Steady core business and ample resources! Country Garden Services expects continuous revenue growth by 2025, with cash on hand not less than 17.7 billion yuan.

Country Garden Services Holdings Limited released its 2025 earnings forecast on February 27, showing that although net profit is under short-term pressure due to strategic adjustments, the core business fundamentals remain stable, cash flow stays healthy, and shareholder returns are increasing, demonstrating the effectiveness of its “proactive shift” strategy.

Steady Revenue Growth and Resilient Core Business

In 2025, Country Garden Services proactively adjusted some of its business segments, but its core operations remain robust, showing strong resilience. The company expects to record approximately RMB 48.2 billion to RMB 48.5 billion in unaudited consolidated revenue in 2025, a year-over-year increase of 9.6% to 10.2%. This growth is mainly driven by steady increases in property management services, community value-added services, and the “Three Supplies and One Industry” business. This upward trend strongly confirms the company’s market competitiveness.

The announcement states that the group focuses on improving customer satisfaction, enhances detailed management and investment at the project level, and digitizes operations to reduce costs and improve efficiency, keeping the core business fundamentals stable. In 2025, the company’s unaudited gross profit is expected to be about RMB 8.2 billion to RMB 8.7 billion, roughly flat year-over-year.

In recent years, downward pressure in the real estate sector has transmitted to the property management industry, with some companies overly reliant on related real estate firms for funding, leading to a high proportion of related-party revenue and dragging down overall gross margins. However, according to recent financial reports, the proportion of related-party income in Country Garden Services has continued to decline, remaining at 1.1% in the first half of 2025, ahead of leading property management companies. CMB International Research believes that the company’s third-party revenue proportion is industry-leading, with diversified business income and less dependence on related parties, helping to mitigate gross margin decline.

Short-term Profit Pressure as Part of Strategic “Proactive Shift”

According to the announcement, due to the prolonged receivables cycle from some clients of its non-wholly owned subsidiary, Country Garden ManGuo Environmental Technology Group Co., Ltd., operating cash flow has not improved significantly. The group has proactively adjusted its business strategy, strategically downsized related operations, and fully impaired the remaining goodwill of ManGuo, with an impairment of about RMB 968.9 million.

Affected by the goodwill impairment of ManGuo and the company’s proactive cleanup of long-aged trade receivables, Country Garden Services expects its unaudited net profit for 2025 to be approximately RMB 450 million to RMB 650 million; attributable net profit to shareholders is estimated at RMB 500 million to RMB 700 million.

However, the announcement also notes that the goodwill impairment of ManGuo will not be included in the core net profit attributable to shareholders of Country Garden Services, and goodwill impairment is a non-cash item, which does not directly impact the company’s cash flow or operations. The company’s unaudited core net profit attributable to shareholders remains around RMB 2.4 billion to RMB 2.7 billion.

Market analysts believe that the short-term pressure on net profit is part of a strategic “proactive shift.” The company is currently in an “active optimization period,” with short-term profit pressures but significantly enhanced long-term competitiveness. Revenue and cash flow indicators show business resilience, and high dividend payout and buyback strategies help reinforce shareholder confidence. If the strategy is executed smoothly, net profit growth is expected to turn positive again.

Healthy and Ample Cash Flow Recognized by Investors

Cash flow is the “lifeline” of the property management industry. In recent years, property companies have faced cash flow pressures due to extended receivables cycles from related-party projects and difficulties in collecting property fees. Against this backdrop, Country Garden Services has maintained healthy and sufficient cash flow. The company estimates that its unaudited net cash from operating activities in 2025 will be no less than RMB 2.4 billion; by December 31, 2025, its unaudited bank deposits (including cash and cash equivalents, time deposits, restricted bank deposits) and structured deposits are expected to total no less than RMB 17.7 billion. Steady net operating cash flow and ample cash reserves enhance risk resistance, providing a solid foundation for navigating cycles, and underpin share buybacks and high dividends.

The board of directors expects that, in line with the group’s dividend policy, the dividend payout for 2025 will be based on 60% of its core net profit attributable to shareholders. To further protect shareholder interests and demonstrate the company’s long-term investment value, the board proposes a dividend payout for 2026 of no less than RMB 1.5 billion in cash. Additionally, between March 28, 2025, and the announcement date, Country Garden Services has repurchased no less than RMB 500 million worth of its shares on the open market, totaling 87,996,000 shares. The combination of high dividends and share repurchases not only directly enhances shareholder returns but also reflects management’s confidence in the company’s intrinsic value and future prospects, receiving positive investor response.

Morgan Stanley Securities issued a research report in January stating that Country Garden Services has tactical upside potential, with advantages including strong cash flow, increased shareholder returns, and an approximate 8% yield. Institutions like CICC also believe that the company’s shareholder returns are attractive.

Related companies: Country Garden Services HK06098, Country Garden HK02007