CR Mixc’s 1H25 revenue grew 6.5% YoY to RMB8.5bn, in line with our estimation. Among segments, both developer VAS and community VAS revenues dropped over 30% YoY, while basic property management revenue grew faster than expected. Commercial segment revenue grew 14.6% YoY, in line with our estimation. Gross margin expanded by 3.1ppts to 37.1%, exceeding our estimation of 0.7ppt expansion. Gross margins of community VAS and shopping mall expanded significantly, while that of developer VAS dropped significantly. Gross profit grew 16.3% YoY, exceeding our estimation, which was partially offset by a 66.5% YoY decline in interest income.
　　As such, core net profit grew by 15% YoY to RMB2bn, slower than the 17.7% YoY we estimated. We cut our 2025-27E EPS by 5.2-8.2%, mainly due to guide down in revenue growth to below 10% YoY for 2025E, as well as the sharp decline in interest income, and cut our TP by 6.5% to HK$42.91. Interim DPS surged by 89.6% to RMB0.529. Together with special dividend of RMB0.352/share, payout ratio reaches 100% of interim core earnings. We like CR Mixc’s strong position in the commercial segment and its high gross margin. Maintain BUY rating.
　　Key Factors for Rating
　　Commercial segment continued to record encouraging growth, with shopping mall revenue surging by 30% YoY in 1H25. Retail sales grew by 21.1% YoY with SSSG at 9.7%. Despite pressure in the luxury segment, retail sales of luxury malls grew 13.2% YoY (SSSG: 9.6%). Retail sales of non-luxury malls increased by 26.4% YoY (SSSG: 9.8%). Number of malls in operation increased by 3 during 1H25 to 125, among which 94 were parent company malls and 31 were third- party ones. In 1H25, CR Mixc obtained 6 malls through third-party expansion.
　　Total reserve mall reached 75, among which 35 were parent malls and 40 were third-party malls.
　　Under the property management segment, CR Mixc added 14.32m sqm contracted area in 1H25 through third-party expansion, among which 71.2% was public projects, 21.1% was residential projects while 7.7% was office spaces. Total contracted GFA increased from end-2024’s 450.5m sqm to 452.1m sqm, while total GFA under management increased from end-2024’s 413.1m sqm to 420.5m sqm.
　　Key Risks for Rating
　　Cash collection may face pressure under adverse economic environment.
　　Valuation
　　Our TP is derived with 23x 2025E P/E. The stock currently trades at 20.1x 2025E P/E and offers 4.7% 2025E dividend yield, which we think is undemanding, given its unique competitiveness in the commercial segment, and industry leading gross margin.