The analyst rating from Morgan Stanley is influenced by several factors outlined in the report. Despite the challenges faced by Chinese property managers, such as weakening collections and rising vacancy fees, the firm expects modest earnings growth in the industry for 2025-27 (3%/5%/7% YoY) and revenue growth of about 5%. However, profit margins are anticipated to be under pressure due to these weakening collections.
Morgan Stanley recommends focusing on high-quality companies with a solid asset base, which is reflected in their Overweight ratings for CHINA RES MIXC and GREENTOWN SER, despite a slight reduction in the target price for the latter. They also consider CG SERVICES as a tactical choice, rating it as Equalweight while increasing its target price. Overall, the ratings are based on the expectation that property management services will be the main growth driver in the industry, even as value-added services remain sluggish.
