Core view
State owned enterprises are preferred for short-term stability, and private enterprises are recommended for long-term efficiency. This year, the real estate industry has been in great turmoil, the real estate enterprises have been in continuous thunderstorms, and the valuation of the property management sector has also been under pressure. We expect that after the Spring Festival next year, the competition pattern of the real estate industry will become clear, and the valuation of the property management sector will be repaired at that time. In the short term, the property management companies of state-owned enterprises enjoy higher certainty and valuation due to the soundness of related real estate enterprises. We are optimistic about poly property with equity incentive plan. In the medium and long term, the operating efficiency of the property management company will determine its valuation. At this point, we believe that private property companies are more likely to win. Mainly optimistic about two categories: first, benefiting from the accelerated integration of the property industry and the significant increase in scale, the head property management company that can quickly start after exploring a mature product line in value-added services recommends country garden services. Second, it is a regional leading property company with high density of infrastructure management, good reputation and well-developed value-added services. After the liquidity crisis of the related real estate enterprises of these property companies is lifted, the future valuation repair is more flexible. Recommend Jinke service and Jianye new life.
The policy is expected to remain friendly. Although property is one of the sub industries of real estate, different from the real estate industry that is often regulated, the property industry is much supported by policies. Since this year, the Ministry of housing and urban rural development and local governments have issued many documents to support property companies to do a good job in matching quality and price, and encourage property companies to explore various value-added services. We believe that the property company is an important starting point for the government’s grass-roots governance. The property company has made outstanding contributions to both the epidemic prevention work during the epidemic and the rescue work in case of sudden disasters (such as the flood in Henan in July). We expect that in the future, it will still receive a lot of support and encouragement rather than suppression in terms of policies.
The real estate industry is cleared, and the property management plate is under pressure. Since April this year, the overall stock price trend of Wuguan plate is basically consistent with that of real estate. As of December 21, 2021, compared with April 20, 2021, the hengshengguan index has decreased by 47%, and the leading index of kroney real estate stocks has decreased by 40% in the same period. We believe that this is mainly because the real estate industry has been cleared and many real estate enterprises are facing life and death problems, which makes the market question the future growth of the property management company and raise concerns about the ownership of the company’s future control. The survival of related real estate enterprises has become the core factor determining the valuation of the property management company.
Integration accelerated, and the head property enterprises increased their share against the trend. According to incomplete statistics of Guojin real estate, the total 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 is the largest buyer in the M & a market this year. Its consideration for the three M & as of Blu ray Garbo service, R & F property and core assets of color life is 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. We believe that the management scale and density (behind which is the owner’s volume and consumption potential) are the basis for property companies to do a good job in owner value-added services. The acceleration of industry integration is conducive to the head company to expand the scale and deepen the density faster, so as to open up a feasible community value-added service business line faster and accelerate the realization of the second growth curve.
The listing boom has receded and the large-scale competition is coming to an end. There are 9 newly listed property companies this year, half of that of last year. We believe that the main reasons are: ① the valuation of the sector is callback, and the differentiation is obvious, and the significance of the listing of small and medium-sized property companies is weakened. ② Some real estate enterprises have liquidity problems and have to sell their property companies to be listed in exchange for cash. We expect that after the listing of everything cloud and Longhu intelligent services next year, the M & a market is expected to maintain a certain heat because the newly listed head property management company still has demands for scale growth. By the end of next year, it is expected that the scale competition in the property management industry may come to an end, and the ranking in the management scale will tend to be stable at that time.
Risk statement
The completion and sales of related real estate enterprises fell sharply; M & A integration is not smooth; The progress of value-added services is less than expected
