HSBC Research Favors CHINA RES MIXC; Property Management Companies Encounter Cash Flow Issues

HSBC Global Research Report on Property Managers

• Preference for CHINA RES MIXC: HSBC Global Research has rated CHINA RES MIXC (01209.HK) as a "Buy," reflecting a positive outlook with a stock increase of +1.340 (+3.583%). The company has also seen significant short selling activity amounting to $29.51 million, with a short selling ratio of 20.104%.

• Adjustments for Other Companies: The report indicates that forecasts and target prices for A-LIVING (03319.HK), CG SERVICES (06098.HK), and SHIMAO SERVICES (00873.HK) have been revised downwards due to slowed growth. A-LIVING's stock rose by +0.070 (+2.333%), while CG SERVICES increased by +0.020 (+0.309%). In contrast, SHIMAO SERVICES saw a decline of -0.020 (-2.597%).

Financial Performance Insights

• Impact of 1H25 Results: Following the release of their 1H25 results, A-LIVING's stock price has faced downward pressure attributed to increased cash flow challenges. This has raised concerns about the company's ability to maintain stable recurring income, which is crucial for property managers.

• Risks Facing Property Managers: The report highlights that all property managers are encountering rising accounts receivable risks. Additionally, the deteriorating quality of housing over the past decade is becoming increasingly apparent, creating challenges for property managers in maintaining resident satisfaction while managing costs effectively.

Market Context

• Dividend Visibility Importance: The broker emphasizes that stable recurring income and clear dividend visibility are essential for the stock prices of property management companies. However, the recent financial disclosures have shown a decline in these advantages, particularly for A-LIVING.

• Short Selling Data: The short selling data as of August 29, 2025, indicates significant market activity, with A-LIVING, CG SERVICES, and SHIMAO SERVICES all experiencing varying levels of short selling, reflecting investor sentiment and market conditions.