S-Enjoy Service Group (1755) H1 2024 earnings summary

Executive summary

• Revenue for 1H24 reached RMB2,770.4 million, up 3.3% year-over-year, mainly driven by property management services growth.

• Net profit attributable to owners was RMB301.6 million, a 2.7% increase year-over-year, with net profit margin at 12.0%.

• Property management services revenue grew 12.6% year-over-year, while community-related and developer-related value-added services declined 8.8% and 22.3%, respectively.

• Operating cash inflow improved to RMB20.6 million in 1H24 (vs RMB6.6 million in 1H23).

• Strategic shift underway toward existing residential markets and recurring community services, with a focus on profitability and professionalization.

Financial highlights

• Property management services revenue reached RMB1,907.9 million (+12.6% YoY), accounting for 68.9% of total revenue.

• Community-related value-added services revenue declined to RMB645.9 million (-8.8% YoY), with recurring services now 84.9% of segment revenue.

• Developer-related value-added services revenue dropped to RMB216.6 million (-22.3% YoY).

• Gross profit increased 5.0% to RMB753.2 million; gross margin rose to 27.2% (+0.4 ppt YoY).

• Cash and cash equivalents rose to RMB2,107.3 million as of June 2024, up from RMB1,930 million at end-2023.

Outlook and guidance

• Strategic focus is shifting from new construction projects to the existing residential market due to reduced opportunities and increased uncertainty in new builds.

• Emphasis on profitability and self-sustaining business units, with priority on perpetual business lines and recurring community value-added services.

• Ongoing adjustments to business processes and talent pipeline to enhance recurring service profitability.