Summary: The situation of project withdrawals in residential property management remains severe, primarily influenced by factors such as high vacancy rates or low owner payment rates. The majority of these exits are proactive decisions made to "cut losses." (Reporting period: April 28, 2026 - May 25, 2026)

Market Overview Policy focuses on dispute resolution and regulatory standards, promoting the construction of new smart service models. During this period, policies in the property services sector addressed industry pain points by establishing regulatory systems and dispute resolution mechanisms, thereby strengthening normative constraints on service quality and owner rights protection. Concurrently, policies guided the industry to adopt intelligent technologies and create a new model of "smart equipment + community management," aiming to propel the sector to become a crucial support for smart communities and public services. On May 11, the Shanghai Municipal Government held an executive meeting and approved in principle the "Implementation Opinions on Promoting Quality and Efficiency Improvement in Shanghai's Property Industry." The document noted the industry's essential shift from "management" to "service" and emphasized the need for continuous efforts to enhance quality and efficiency. It highlighted a people-oriented approach to solve community governance challenges. Specialized rectification actions in the property sector continued, focusing on issues such as service quality not matching price, encroachment on public owner revenues, non-standard use of maintenance funds, and inadequate upkeep of shared facilities. For instance, Zunyi City conducted rigorous special campaigns on these issues. Since 2026, the city's property service sector rectification identified 293 major problems, with 284 rectified, achieving a 96.93% completion rate. It accomplished 223 tangible projects for residents, improved 20 systems, recovered funds totaling 3.537 million yuan, and held 31 individuals accountable. Simultaneously, to deepen the integration of artificial intelligence with urban management and enhance the intelligence level of urban operation management services, the Qingdao Urban Management Bureau issued the "Qingdao City Management Sector 'AI+' Social Governance Action Plan (2026-2028)." The plan aims to promote the application of smart terminals by 2027, deploying over 100 intelligent connected sanitation vehicles, cleaning robots, unmanned inspection vehicles, and patrol robots in areas such as municipal roads, residential communities, parks, and squares. It also proposes prioritizing the promotion of unmanned cleaning, garage floor washing, community delivery, and smart security patrol services in qualified residential areas. By establishing the "smart equipment + community management" model, the goal is to achieve cost reduction, efficiency improvement, safety upgrades, and comprehensively enhance the refinement of property management as well as residents' sense of security and satisfaction.

Corporate Operations Market expansion activity cooled during the period, and the withdrawal situation in the residential segment remains severe. During this period, the market expansion enthusiasm of sample property enterprises declined compared to the previous reporting period. Most enterprises focused on entering previously secured projects, with an overall decrease in the number of newly won or contracted projects. By sector, residential projects still constituted a high proportion of new expansions, but the period also saw a minor peak in withdrawals. Meanwhile, the trend of diversification continued, with new projects widely covering public facilities, urban services, commercial offices, retail, cultural tourism, and industrial parks. Notably, new projects geographically involved not only mainland China and Hong Kong but also overseas markets, where companies exported smart cleaning operation systems. On May 15, Dongyuan Renzhi Services announced its smart cleaning solutions had been implemented in several benchmark projects in Indonesia, including Poins Mall and South Quarter Office in Jakarta. The former is a core regional shopping center catering to local consumption and lifestyle needs, while the latter is a benchmark Grade A office building housing numerous multinational corporations and Fortune 500 companies. Focusing on main sectors: In residential property, the withdrawal situation remains severe due to high vacancy rates or low owner payment rates. Proactive exits aimed at "cutting losses" constitute the vast majority, while forced exits due to non-renewal of contracts are relatively rare. Overall, the concentrated withdrawals represent an active structural adjustment as the industry shifts from "scale expansion" to "quality and efficiency priority." This reflects a strategic pivot by companies to strictly control losses and focus on high-quality assets, also accelerating the industry's return to the essence of service and a track of healthy market competition. In commercial property, services are transitioning towards a full-trusteeship + deep co-creation model. By taking over overall project operation rights, companies are deeply integrating and systematically renovating core areas such as quality renewal, low-carbon management, and digital energy efficiency with property owners. On April 30, Wanwu Lianghang officially entered Lalaport Shanghai Jinqiao, focusing on two dimensions for new service upgrades: first, comprehensive enhancement of environmental facilities, aligning with sustainable development goals and international commercial standards to improve restrooms, nursing rooms, waste rooms, and waste disposal for a leap in environmental quality; second, redesigning arrival experience routes, with the service team prioritizing optimization of parking flow planning and non-motor vehicle route management to handle large passenger flows during weekends and holidays. In office property, services are undergoing a deep transformation from basic property management to full lifecycle asset operation management. Companies are increasingly involved in the renovation and operation of existing assets, emphasizing customized, refined service solutions and smart property management technologies to assist owners in achieving asset renewal and long-term value appreciation. During this period, Savills was formally appointed to provide full-trusteeship property management services for two Chengdu projects: the Midtown Plaza, a CBD landmark in Jinjiang District, and Tower 2 of the Jiaozifin Financial Plaza, a core project in the Financial City CBD of the High-tech Zone. In industrial park property, Yashili Group secured projects by targeting advanced manufacturing as a core engine, establishing key service footholds in high-energy industrial development zones. Leveraging mature facility management systems and standardized operation and maintenance processes, the company is committed to creating efficient and comfortable office environments to enhance corporate operational efficiency. In the public facilities property sector, expansion in sub-sectors like ports, schools, hospitals, and scenic spots maintained high activity, showing a clear trend of focus and deep cultivation. It is reported that in April, COLI Property Services successively entered four major Hong Kong immigration port projects, involving the China Ferry Terminal, Hong Kong-Macau Ferry Terminal, Hong Kong West Kowloon High-Speed Rail Station, and the Hong Kong Port of the Hong Kong-Zhuhai-Macao Bridge, providing professional security and health monitoring services for these projects. In urban sanitation services, Greenmei Chuangcheng, an environmental sanitation company under automaker Chery, won the bid on May 12 for the integrated urban-rural sanitation service procurement project in Gaozhou City, Guangdong Province. The contract value is approximately 337 million yuan, with a service period of three years.

Financial Performance Revenue and profit divergence among leading sanitation firms; property company operating cash flow declined in Q1. By the end of April, listed urban sanitation service companies had disclosed their 2025 performance data. Companies including Infore Environment, Yuexiang Environmental, Beijing Enterprises Urban Resources Group, FULONGMA, QianYuan Co., Ltd., Jinlv Environment, and XINANJIE showed significant divergence in revenue and net profit indicators. However, all emphasized enhanced accounts receivable collection over the past year, leading to an improved cash flow position year-on-year. Specifically, among the seven companies, three experienced declines in both revenue and net profit indicators, with XINANJIE and QianYuan Co., Ltd. seeing declines in both metrics. Analysis indicates fierce competition in the sanitation industry, where state-owned and central enterprises are accelerating market share capture with capital and management advantages. XINANJIE's competitive edge was insufficient, leading to a 14.73% year-on-year decline in traditional sanitation business revenue. During the period, the company also proactively shut down inefficient operations and completed deregistration of related entities, with the scale decline trend not yet effectively curbed. Concurrently, a combination of factors—increased bad debt provisions, recognition of approximately 11 million yuan in losses from litigation judgments, goodwill impairment from acquiring Chongqing Xuhong Aviation equity, and increased other asset impairments and disposal losses—resulted in a significant drop in profitability. Faced with industry challenges like local fiscal pressure and high accounts receivable, to secure operational safety, these sanitation companies have been cautiously selecting projects, reducing the undertaking of high-advance-payment, low-return businesses. On the other hand, they intensified efforts in specialized collection of receivables and revitalizing existing funds, employing multiple measures to accelerate the recovery of operating funds. In terms of effectiveness, the net cash flow from operating activities for these companies improved significantly year-on-year, with liquidity safety margins continuously rising. However, the overall difficulty in payment collection remains a concern. Statistics show that the total accounts receivable and notes for these seven sanitation companies amounted to approximately 21.416 billion yuan by the end of 2025, accounting for 55.68% of their total revenue of 38.461 billion yuan, reflecting a widespread issue of capital being tied up. It is observed that the property industry is still in a phase of "difficulty in increasing profit despite revenue growth," with credit impairment losses particularly impacting small and medium-sized enterprises. Therefore, against the backdrop of sustained high industry-wide collection pressure, a company's payment collection management capability has become a key differentiator determining profit quality.

Capital Markets and M&A Property management stocks show some recovery; the overall M&A market remains quiet. In the secondary market, property management stocks showed some recovery during this period. The average interval increase for 40 sample Hong Kong-listed property companies monitored was about 1.51%, up from a 0.6% decline in the previous reporting period. The overall valuation level also rebounded. As of the latest closing date, the average price-to-earnings ratio (TTM) for the sample companies was 12.14 times, compared to 11.62 times at the end of the last reporting period. In terms of total market capitalization, seven companies continued to have a market cap exceeding 100 billion Hong Kong dollars. Among them, China Resources Mixc Lifestyle Services remained first with a total market cap of 103.899 billion HKD. Among others, Country Garden Services surpassed Onewo to rank second, though their total market caps were close at 20.065 billion HKD and 20.01 billion HKD, respectively. Evergrande Property Services' total market cap exceeded that of COLI Property Services, with latest market caps of 14.378 billion HKD and 12.545 billion HKD, respectively. During the period, the M&A market in the property sector was generally quiet, replaced by cases of asset disposal, passive equity changes, and active control transfers among listed property companies. Specifically, on one hand, directly impacted by debt defaults and funding chain tensions of their real estate parent companies, some property firms faced the passive situation of their controlling shareholders' equity being forcibly sold or were forced to accept physical assets from related parties to offset accounts receivable through "asset-for-debt" swaps. On May 15, Zhongjun Group and Zhongjun Commercial Management issued a joint announcement stating that all charged shares representing approximately 26.0% of Zhongjun Commercial Management's issued share capital had been sold to certain parties. After the sale, Leview Holdings' stake in Zhongjun Commercial Management plummeted from about 64.5% to approximately 38.5%. Although it remains the controlling shareholder, the equity structure has fundamentally shifted. It is understood this occurred because Zhongjun Group failed to repay syndicated loans on time, triggering cross-default clauses, leading to the shares of Zhongjun Commercial Management, which were pledged as loan guarantees to creditors, being taken over by the security agent. With the parent company unable to repay the debt, creditors ultimately forcibly sold the approximately 26.0% charged shares to a third party to recover funds, resulting in a passive change of ownership. On the other hand, to alleviate their own operational pressure or exit inefficient businesses, some property companies actively divested non-core heavy-asset properties during the period, and there were cases where controlling shareholders actively sold their controlling stakes in listed platforms. On May 18, after a brief trading suspension, Pujiang International Holdings Limited announced that its controlling shareholder (He Gao Holdings) had entered into a memorandum of understanding with an independent third party to sell its entire 74.08% stake (totaling 300,030,000 shares). This marks the founding team's choice to completely exit in a clean-out manner without debt pressure.

Property Technology and Digitalization Multiple measures advance digital-intelligent processes; Xiamen Keytop Communication applies for Hong Kong listing. During the reporting period, some space service and operation companies advanced digital-intelligent processes through capital operations, cross-border integration, and deepening AI technology application. This aims to solidify technology R&D and platform operation foundations, use proactive digital-intelligent capabilities to transform traditional space service scenarios, and expand services to areas like various parking facilities, carbon data assetization, green finance, and smart sanitation. On May 5, smart parking space operator Xiamen Keytop Communication applied for a Hong Kong listing, intending to use raised funds to advance R&D and enhance technological capabilities; deepen parking lot operation business and expand operational scale; extend marketing and service networks and explore global expansion opportunities; and for supplementing working capital and other general corporate purposes. Information shows the company, founded in 2006, has developed into a comprehensive parking industry group integrating digital-intelligent parking systems, management services, and parking lot operations. Based on relevant revenue in 2024, it ranks second in China's smart parking space operation industry with a 3.3% market share. To date, the company has provided services for parking lots in various scenarios, covering large commercial complexes, office buildings, residential communities, public facilities, hotels, scenic spots, schools, hospitals, and logistics parks. On May 15, Onewo signed a "Zero-Carbon Partner Strategic Cooperation Agreement" with Conflux and Meson in Hong Kong, planning comprehensive, in-depth ecological cooperation around digital governance of zero-carbon parks, blockchain-based carbon data certification, and the implementation of green data assetization and financialization. This collaboration represents Onewo's exploration under the dual trends of "dual carbon" and "digital finance," and is one of the main directions for implementing its 2025-2027 strategy centered on the three keywords: "asset services, intelligence, low-carbon." Additionally, in April, Chongqing Sanitation Group and COLI Property Services formally signed a strategic cooperation agreement. The two parties plan to complement each other's strengths and achieve synergistic effects in areas like public welfare security, urban operations, and the integration of smart sanitation and smart property services. It is understood that COLI Property Services has accumulated rich experience in multi-format property services, comprehensive urban operations, and smart property solutions. In the future, it will leverage its advantages to jointly expand urban service spaces and explore innovative service models with Chongqing Sanitation Group. This signifies both parties will extend their digital-intelligent capabilities from single building spaces to broader urban public areas, injecting more technologically advanced momentum into high-quality urban development and the improvement of public welfare.