CICC expects the company's net income attributable to shareholders to increase by 11% and 10% respectively in 2024 and 2025.
Zhongtong Finance APP has learned that CICC released a research report stating that it maintains a "outperform industry" rating for Wing Shun Services (01995), expecting the company's net income attributable to shareholders to increase by 11% and 10% respectively in 2024 and 2025, raising the target price by 33% to 2.2 Hong Kong dollars, mainly considering the potential attractiveness of the dividend yield. The company's 1H24 performance slightly exceeded market expectations, with a proposed interim dividend of 0.12 Hong Kong dollars per share, increasing the dividend payout ratio to 70% (of which ordinary dividends account for 50% and special dividends account for 20%, compared to a 30% dividend payout ratio in 1H23). The scale of external expansion is expanding against the trend, and value-added services are under pressure in the face of environmental pressures. Operating efficiency has improved, and accounts receivable and cash flow performance have been steady.
The report states that Wing Shun adheres to its "two-five plan" and attaches importance to shareholder returns. The company is committed to achieving a compound annual growth rate of double-digit income and profit during the "two-five period", with net income covering around 1 times the operating net cash flow. The bank expects that with the company's continuous improvement in corporate governance, business model adjustment, and the continuous improvement of receivables from related parties, the company and its business are expected to maintain steady expansion in the future. The company also places greater emphasis on shareholder returns, raising the dividend payout ratio to 50% in 2023, and further increasing it to 70% in the first half of 2024 (with ordinary dividends at 50% and special dividends at 20%). The company's target dividend payout ratio for the next three years is not less than 50%; between November 2023 and July 2024, the company also repurchased a total of 20.67 million shares, accounting for 1.2% of the total share capital.
