Recently, Jinmao Property Service Development Co., Ltd. (hereinafter referred to as "Jinmao service" or "company") under China Jinmao (00817. HK) successfully held the meeting, becoming the only material enterprise that successfully held the meeting in recent two months. According to the data set after the hearing, from 2018 to 2020, Jinmao's service revenue increased steadily, and the compound annual growth rate of profit was as high as 110.0%.
Market analysts pointed out that at present, mergers and acquisitions are frequent in the property management market, and the valuation is gradually returning to rationality. At the moment when the resources on the property management track are concentrated to the top enterprises, as a latecomer with the background of central enterprises and rapid growth, Jinmao service is highly expected.
compound profit growth rate in recent three years: 110%
On February 6, China Jinmao announced that Jinmao service had submitted the post hearing data set to the stock exchange on the proposed spin off, and China International Capital Corporation Limited(601995) and HSBC holdings were its joint sponsors. According to the data set after the hearing, Jinmao service is a property platform of Jinmao in China, positioned as a "high-end property management and urban operation service provider". After the spin off, Jinmao service will continue to be a subsidiary of China Jinmao.
Relying on China Jinmao and Sinochem Group behind it, Jinmao service achieved continuous growth in contract area and area under management during the reporting period. As of December 31, 2018, 2019 and 2020 and September 30, 2021, the construction area under management of the company was 10.2 million square meters, 12.7 million square meters, 17.7 million square meters and 23.2 million square meters respectively. Among them, the construction area under management of projects developed by Jinmao group, Sinochem Group and other joint ventures and associates accounted for 89.8%, 94.2%, 87.8% and 86.6% respectively.
Compared with many listed property companies, the scale of Jinmao service is not large, but its profitability is prominent: from 2018 to 2020, the revenue of Jinmao service was 575 million yuan, 788 million yuan and 944 million yuan respectively, with a compound annual growth rate of 28.2%, and the revenue in the first nine months of 2021 was 1.049 billion yuan; Over the same period, Jinmao service realized profits of about 17.5 million yuan, 22.6 million yuan, 77.1 million yuan and 109 million yuan respectively, with a compound annual growth rate of more than 110.0%.
At present, Jinmao service operates three businesses, namely property management services, non owner value-added services and community value-added services. Among them, the income from property management services is the main source of income of the company. In 2018-2020 and the first nine months of 2021, it received 335 million yuan, 463 million yuan, 567 million yuan and 578 million yuan respectively, accounting for 58.3%, 58.6%, 60.1% and 55.2% of the total income respectively.
It is worth noting that in the property management service business of Jinmao service, non residential properties have considerable weight: as of September 30, 2021, the construction area under management of residential properties and non residential properties is about 19.7 million square meters and 35 million square meters respectively, accounting for 85.0% and 15.0% of the total construction area under management, respectively. However, from 2018 to 2020, the income of non residential properties was 171 million yuan, 261 million yuan, 291 million yuan and 243 million yuan respectively, accounting for 29.7%, 33.0%, 30.8% and 23.2% of the total income, while the proportion of residential properties in the total income in the same period was 28.6%, 25.6%, 29.3% and 32.0% respectively.
Moreover, the average property management fees charged by non residential properties in the same period were about 20.7 yuan / m2, 20.0 yuan / m2 and 19.7 yuan / m2 respectively, which was significantly higher than the industry average level published by the China Index Research Institute (5.9 yuan, 5.2 yuan and 5.0 yuan per square meter in the same period), which was related to the fact that most of the projects under management of Jinmao services were city level landmarks. The reporter of Huaxia times saw that skyscrapers such as Shanghai Jinmao building, 421 meters high, Lanzhou Asia Europe International Building, 313 meters high, and Changsha Meixi Lake twin towers, 250 meters high, are all on the company's service list.
In addition, Jinmao service also provides various forms of urban operation services, covering the above three business lines. "The firm connection with China Jinmao enables Jinmao property to continuously make use of China Jinmao's strong project reserves in the field of urban operation", Jinmao service said in the prospectus: "as of January 27, 2022, Jinmao property has signed preliminary property management contracts for 22 urban operation projects in Jinmao, China, of which 12 projects have been taken over."
In addition to relying on the "big tree", Jinmao service also emphasizes the need to improve the external expansion ability. According to the information set after the hearing, the company has allocated more resources since 2020 to speed up the business development with independent third-party property developers. Among them, in 2020, the total construction area of the project under management of Jinmao service developed by an independent third party was about 2.2 million square meters, more than three times that of about 700000 square meters in 2019.
Jinmao service hopes to further expand its scale through IPO. It is reported that the proceeds from this IPO are mainly used to acquire and invest in other potential material enterprises, expand cooperation with suppliers cooperating with relevant businesses, upgrade the company's intelligent service management system, and use for enterprise working capital and general purposes.
It is worth mentioning that Jinmao service prefers to acquire companies with state-owned enterprise background. "With our status as a state-owned enterprise, we are in a favorable position to seek cooperation with state-owned enterprises and compete with competitors in the acquisition of state-owned property management companies". As for the specific acquisition standards, "in 2020, about 360 state-owned property management companies in China meet the standards of at least 1 million square meters of construction area under management and at least 50 million yuan of annual income."
centralized listing of head material enterprises or boost industry confidence
Throughout 2021, the enthusiasm of material enterprises to go public continued unabated. According to the statistics of Kerui property management, from the perspective of table delivery enterprises, the number of table delivery enterprises in the industry reached 34 in 2021, which is the largest year of table delivery enterprises so far. However, from the actual promotion process, only 9 tables were delivered and successfully listed during the year. In addition, a total of 14 newly listed property enterprises were added during the year (13 of which were listed through regular IPO, all of which were Hong Kong stock property enterprises), 4 less than expected compared with 18 in the previous year.
It has undoubtedly become more difficult for material enterprises to be listed: according to the statistics of Kerui property management and China Material Research Association, 17 material enterprises listed on the Hong Kong stock exchange took an average of 137 days from the initial submission to the successful listing in 2020, while the average time of 13 material enterprises listed in 2021 was 205 days. From the perspective of approval rhythm, the approval progress of material enterprises slowed down, with a year-on-year delay of about 68 days. In addition, PE in the property sector generally decreased in 2021. By the end of 2021, the average PE in the property sector was only 17.64 times, a decrease of 52.31% compared with the end of 2020 (37.00 times).
According to public information, in 2021, a number of material enterprises that submitted their statements faced the dilemma of "prospectus failure", and some material enterprises still did not escape the fate of "failure" in the secondary submission of statements. Even if they were successfully listed, the performance of material enterprises was not satisfactory. Some market analysts generally believe that this is not a good time to go public in the traditional sense.
As the first material enterprise to successfully resist the trend in the "cold winter", Jinmao service is highly affirmed by people in the industry.
"I am relatively optimistic and optimistic about the future of Jinmao property." Bai Wenxi, chief economist of IPG China, told the Huaxia times that on the one hand, the strength of major shareholders has given Jinmao service a larger business scale, an annual new management area and a more optimized business structure, on the other hand, it is also because the nature of the central enterprise of the enterprise itself has a more prominent credit advantage in the current market environment, This is conducive to its faster development through industry integration.
According to the information provided by Tang Zhuo, President of Jiahe family property service research institute, as of September 30, 2021, the management ratio of Jinmao service contract was 1.97, 0.34 higher than the industry average. "Thanks to the rapid growth of its parent company China Jinmao in soil storage, the growth of the area under management of Jinmao services is highly deterministic and has good growth potential." Tang Zhuo thinks.
On the other hand, "Jinmao service focuses on high-end properties (including high-end residential and high-end commercial writing) in first and second tier cities, and the average property management fee is much higher than the industry average. With the increase of project density in Jinmao service cities, the management cost decreases, and the gross profit margin has a large room for improvement." Tang Zhuo said.
Tang Zhuo said: "China Jinmao, a related party of Jinmao service, is a real estate enterprise with the top 15 comprehensive strength. The major shareholders are Sinochem Group and Ping An Life Insurance, which is more reliable in terms of stability. As the only property service provider in the group, Jinmao service will continue to benefit from the stable development of China Jinmao."
It is worth mentioning that some people in the industry believe that Jinmao service will be held more than 20 days in advance, which has injected confidence into the material enterprises waiting in line for listing to a certain extent. In 2022, leading property companies including everything cloud and Longhu property will also be listed one after another, which may increase the market's confidence in the property management industry to a certain extent.
"More and more excellent enterprises are listed, which can better accelerate the normative construction of the industry and reflect the health of the industry from one side." Wang Qun, vice president of Zhengrong service holding group, stressed to the reporter of Huaxia times: "this shows that the property management industry is still a very viable and sustainable track." It is also believed that although the valuation of the property sector fluctuates greatly in the short term, the long-term positive trend and Growth Logic of the industry remain unchanged.
