Listed companies are entering the intensive disclosure season of annual reports, and a number of property management listed companies with “red” performance have attracted extensive attention from the market.
Recently, several property management listed companies such as Xuhui Yongsheng Service Group Co., Ltd. (hereinafter referred to as “Xuhui Yongsheng service”, 01995. HK), Xincheng Yue Service Group Co., Ltd. (hereinafter referred to as “Xincheng Yue service”, 01755. HK) and Zhengrong Service Group Co., Ltd. (hereinafter referred to as “Zhengrong service”, 06958. HK) disclosed their performance in 2021, and many indicators such as operating revenue and net profit increased significantly.
The reporter of China business daily noted that the trend of scale expansion in the property management industry is undergoing a “turn”, and many industry executives have stressed the need for more quality scale expansion. Zhou Hongbin, executive director and President of Xuhui Yongsheng service, said that it was necessary to realize the transformation from “rapid scale expansion to professional success” in 2022.
“The head property enterprises regard the next three to five years as a window period for industry integration and M & A, and regard rapid expansion of scale as the first priority.” Kerui property management also believes that the giants are more cautious in the acquisition and acquisition. “On the basis of scale growth, the integration and operation management after M & A are the key to determine whether we can achieve ‘1 + 1 2’.”
rational growth has gradually become the “theme”
Under the background that the real estate industry is still waiting for the dawn of recovery, the property management listed companies that recently focused on disclosing the performance of 2021 have attracted special attention.
On March 28, 2022, Xincheng Yue service said at the online performance meeting that the company realized an operating revenue of about 4.351 billion yuan in 2021, an increase of about 51.8% over the same period in 2020, and the net profit attributable to the parent company was about 676 million yuan, a year-on-year increase of 55.4%. Xuhui Yongsheng service also achieved a net profit of 690 million yuan in 2021, a year-on-year increase of 56.5%, and the net profit attributable to the parent company was 620 million yuan, a year-on-year increase of 58%.
The reporter found that behind the “red” performance of many property management listed companies, the core business indicators such as management scale have also increased rapidly.
“Scale growth remains one of the current core objectives.” Xuhui Yongsheng service said that through the effective implementation of the “four-wheel drive” business strategy, Xuhui Yongsheng service third-party property developers will manage a total construction area of 139 million square meters in 2021, accounting for 81.3% of the total construction area, an increase of 2.7 percentage points over the same period in 2020; In recent years, the proportion of related party transactions has continued to decrease. In 2021, the related party transactions with Xuhui group amounted to 480 million yuan, accounting for 17.3% of the total revenue, a decrease of 0.4% compared with the same period in 2020.
According to the annual report, in 2021, the construction area of Xuhui Yongsheng service contract was 271 million square meters, a year-on-year increase of 49.4%; The construction area under management was 171 million square meters, a year-on-year increase of 68.3%; There were 1409 contracted projects and 1032 projects under management, with a year-on-year increase of 43.0% and 61.8% respectively.
The total area under management of Zhengrong service has also increased significantly. Relevant data show that by the end of December 2021, the total area under management of Zhengrong services has reached 70.98 million square meters, an increase of 72% over the same period in 2020; The total contract area exceeded 100 million square meters, reaching 104 million square meters, an increase of 19% over the same period in 2020.
“The revenue growth of Wuguan listed companies is consistent with the growth rate of their area under management, reflecting that the revenue growth depends on the rise of the scale under management.” Huang Zhuowei, an analyst of Anxin international real estate industry, believes that the management scale of property management listed companies is still the key.
However, it is worth noting that at the performance conference organized by a number of property management listed companies, many company executives stressed the importance of scale and the need for quality expansion.
Qi Xiaoming, CEO of xinchengyue service, said that in terms of residential project development strategy, we should pay attention to the quality of external expansion. “If we have to choose between scale and quality, we choose to pay more attention to the quality of external expansion on the basis of scale growth, still adhere to the strategy of focusing on new development, and focus on our deeply cultivated areas.”
“There were so many targets in the market before, but they were not all good projects.” Zhou Di, executive director and chief financial officer of Xuhui Yongsheng service, revealed at the performance conference that the company “saw a lot, adjusted more than 20 target projects, and finally only five or six succeeded”.
“the second growth curve” is gradually taking shape
While the performance continues to rise, a number of property management listed companies are also accelerating to build a second growth curve such as community value-added services.
Relevant information shows that in 2021, the three business segments of Xuhui Yongsheng service, property management service, non owner value-added service and community value-added service continued to keep pace with each other. Among them, the revenue from property management services was 2.65 billion yuan, an increase of 51.1%; The revenue of the latter two types of value-added services was 1.97 billion yuan, a year-on-year increase of 44.5%.
“In terms of community value-added services, the supply capacity of enterprise ecological products has become increasingly rich, which has comprehensively improved the income source of this sector.” Jiahe family research report shows that Xuhui Yongsheng community value-added services include home life services, parking space management and rental services, of which the income from home life services in 2021 was 570 million yuan, accounting for 51.8% of the income from community value-added services.
The reporter further combed and found that in addition to Xuhui Yongsheng service, the community value-added services of many property management listed companies have also achieved rapid growth.
In 2021, Xincheng Yue service achieved a main revenue of 4.35 billion yuan, a year-on-year increase of 52%. Among them, the operating revenue of community value-added services reached 915 million yuan, with a year-on-year increase of about 84%, accounting for about 21% of the company’s total revenue.
“Community value-added services have become the second largest business sector in terms of revenue and gross profit.” Kerui property management believes that in the specific business of value-added services in Xincheng Yuet service community, the performance of the two business modules of large logistics and large community can be called outstanding.
Qi Xiaoming also stressed at the 2021 performance conference of Xincheng Yue service: “from the strategic level of the whole company, we will continue to deepen the ‘one core and two growth’ strategy, put forward the specific business strategy of large logistics + large community, and carry out comprehensive business deep cultivation around two different customer groups.”
“Among the more than 30 kinds of community value-added services carried out by 44 property management listed companies, due to the low cost of getting customers and strong replicability, the income from community life services accounts for more than half of the income from community value-added services.” Wu Kuiyong, senior analyst of the property business department of China Index Research Institute, believes that “local life services and park space services are mentioned most frequently; Meiju services have grown rapidly and become a ‘dark horse’ in the field of subdivided business.”
In Wu Kuiyong’s view, it is expected that the value-added services of Wuguan listed companies will show a trend of more huge market space and more diversified business scenarios in the future. “The value-added service business carried out by Wuguan listed companies cannot be fully developed and comprehensive. They should make some choices in combination with the enterprise’s resource endowment. At the same time, the business model should be iterated continuously in order to gradually mature.
”Wu Kuiyong also said.
speed up the “independence” process of property management industry
It is worth noting that in the process of continuous expansion of Wuguan listed companies, the “independence” process of Wuguan industry is also accelerating.
Relevant data show that by the end of 2021, the area from third parties in Zhengrong service contract area reached 72.57 million square meters, accounting for nearly 70%, an increase of 17% compared with 62.1 million square meters in 2020. In terms of the area under management, the area under management from a third party reached 51.13 million square meters, accounting for 72%, a significant increase of 94% compared with 26.31 million square meters in 2020.
“From the perspective of the composition of projects under management, the source of third-party property projects accounts for nearly 70%, which shows that the company has sufficient independence and that the company’s third-party expansion business continues to maintain a high level of growth.” Said the relevant person in charge of Zhengrong service.
In fact, vigorously increasing the proportion of third-party outreach business is becoming a common choice for many property management listed companies.
For example, by the end of December 2021, in the area under management of Landsea green life Service Co., Ltd. (hereinafter referred to as “Landsea green life”, 01965. HK), the area from independent third parties had increased from 1.5 million square meters in 2018 to 12.22 million square meters in 2021, with a compound growth rate of 101.2%. Among them, the proportion of independent third parties also increased from 16.6% in 2018 to 52.1% in 2021.
“In the past year, on the one hand, based on quality service, on the other hand, we have deepened the field of value-added services, explored new business models, actively expanded urban service tracks and promoted digital construction.” In response to the reporter’s interview, the relevant person in charge of Landsea green life said that in the next step, the company will continue to promote the high-quality growth of scale and accelerate the transformation and upgrading from traditional property companies to life service platforms.
The Zheshang Securities Co.Ltd(601878) research report shows that Xuhui Yongsheng service is becoming the core driving force under the condition of “relying on but not relying on the parent company”. From 2017 to 2021, the business proportion of Xuhui Yongsheng services from third parties in the management / contract area increased to 81%.
Zhou Hongbin introduced at the 2021 performance conference of Xuhui Yongsheng service that the company seized the opportunity in 2021, established cooperation with more than 30 developers and established a joint venture with a scale of more than 300 million yuan.
Wu Kuiyong also believes that the current property management industry is in a “golden period” of development, and the industry’s leading enterprises have realized the rapid expansion of management scale through three channels: third-party market expansion, acquisition and acquisition and undertaking the area of related parties. “In 2021, the third-party market expansion projects and area of Top50 property service enterprises are increasing, which provides strong support for the expansion of the scale of property service enterprises.”
Huang Xianzhi, chairman and non-executive director of Zhengrong service, also said earlier: “property management is moving from a subsidiary function of the large real estate industry to independence.” Zhou Hongbin also believes that for excellent material enterprises, real estate regulation “has brought opportunities for independent development of the industry in the future and accelerated the process of marketization.”
In the view of insiders, property management companies were previously considered to be lack of independence, but with the help of capital, property management listed companies are building a unique competitiveness by moving towards the capital market, accelerating the expansion of third-party projects and other ways, plus the benefits of policy encouragement. The whole property management industry is expected to accelerate into the “era of independent development”.
