The market once doubted the development prospect of state-owned property management companies. Recently, state-owned enterprises have shown strong strength in mergers and acquisitions and expanding the market. In the long run, we think that whether state-owned enterprises or private enterprises, independent market-oriented operation is the key, and they are likely to become the leaders of the industry.
The market once doubted the development prospect of state-owned property management companies. The competition in the M & a market was once very fierce. There were few successful M & A cases of state-owned listed property management companies from 2020 to 2021. At that time, the market salary and equity incentive continued to rise, and the attraction of state-owned property management companies to excellent talents continued to decline. Affiliated state-owned real estate development enterprises are relatively stable in terms of scale growth and take the lead in deleveraging at the request of SASAC. Therefore, the delivery of affiliated parties is not comparable to private peers in the short term. Before the fourth quarter of 2021, the market had doubts about the growth of state-owned property management companies.
Mergers and acquisitions of state-owned enterprises have recently broken down. Recently, China Resources Vientiane life and China Merchants Property Operation & Service Co.Ltd(001914) respectively fulfilled high-quality small-scale mergers and acquisitions, ending the situation that state-owned listed property management companies did not do anything in the M & a market. There are still many opportunities to improve the efficiency and integration in the M & a market. No property management enterprise has built a moat of high enough business and scale, and the head state-owned enterprises have growth opportunities. We believe that with credit and capital advantages, state-owned property management companies have ushered in an opportunity window in the property management M & a market with better opportunities.
Compensation incentives and related party delivery have changed. We believe that although private property management companies are independent companies, the remuneration of senior personnel may be affected by the operation adjustment of real estate development enterprises to varying degrees. In contrast, some state-owned enterprises have optimized the salary assessment system, actively carried out equity incentive, and continued to improve the level of market-oriented operation. In addition, the rising market share of state-owned enterprises in the development system in the future also means the growth rate of related party delivery.
Sharing brands may have an impact on the expansion of some private enterprises. Although property management companies operate independently, most of them share brands with development enterprises. When the brand has defects, i.e. concerns about delayed delivery and other factors, we believe that it is more difficult for affiliated property management companies to win the trust of consumers. When the regional investment of development enterprises shrinks, it is expected that it will be more difficult for the same brand property management companies to expand public construction and urban service projects in this region.
Risk tip: some property management companies do not have independence, and there is a risk that development funds will be occupied.
Heroes don’t ask about their origins. Independence and marketization are the key. We believe that it is not so much the problems encountered by private property management companies as the market adjustment that exposes the lack of independence of property management companies. If enterprises can build an independent brand matrix as soon as possible, establish assessment, reward and punishment standards that are completely decoupled from the development business, and pursue the principle of market-oriented operation, we believe that both state-owned enterprises and private enterprises have the hope to build the advantages of scale, ability and brand in the broad track of property management. We are optimistic about China Resources Vientiane life, poly property, Jinke service, country garden service, China Merchants Property Operation & Service Co.Ltd(001914) , green city service and Zhonghai property.
