Summary of Key Highlights
In the first half of 2026, Yuexiu Services experienced a decline in both revenue (RMB 1.915 billion, down 2.4%) and profit (RMB 224 million, down 6.6%). However, its core property management business showed a counter-trend growth. The company proactively withdrew from 5.04 million square meters of inefficient projects to minimize losses, while still achieving growth in its management scale (contracted area increased by 5.6% and managed area increased by 8.6%). The majority of new contracts (68%) came from non-residential sectors, and in the future, it plans to focus on this area, investing RMB 4.9 billion in non-residential projects and proceeding with acquisitions and mergers cautiously.
I. Performance: Overall Decline, but Stable Foundation with Structural Changes
Yuexiu Services' overall performance declined in the first half of the year, but there were clear distinctions within its business segments:
- Core Property Management (daily management of residential communities): Revenue was RMB 840 million, up 17% year-on-year, and its proportion of total revenue increased from 36% to 44%. This segment represents a stable demand, as services such as security, cleaning, and maintenance are essential and must be provided by the company.
- Non-Owner Value Addition Services (supporting developers): Revenue was RMB 330 million, up 3.8%. These services, such as pre-project management and sales support, fluctuate less as they are tied to the developers' business activities.
- Community Value Addition Services (additional income from residents): Revenue was RMB 559 million, down 27%. This decline was mainly due to the completion of previously signed renovation contracts, with no new major projects in this area (such as renovations or community shopping events, which are not mandatory services for residents).
Management explained that this aligns with industry trends: property management is a livelihood-related industry, and it is difficult to increase property management fees (due to long adjustment cycles and residents' reluctance to pay). However, costs for labor and energy continue to rise, squeezing overall profits.
II. Proactive Withdrawal from Inefficient Projects: A Rational Step in the Industry
In the first half of the year, Yuexiu Services voluntarily withdrew from 5.04 million square meters of contracted areas, doubling the number of withdrawals from the previous year. Eighty percent of these withdrawals were due to operational losses or residents' long-term non-payment.
- Reasons for withdrawal: Many companies in the industry previously took on projects at low prices to expand their scale (e.g., with low property management fees and high costs), resulting in continuous losses or resident dissatisfaction and non-payment. Proactive withdrawal serves as a way to stop losses and focus on profitable projects.
- Selection of projects for withdrawal: Only projects that cannot be improved in the long term were chosen for withdrawal, ensuring that the overall management scale remains stable. New projects are carefully selected to ensure profitability and high payment rates from residents.
Management stated that this is a necessary step in the industry's return to rationality, shifting from a focus on scale to quality.
III. Growth in Management Scale: Non-Residential Business Becomes a New Driver
Despite withdrawing from inefficient projects, Yuexiu Services' management scale increased:
- As of June, the contracted area was 95.02 million square meters (up 5.6%), and the managed area was 79.82 million square meters (up 8.6%). New contracts totaled 10.42 million square meters, a 70% increase year-on-year, with 84% coming from market expansion (not provided by the parent company, Yuexiu Real Estate). The new contracts were mainly in non-residential sectors, such as TOD (Mixed-use Development), government office buildings, industrial parks, and commercial complexes.
- Notable projects included the Xiakewan Cultural and Tourism Project in Wuxi (over one million square meters), China Unicom's Guangdong headquarters, the Guangzhou-Shenzhen Intercity Railway, and the Guangzhou Business Center. The company also expanded into three core cities: Beijing, Chengdu, and Xi'an.
- Attractiveness of non-residential projects: These projects (e.g., government office buildings and railways) are funded by enterprises or the government, providing more stable revenue and higher profit margins, making them the new "foundation" of the industry.
IV. Future Directions: Focusing on Non-Residential Business and Cautious Acquisitions
With RMB 4.9 billion in cash, Yuexiu Services plans to focus on two main areas:
1. All-in on non-residential sectors: Invest in non-residential projects to maintain service quality and customer satisfaction.
2. Cautious acquisitions and mergers: The company will not blindly acquire companies but will focus on three key areas:
- Niche sectors: Commercial offices, government buildings, and major transportation infrastructure (railways, airports), which are Yuexiu's strong areas.
- New services: Smart home technologies (e.g., intelligent access control for residential communities) and energy management (helping customers save energy).
- Target selection: Acquisitions must be profitable, financially transparent, and have reasonable valuations. Safety and synergies (e.g., complementary services with existing businesses) are more important than scale.
In summary, Yuexiu Services' strategy is to reduce unprofitable activities, focus on profitable non-residential projects, and only acquire reliable companies.
Conclusion
Yuexiu Services' semi-annual report reflects the current state of the property management industry, which is shifting from a focus on scale to quality. For residents, this means that property management services are likely to improve in quality to retain profitable projects. For the industry, it represents a transition from rapid growth to rational development.