Binjing Service has released its 1H26 results, reporting revenue of RMB2.3bn (+13% YoY) and attributable net profit of RMB320mn (+6% YoY). Profit growth slightly trailed our full-year forecast (+10% YoY) in our previous report, mainly due to margin pressure. Maintain BUY, considering: 1) the basic property management segment sustained rapid growth in both revenue and GFA under management; 2) service quality drove strong collection rates and market expansion; and 3) the dividend yield remains compelling.
Robust growth in basic property mgmt. rev. & GFA under mgmt.
In 1H26, the company maintained double-digit YoY revenue growth. Basic property management revenue rose 21% YoY to RMB1.4bn, driven by a 23% YoY expansion in GFA under management to 92.68mn sqm. However, 5S value-added services growth continued to decelerate, with revenue flat YoY at RMB660mn, reflecting a slight YoY decline in home renovation (Youju) revenue. Attributable net profit growth lagged revenue growth as gross margins contracted across all business lines. The basic property management segment saw gross margin decline 1.2pp YoY to 17.0%, weighed down by rising labor costs and higher quality-related spending. Non-owner value-added/5S value-added services saw gross margins fall 2.8pp/1.5pp YoY to 31.9%/24.6%, affected by the property market downturn and brokerage business volatility. For the full year, we expect revenue and profit trends to remain broadly like the 1H26 performance.
Earnings forecasts and valuation
Given that 5S value-added services contract liabilities had already begun to decline from end-2025 levels in 1H26, we lower our home renovation revenue forecasts. We also trim our value-added services gross margin assumptions, reflecting the segment's profitability trends. As a result, we revise our 2026/2027/2028 attributable net profit to RMB630/674/724mn (previous: RMB654/720/793mn, down 4/6/9%), implying EPS of RMB2.28/2.44/2.62. The peer average 2026E PE is 9x (Wind consensus). Factoring in the company's service quality edge and high dividend attributes, we believe a 2026E PE of 12x is justified, yielding a target price of HKD31.64 (previous: HKD32.24, based on 12x 2026E PE).
Risks: weaker 5S value-added services than we expect, reduced support from affiliated developers, and downside risk to market expansion scale and profitability.