenue grew by 23.4% YoY, higher than our estimation at <20%. Gross margin expanded by 0.8ppt to 34%, while we estimated 0.3ppt decline. Moreover, SG&A as % of revenue declined by 1.5ppts to 6.5%, while we expected the same level as last year. As such, core net profit grew by 24.2% YoY to RMB1.77bn, faster than the 16% growth we estimated. OCF/core net profit ratio increased by 17.9ppts to 89.6%. DPS increased by 25.1% YoY to RMB0.279. We trimmed our 2024-26E revenue while lifting our margin assumptions accordingly, and raised our 2024-26E core EPS by 4.5-4.9%, respectively. Our TP is also lifted by 4.6% to HK$49.12. We like CR Mixc’s unparalleled competitive advantage in the commercial segment, and the synergy between the different property types under its management. Maintain BUY rating on the stock.
Key Factors for Rating
Revenue from commercial management business grew by 23.4% YoY, while the segment’s gross margin expanded by 2.4ppts to 60.9%. Retail sales increased by 19.7% YoY (SSSG: 7.6%). Retail sales of luxury malls increased by 9.6% YoY (SSSG: 4.0%), while that of non-luxury malls increased by 26.7% YoY (SSSG: 10.0%). 7 new shopping malls were opened during 1H24, among which 4 were parent company projects and 3 were third-party projects, adding the number of parent and third-party projects in operation to 82 and 26, respectively. At the same time, 7 new third-party projects were signed during 1H24, increasing the total number of signed third-party projects to 46.
For property management segment, newly added third-party GFA amounted to 24.3m sqm in 1H24, down 13.8% YoY. 88.1% of the new GFA are urban public spaces, while 7.9% are residential. Total contracted GFA and managed GFA increased by 4.9% and 7.5% YoY during 1H24 to 446m and 398m sqm, respectively. By end-1H24, third party projects accounted for 60.2% and 61.9% of contracted and managed GFA, respectively.
Revenue of community VAS grew 25.6% YoY, faster than basic property management’s 15.3% YoY growth. Through “cultivating capabilities + integrating resources + external supply” strategy, revenue from butler on call (一呼管家) and CR select (润物直购) surged by 57.5% and 49.6% YoY, respectively. Affected by property market, revenue from leasing and sale edged up by only 0.3% YoY while one-stop decoration revenue grew by 19.3% YoY.
Key Risks for Rating
Consumption growth may slow down amid economic challenges.
Valuation
Our TP is derived from 25x 2025E P/E. The stock currently trades at 12.2x 2025E P/E, which we think is undemanding, given 15-20% earnings growth for 2024- 25E, and CR Mixc’s unparalleled competitiveness in the commercial segment.