Although the listing boom has receded, M & A will continue in the pursuit of scale.
The wave of listing and M & A in the property management industry, which has lasted for more than two years, still has aftershocks.
In January 2022, Longhu Zhichuang life and Lushang life service successively submitted forms to the Hong Kong stock exchange, of which the latter was the second form. In February, Jinmao property was listed on the Hong Kong stock exchange. In addition, the launch of the listing plan of everything cloud at the end of the year means that the last batch of large real estate enterprises have also embarked on the road of splitting property listing.
In the same period, property management enterprises under China Resources, Hejing, Jinke and country garden all made mergers and acquisitions, indicating that the horse racing enclosure in the property management industry is still continuing.
With the real estate market entering the stock era, the field of property management has ushered in development opportunities in recent years. In the past two years, a large number of property management enterprises have landed in the capital market, most of which are separated from the property sector of real estate enterprises. With the help of capital, mergers and acquisitions in the property management industry also began to accelerate, and a number of leading property management enterprises were born.
This wave of listing action at the end of the year and the beginning of the year is regarded as the continuation of the tide of integration in the property management industry. However, it is worth noting that compared with the past, the attitude of capital has become calm. The parent companies of some property management enterprises are in a liquidity crisis, which also affects their listing options. Affected by this, the capitalization wave of the property management industry is cooling down.
However, in the pursuit of scale, M & A will continue.
Capital “last bus”
The wave of listing of property management enterprises began in 2018. In that year, a total of 6 property management enterprises landed in A-Shares and Hong Kong shares, equivalent to the sum of the previous four years (2014-2017). By 2019, the number will rise to 11 and 18 in 2020. In 2021, the tide of listing of property management decreased, but 14 enterprises still completed listing.
The emergence of this upsurge stems from the background of “real estate entering the second half”. China’s real estate stock is huge, but the digital and intelligent level of management is not high. With the development of big data and cloud computing technology, there is a lot of room for imagination in the operation of these assets.
In the past few years, except for a few specialized property management service enterprises, most listed property management companies have been separated from the property management business of traditional real estate enterprises. Although the scale of listing is different, it is generally sought after by capital.
According to Kerui property management statistics, by the end of 2020, the average PE of the property section will reach 37.00 times. In contrast, the average PE of the real estate sector is only single digits.
But by 2021, the enthusiasm of capital has decreased significantly. In addition to the reduction in the number of listings, the subscription scale and P / E ratio of property management enterprises at the same level also declined. According to the statistics of the above institutions, by the end of 2021, the average PE in the property sector was only 17.64 times, with a year-on-year decrease of 52.31%. Among them, China Resources Vientiane life, with the highest P / E ratio, was 53.72 times, down 64.36% from the end of last year; Caisheng, with the lowest price earnings ratio, was 2.26 times, down 74.66%.
The agency also said that in 2020, 17 property enterprises listed on the Hong Kong stock exchange took an average of 137 days from initial submission to successful listing, while the 13 property enterprises listed in 2021 took an average of 205 days.
“The tide of listing property companies is coming to an end.” Yan Yuejin, director of the think tank center of Shanghai E-House Research Institute, told the 21st Century Business Herald reporter that on the one hand, it is because most large and medium-sized property companies have completed listing, on the other hand, it is because the best window period has passed. He believes that unless it is a high-quality property management enterprise, the popularity of the capital market has been much lower than before.
Since the end of last year, the four property enterprises that have made the listing action, including evercloud, Longhu Zhichuang life, Lushang life service and Jinmao property, all rely on traditional real estate enterprises. Among them, the area under management of all things cloud has reached 566 million square meters respectively (by the end of 2020), second only to country garden service; The area under management of Longhu Zhichuang also reached 250 million square meters (by the end of 2021). The area under management of Lushang life service and Jinmao property is only about 20 million square meters.
Analysts believe that the difference in scale will differentiate the listing performance of these companies. However, this will also be the “last bus” of the capital of Wuguan enterprises. With the calm attitude of capital, the listing tide of Wuguan enterprises will also be flat.
It is worth noting that the liquidity crisis of the real estate industry is also affecting the listing process of property enterprises. In 2021, Zhongnan service and Zhongliang Baiyue Zhijia experienced the second presentation and passed the hearing, but finally chose to be acquired; Xiang life service announced the suspension of listing; Sunshine Zhibo terminated its IPO and exchanged shares for everything cloud; R & F property chose to be acquired by country garden services.
The failure of direct listing of these property companies is considered to be related to the liquidity crisis of the parent company. In fact, since August last year, not only the IPO of real estate enterprises has almost returned to zero, but also the listing of its property companies is close to being cut off. Sinolink Securities Co.Ltd(600109) said, “the real estate industry has entered a downward trend since July last year. Many real estate enterprises have to sell their property companies in order to save themselves.”
The scale race is still fierce
Similar to real estate, property enterprises also have obvious scale effect. In recent years, with the help of capital, the tide of M & A in the property management industry has also begun, and the scale of M & A reached a new high last year.
According to the incomplete statistics of Sinolink Securities Co.Ltd(600109) , the cash expenditure of listed property management companies in M & A in 2021 exceeded 30 billion yuan, more than double that in 2020. Country garden service was the largest buyer in the M & a market last year. Its three mergers and acquisitions of Blu ray Garbo service, R & F property and color life all cost billions or even 10 billion yuan. These three mergers and acquisitions alone will bring at least 250 million square meters of under management area to country garden services, equivalent to 66% of its under management area by the end of 2020.
In 2022, the acquisition of country garden services continues. On February 14, Country Garden Service announced that it planned to acquire about 93.76% equity of Zhongliang Baiyue Zhijia. Including a purchase in March last year, country garden services acquired all the shares of Zhongliang Baiyue Zhijia.
It is worth mentioning that Zhongliang Baiyue Zhijia once handed in its forms on the Hong Kong Stock Exchange twice last year and passed the listing hearing in December last year, but finally chose to sell.
Zhongnan service, which also has the experience of submitting statements twice and passing the hearing, was acquired by China Resources Vientiane life in January this year, with a price of no more than 2.26 billion yuan. That month, China Resources Vientiane life also acquired 50% equity of Yuzhou property service at a price of no more than 1.06 billion yuan.
After the wave of listing and M & A in the past two years, the differentiation pattern of the property management industry has gradually taken shape. According to the statistics of China Index Research Institute, in 2020, the market share of the top 100 property management enterprises reached 49.71%, an increase of 6.10 percentage points over 2019. By 2021, its share has exceeded half. Among them, the growth rate of the scale and market share of the top ten property management enterprises is significantly higher than the industry average, “the strong are always strong”.
However, the pursuit of scale by property companies will not stop there. At present, the valuation of a certain company in the 21st century is still highly dependent on the capital of the parent company, which also reflects the lack of capital management capacity of the parent company. Therefore, expanding the share of third-party companies through M & A will still be the main strategy of major companies.
He also believes that in terms of the current concentration of the property management industry, there is still some room for enterprises at all levels to improve, which also determines that scale expansion is still necessary.
At the same time, there is still a lot of market space in non residential formats such as commercial offices, hospitals, schools and urban services.
China Index Research Institute pointed out that the M & A of property management industry will continue, and will have the following characteristics: first, the phenomenon of big fish eating big fish will still occur; Second, some small and medium-sized real estate enterprises have taken advantage of mergers and acquisitions, market expansion, strategic cooperation and other means to quickly increase market share, and even overtake in corners; Third, in the field of mergers and acquisitions, property service enterprises with state-owned assets will play a leading role more and more.
Sinolink Securities Co.Ltd(600109) believes that with the listing of everything cloud and Longhu intelligent services, there are still demands for scale growth, and the M & a market is expected to maintain a certain heat. However, by the end of this year, it is expected that the scale competition of the property management industry may come to an end, and the ranking of the management scale will tend to be stable at that time.
