On February 14, Country Garden Service Holding Co., Ltd. (hereinafter referred to as “country garden service”) announced that it planned to acquire about 93.76% equity of Zhongliang Baiyue Zhijia Service Co., Ltd. (hereinafter referred to as “Zhongliang service”). Previously, Zhongliang service submitted the form twice and successfully passed the hearing of the Hong Kong stock exchange.
Under the background of the changing development situation of the real estate industry and the synchronous adjustment of the development pattern of the property industry, with the breaking of newly listed property companies, state-owned enterprise property companies and non residential property companies stand out, and committing themselves to white knight has gradually become the priority choice of residential property companies.
the situation has changed. White knight rescue
Since the second half of 2021, the development situation of the real estate industry has faced great changes and uncertainties. Some real estate enterprises are deeply involved in the debt crisis, which has aroused the concerns of all relevant parties and the capital market, and caused a certain degree of fluctuation in the secondary trading market and bond market. The stock prices of some real estate enterprises and property enterprises fluctuated violently and fell one after another.
In contrast, the pace of listing of property companies has slowed down significantly, the number of property companies submitting statements for the second time has increased rapidly, and the Prospectuses of many property companies to be listed on the Hong Kong Stock Exchange have expired.
Since August 2021, only four property companies including Jingcheng JIAYE, Deshang industrial investment service, Zhongliang service and Jinmao service have passed the hearing of the Hong Kong stock exchange. Among them, only two property companies, Jingcheng JIAYE and Deshang industrial investment service, have officially landed in the capital market, but their share prices have fallen below the issue price.
On the morning of November 1, 2021, rongchuang service and first service issued a joint announcement that rongchuang service planned to conditionally acquire 322 million first service shares through xinbaili financing Co., Ltd., accounting for 32.22% of the issued share capital of the company. The transaction consideration was 692 million yuan (HK $8.43 billion), and the consideration per share was 2.15 yuan (HK $2.6167 per share), Compared with the closing market price of HK $1.37 per share on the stock exchange on the last trading day, the premium is about 91.0%.
Previously, the default of US $250 million became the fuse of the dilemma of contemporary real estate, and contemporary real estate became one of the top 100 real estate enterprises in debt default after Evergrande, China Fortune Land Development Co.Ltd(600340) , Sichuan Languang Development Co.Ltd(600466) , huaxiangnian holding and Xinli holding.
On January 3, rongchuang Service announced that it would terminate the acquisition of about 32.22% equity of first service holdings. Before and after the news release, the share price of first service holdings fell by more than 60%.
Under the background of the continuous tension in the capital chain of real estate enterprises, the breaking of stock prices and the continuous decline of market value after the listing of property companies, and the termination of mergers and acquisitions of some property companies, Zhongliang holdings and Zhongliang service met their own white knight – country garden service.
Although the announcement did not disclose the amount of M & a received, the country garden service, which is still sold under the severe situation, will undoubtedly greatly alleviate the capital pressure of Zhongliang holdings and bring new development opportunities for itself and Zhongliang services in the rapid integration.
valuation callback listing temptation no longer
Since 2021, the share price of listed property companies has been significantly corrected, and the valuation and market value of many listed property companies have fluctuated downward, which has aroused the concern and thinking of the property industry about the necessity and rationality of property companies landing in the capital market.
As of the closing on February 18, there were 53 listed property companies in a + H shares. In nearly 250 trading days, a total of 21 property companies decreased by more than 20%, of which 9 property companies decreased by more than 50%. Only 10 property companies saw their share prices rise, and only 3 companies saw their share prices rise by more than 50%.
Among the 12 newly listed property companies (excluding HUAFA property services) since 2021, as of the closing of February 18, 2022, except that the share prices of Landsea green life and Dexin service group remained unchanged, the share prices of the other 10 property companies fell to varying degrees, with a maximum decline of 63.81%, and the average p / E ratio was only 17.97 In contrast, in 2020, the average price earnings ratio of listed property enterprises on the first day was as high as 46.82.
Affected by the continuous development of the real estate industry and the inclusive stock price rise of the property industry for too long, many property companies are still unwilling to face the possibility of further differentiation of stock prices among property companies. As property companies gradually recognize and accept the reality, the temptation of listing will continue to decline, and property companies will become more and more rational.
ups and downs of differentiation between non resident state-owned enterprises and property enterprises
Since 2021, the state has regulated industries closely related to people’s survival and development, such as childbirth, parenting and education. One of the remarkable features is that for industries with dual attributes of public attribute and marketization, the weight proportion of public attribute has been increasing, which will also have a certain impact on the long-term development of the property industry, especially residential property.
On November 10, 2021, Beijing Jingcheng JIAYE Property Co., Ltd. was listed on the Hong Kong stock exchange. It was reported at HK $8.28 in the morning call auction stage, which was the same as the issue price, with a total market value of about HK $1.214 billion. Public information shows that Beijing JIAYE manages more than 30% of Beijing’s hutongs and has a high business moat. However, as of the closing on February 18, the share price of Beijing JIAYE closed at HK $5.11, down nearly 40% from the issue price.
The recent trend of property companies in the capital market also shows to a certain extent that the popularity of pure residential or residential property companies is declining.
On October 22, 2021, at the business exchange meeting of Vanke Group, Zhu Baobao, CEO of all things cloud, announced the growth strategy of the troika of all things cloud space. Among them, the growth rate of Vanke property is controlled within 30%, and Vanke is the preferred property housekeeper for residents; The growth rate of all things Liangxing is maintained at 30% – 60%, making it the preferred property housekeeper for enterprises; The growth rate of everything Cloud City is greater than 60%, making it the preferred property housekeeper of the government.
In addition, Zhu Baobao also released the strategy of “one hundred cities and one thousand streets” based on the three space sector: deeply cultivate the streets, focus on butterfly transformation, and Vanke property accounts for more than 25% of the residential market in 88 streets in more than 100 cities; It is estimated that by the end of 2021, there will be up to 300 high concentration streets; In the next three years, Vanke property, all things Liangxing and all things Yuncheng will jointly complete the plan of 100 cities and 1000 streets. Recently, the relevant information frequently sent by the official wechat of all things cloud and various channels also shows that all things cloud is accelerating the layout in the field of urban services.
On January 7, Longhu Zhichuang life submitted a prospectus and planned to be listed on the Hong Kong stock exchange. The prospectus disclosed that as of September 30, 2021, the operating income of Longhu Zhichuang life was 7.77 billion yuan, including 6.012 billion yuan from residential and other non-commercial property management services and 1.759 billion yuan from commercial and property management operation services, which accounted for 22.6% of the total revenue.
According to the prospectus, from 2019 to 2020, the business management revenue of Longhu Zhichuang life increased from 482 million yuan to 1.759 billion yuan. The rapid growth of business management revenue benefited from the continuous growth of management scale. As of December 28, 2021, Longhu Zhichuang lives in 60 opened shopping centers, with an area of 5.8 million square meters, serving 13000 tenants and businesses.
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. Statistics show that as of September 30, 2021, the contracted construction area of Jinmao service has reached 45.7 million square meters, covering 47 cities in 22 provinces, autonomous regions and municipalities directly under the central government, of which 67.8% are located in the first and second tier cities in China. The total construction area under management is 23.2 million square meters, including 96 residential projects and 41 non residential projects. Among them, the construction area under management of residential property and non residential property is about 19.7 million square meters and 3.5 million square meters respectively, accounting for 85% and 15% of the total construction area under management respectively.
Jinmao service property management portfolio covers residential properties and various non residential properties, including commercial properties (such as office buildings and shopping centers) and public and other properties (such as schools, government facilities and other public spaces). In terms of revenue, Jinmao’s service revenue increased from 575 million yuan in 2018 to 788 million yuan in 2019 and further increased to 944 million yuan by 2020. As of September 30, 2021, the total revenue of Jinmao service reached 1.048 billion yuan. Among them, the income from property management services is about 578 million yuan, accounting for 55.2%; Non owner value-added service revenue was 371 million yuan, accounting for 35.4%; The income from community value-added services was 98.82 million yuan, accounting for 9.4%.
At a time when most property companies have chosen to wait and see or suspend the pace of listing, property companies dominated by non residential formats and property companies represented by state-owned enterprises are becoming the mainstay of the property industry’s impact on the capital market.
Relying on the development pattern of China’s real estate industry, the development pattern of the real estate industry is undoubtedly facing profound adjustment and reform at a time when the development situation of the real estate industry has changed. When the ability to maintain growth has become the first priority for the development of real estate enterprises, the sale of long-term and slow-growing property companies has become an important choice for many real estate enterprises to withdraw their funds.
At a time when the relationship between supply and demand is changing and cash is king, where will these property companies go? Who will become the White Knight of such property companies?
