Bank of America Securities: Upgrading Greentown Services (02869) to a “neutral” target price to HK$3.5

The Zhitong Finance App learned that Bank of America Securities released a research report stating that Greentown Services (02869) can achieve a 10% increase in core operating profit or net profit from 2025 to 2026, raising the profit forecast for this year and next by 5% to 8%. The company's current stock price is 13 times the predicted price-earnings ratio for this year, plus a dividend rate of 4.7%. The valuation is reasonable, but it is not attractive compared to other higher-valued state-owned enterprise peers. The bank upgraded its rating from “outperforming the market” to “neutral” and raised the target price from HK$3.2 to HK$3.5.

According to the report, Greentown Services' core operating profit and net profit increased 26% and 21% year-on-year respectively in the first half of the year, both better than the forecast. Management raised this year's core operating profit growth target from 15% to 20%. The goal is to increase gross margin by 0.5 percentage points this year, while reducing the cost ratio of sales and administrative expenses by 0.6 percent. The dividend ratio will not be less than 50% of profit. If there is significant impairment or provision is required, management will consider paying special interest to cover it, and share repurchases will continue. Management's target fee collection rate will increase by 1 percentage point this year, and accounts receivable growth should be less than revenue growth.