1H26 Preview: DP margin weakness persists despite IP growth and on-track deleveraging; Neutral

研报英文原文证据摘录

1H26 Preview: DP margin weakness persists despite IP growth and on-track deleveraging; Neutral

Goldman Sachs Longfor Group (0960.HK)

n Our view on 1H26: we expect minor core net loss in 1H26, reflecting (-)

double-digit DP topline contraction yoy, aligning with the broader industry trend

and approx. 2pp-3pp yoy DP GPM decline from FY25 level given continued property

price weakness of vintage inventories, especially those located outside top-tier

cities, which might be largely buffered by (+) LSD% topline and profit growth of

non-DP segments, mainly supported by mall income ramp-up, though we expect

growth of long-term rental apartment and property service legs might be

overshadowed by macro adversities and intensified scale expansion competition.

Furthermore, we expect the company’s debt reduction pace to be on track of

achieving Rmb10bn p.a. in 26E-28E (vs. Rmb20bn achieved in average 23A-25A),

with N-T repayment needs (Rmb2.3bn scheduled for rest of 2026E) likely well

covered by rental-supported OCF.

n Keys to watch next: 1) For upcoming 1H26 earnings - management guidance on

potential inventory impairment and profitability impacts, rental income growth

strength, net profit inflection timeline, etc. 2) the progress of vintage inventory

clearance through ordinary project sell-throughs, and rezoning or swapping of

acquired lands with government, and whether land acquisition would resume to

replenish landbank with higher-quality, better margin plots to drive future contract

sales recovery. 3) social retail sales trends and whether Longfor’s GMV could

continuously outperform that and lead to rental growth upside. 4) debt reduction

and restructuring pace (e.g. swapping high-interest financing with low-cost IP