CHINA MERCHANTS PROP OPERATION (001914.SZ): Weak shareholder return outlook and asset impairment risk overhang; downgrade to Sell

Research evidence excerpt

CHINA MERCHANTS PROP OPERATION (001914.SZ): Weak shareholder return outlook and asset impairment risk overhang; downgrade to Sell

Equity Research

21 July 2026 | 6:31PM CST

CHINA MERCHANTS PROP OPERATION (001914.SZ)

Weak shareholder return outlook and asset impairment risk overhang;

downgrade to Sell

We downgrade CMPO to Sell from Neutral given low visibility on both growth and Yi Wang, CFA

+86(21)2401-8930 |

improvement in shareholder return, alongside lingering IP write down risks: yi.wang@goldmansachs.cn

Goldman Sachs (China) Securities

Company Limited

n Shareholder returns appear to be less of a focus compared to the rest of Shi Xu

coverage PMs, with no indication of a plan to raise the dividend payout ratio +86(21)2401-8929 | shi.x.xu@goldmansachs.cn

beyond the current level of c.30%, placing CMPO’s dividend yield (3%) at the GoldmanCompany SachsLimited(China) Securities

lowest level for the coming three years among our coverage universe (average Kaiyan Jing

6-7%). +86(21)2411-8092kaiyan.jing@goldmansachs.cn|

n IP write down risks aggravating amid macro adversities, which could Company Limited

overshadow the company’s profitability stabilization. CMPO is the most

“asset-heavy” property manager among our coverage universe, with Rmb5.5bn

of investment properties sitting on its balance sheet, equivalent to 27% of

CMPO’s 1Q26 total assets. These assets, consisting of hotels, malls, offices,

apartments and leasable public buildings with aggregate GFA of over 0.6mn sqm,

have seen weakening occupancy rates (-2pp yoy in FY25) and rental income

generation (-4% yoy, vs. CMPO’s overall topline +12% in FY25). We expect

unfavorable rental reversion and occupancy pressure due to low consumer

confidence and macro headwinds, potentially leading to steeper fair value losses

(vs.