PDF《BUY》

2778 Free float 42% Sources: Bloomberg, Company data -40 -20

0 20

40 60

80 Sep/16 Jan/17 May/17 Aug/17 (%)

2869 HSI Index Friday, September 29,

2017 To access our research reports on the Bloomberg terminal, type CMHK

2 Focus charts Figure 1: 31% earnings CAGR in 16-19E (from a higher base)… Figure 2: …driven by 27% 16-19E CAGR in managed GFA &

prop management revenue… Sources: Company data, CMS(HK) estimates Sources: Bloomberg, CMS(HK) estimates Figure 3: …and growing contributions from value-added services… Figure 4: …with an improving GP margin Sources: Company data, CMS(HK) estimates Sources: CMS(HK) estimates Figure 5: Greentown Service'

s earnings CAGR vs peers, 2017E-2019E Figure 6: Re-rating is set to continue *Colour Life (1778.HK, N-R) and COPH (2669.HK, N-R) data are from Bloomberg Consensus Sources: Bloomberg, CMS(HK) estimates *industry peers'

P/E includes Colour Life (1778.HK, N-R) and COPH (2669.HK, N-R) Sources: Company data, Bloomberg, CMS (HK) Friday, September 29,

2017 To access our research reports on the Bloomberg terminal, type CMHK

3 Industry overview Market size to grow +19% in

4 years The core property management services in China involve provision of security, cleaning, gardening and repair &

maintenance services. There were 34.4bn sqm completed property inventory as at the end of

2016 according to our estimates, based on living space per capita in China in

1999 plus total residential GFA completed since 2000. Among the 34.4bn sqm property inventory, 18.5bn sqm (54% of the total inventory) have proper property management services according to China Index Academy statistics (excluding those governmental housings, vacant housings and properties without management). We expect the total GFA with property management to grow +19% in next

4 years from 18.5bn sqm to 22.0bn sqm in 2020E (see figure 7), based on the following assumptions: ? 2017E: residential GFA completion to grow +3% YoY (YTD 8M17 +2.6% YoY) ? 2018E-2019E: residential GFA completion to accelerate to +8%/ +8% YoY, factoring in 1) the pick-up in construction new start in 2013-2014, and 2) the increase in delivery of fitted units from bare-shell previously (the time period between new construction starts and completion for bare-shell units is generally 3-3.5 years, and 3.5-4.5 years for fitted units) ? 2020E: residential GFA completion to slow down to flat YoY, factoring in the slowed construction activities in 2014-15 Figure 7: New start GFA &

completed GFA &

managed GFA forecast New start GFA (mn sqm) YoY Completed GFA (mn sqm) YoY Completed residential GFA with prop mgt (mn sqm) YoY

1999 180

162 2000

233 29%

189 17%

2001 293 26%

225 19%

2002 342 17%

266 18%

2003 437 28%

322 21%

2004 479 10%

347 8%

2005 540 13%

400 15%

2006 636 18%

432 8%

2007 781 23%

478 10%

2008 799 2%

477 0%

2009 925 16%

596 25% 11,700

2010 1,295 40%

612 3% 12,400 6.0%

2011 1,460 13%

717 17% 13,400 8.1%

2012 1,307 -11%

790 10% 14,400 7.5%

2013 1,458 12%

787 0% 15,400 6.9%

2014 1,249 -14%

809 3% 16,400 6.5%

2015 1,067 -15%

738 -9% 17,500 6.7%

2016 1,159 9%

772 5% 18,500 5.7% 2017E

795 3% 19,295 4.3% 2018E

859 8% 20,154 4.4% 2019E

927 8% 21,081 4.6% 2020E

927 0% 22,008 4.4% Source: Wind, China Index Academy, CMS (HK) estimates Friday, September 29,

2017 To access our research reports on the Bloomberg terminal, type CMHK

4 Key industry players According to China Index Academy, there are over 1,000 property management companies in China. But the market is undergoing consolidation, market share of top