$碧桂园服务(06098)$ Country Garden Services Holdings Company
1H18 Result: A Strong Beat

morganstanley.com
Attractive
Price Target
HK$14.00
Net profit went up 133% YoY to Rmb471mn thanks to a significant margin improvement. Excluding the returned tax overprovision, net profit still grew by 104% YoY. 1H18 net profit (excl. tax return) is 68% of our full-year estimate, vs. 50% of 1H17/2017.
Property management: Revenue grew by 35% YoY; revenue-bearing GFA increased by 14mn sqm in 1H18, mainly from properties developed by CGH. The gross margin increased by 4.6ppt to 39%, despite rising labor costs.
Community value-added services (VAS): Revenue increased by 53%, while the gross margin further improved by 7.4ppt to 67%.
VAS to non-property owners revenue increased by 98% to Rmb276mn, thanks to strong contracted sales of CGH in 1H18, which reached Rmb412bn, +43% YoY.
The company didn't declare an interim dividend.
Stock implications: We think the result is a strong beat, thanks to margin improvement.