HK : Shimao Services - Parent’s health a drag on its valuation

Shimao Services reported a 51% yoy increase in core net profit in FY21 and intends to maintain a payout ratio of 30%. We expect slower 3P expansion due to the weak property market and for community VAS to continue to drive revenue at the expense of GPM. The tripled FY21 impairment provisions had little impact on its liquidity, given its high net cash position. Downgrade to Hold with a lower TP of HK$5.