In the year when the real estate industry went down, the property management industry sent a positive signal. As of April 13, in addition to a small number of companies such as Evergrande property and lottery life, 52 listed property companies have announced the annual results of 2021. According to the statistics of wind, the reporter of Securities Daily found that all 52 listed material enterprises (including 50 Hong Kong listed companies and 2 A-share listed companies) achieved year-on-year growth in revenue last year, and more than 80% achieved positive growth in net profit attributable to their parents.
Bai Wenxi, chief economist of IPG China, said in an interview with the Securities Daily: “the property company achieved rapid growth in both revenue and performance last year, which formed a very obvious contrast with the real estate sector. This is actually related to the industry characteristics of the two, and the property sector has strong anti cyclical.”
Under the thinking of “scale is king”, listed material enterprises accelerated the pace of acquisition and merger in 2021 and further expanded their management area. However, behind the expansion of scale, property companies have to face the sequelae of expansion, such as pressure on asset structure and decline in profit quality.
revenue and profit double increase
head listed material enterprises are stronger
On the whole, 52 listed material enterprises achieved a total revenue of 178960 billion yuan in 2021, with an average revenue of 3.442 billion yuan per company. Among them, five listed property companies had operating revenues of more than 10 billion yuan, and the country garden service, with the highest revenue, achieved an annual revenue of 28.843 billion yuan last year, approaching the 30 billion yuan mark. Ya life service, green city service, poly property and China Merchants Property Operation & Service Co.Ltd(001914) ranked second, with a revenue of 10 billion yuan to 20 billion yuan last year.
In 2021, the threshold for the revenue of listed material enterprises to be in the top 10, top 20 and top 30 is about 6 billion yuan, 2.2 billion yuan and 1.3 billion yuan respectively. In contrast, the thresholds for the top 10, top 20 and top 30 revenue of listed material enterprises in 2020 are about 4.6 billion yuan, 1.8 billion yuan and 1.1 billion yuan respectively. The revenue scale of each echelon of listed material enterprises has increased significantly in 2021.
Hejing Youhuo was the listed material enterprise with the fastest revenue growth last year, with a year-on-year growth rate of 114.57%; German industrial investment services and Country Garden Services ranked second and third with a year-on-year growth rate of 98.01% and 84.89% respectively. All 52 listed material enterprises achieved positive revenue growth in 2021, with an average revenue growth rate of 42.89%, about 8 percentage points higher than that in 2020.
The high increase in revenue mainly comes from the increase in pipe area. Country Garden Services said that the growth was mainly due to the increase in the charged management area of the group’s property management services and the comprehensive increase in the business income of community value-added services, urban services and commercial operation services. Hejing Youhuo also explained that the revenue growth was mainly due to the group’s active strategy of external expansion and revenue M & A, resulting in a significant increase in the total construction area under management.
“In 2021, the property company continued its growth trend, which proves that the industry is in the stage of increasing concentration, and there is still a lot of room for development.” Chen Sheng, President of China real estate data research institute, told the reporter of Securities Daily.
In terms of performance, country garden service won the “profit king” with a net profit attributable to the parent company of RMB 4.033 billion in 2021. In addition, the net profit attributable to the parent company of ya life service, China Resources Vientiane life, rongchuang service, Shimao service and Jinke service exceeded RMB 1 billion in 2021. 52 listed property companies earned 23.15 billion yuan in total, with an average profit of 445 million yuan per company.
In 2021, 43 listed property enterprises had positive net profit attributable to their parent company and achieved year-on-year growth, accounting for more than 80%. The fastest-growing enterprises include Guorui real estate, HUAFA property services, Jinmao services, etc., with a year-on-year growth rate of more than 130%. Rongchuang services, China Resources Vientiane life and hejingyouhuo’s net profit to their parent increased by more than 100% year-on-year, and the median growth rate of these 52 listed property enterprises was 44.57%.
It is worth mentioning that the larger the scale, the faster the performance growth of real estate enterprises, which is in line with the external impression of the prominent Matthew effect and the constant strength of the strong in the property industry. According to the data, the top 10 listed material enterprises in terms of revenue increased by 49.78% on average last year, and their performance increased by 54.18%, significantly faster than the industry average.
Bai Wenxi believes that the development speed of the top 10 listed material enterprises is faster, which is not only the embodiment of the scale effect, but also the result of the increasing industry concentration.
profit quality to be improved
listed enterprises may need to increase muscle and reduce weight
Property to the left, property to the right. In recent years, listed property companies have frequently expanded their territory and made rapid progress in scale. According to Kerui property management data, the 47 listed property enterprises that fully disclosed the total area under management from 2019 to 2021 have increased from 2.480 billion square meters to 5.259 billion square meters, and the average area under management has increased from 527653 million square meters to 112 million square meters, with a compound growth rate of 45.62%.
Reflected in the balance sheet of listed material enterprises, by the end of 2021, the total assets of 52 listed material enterprises that disclosed the financial statements of 2021 had reached about 297088 billion yuan, an increase of about 38.36% over the end of 2020, with an obvious expansion trend.
However, on the other side of the “coin”, the soaring scale also brings some pressure to the asset structure of listed material enterprises. Taking accounts receivable as an example, wind data shows that by the end of 2021, the accounts receivable of 52 listed property enterprises had reached 67.069 billion yuan, an increase of 82% over the end of 2020; Accounting for 22.58% of assets, an increase of about 5.41 percentage points over the end of 2020.
The sharp increase in accounts receivable has weakened the beautiful profit performance of listed material enterprises to a certain extent. Moreover, from multiple indicators, the profit quality of listed material enterprises needs to be improved. For example, the average gross profit margin of 52 listed property enterprises decreased slightly by 0.68 percentage points compared with that in 2020, and the gross profit margin of 28 listed property enterprises decreased year-on-year, accounting for more than half; In terms of roe, the median roe of 52 listed property enterprises in 2021 was 17.88%, down about 3.02 percentage points from 2020; In terms of cash flow performance, the net cash flow from operating activities of the five listed material enterprises that announced their cash flow status decreased year-on-year in 2021.
“The profit quality of property companies declined in 2021, which is related to their high dependence on the business of related real estate enterprises. There are general difficulties in the liquidity of related real estate enterprises. If it is transmitted to property companies, it will lead to the rapid growth of accounts receivable of property companies and the decline of roe.” Bo Wenxi said.
“For property companies, basic services such as security and cleaning are relatively rigid and difficult to grow, which depends on the effective expansion of scale.” Chen Sheng said that to enhance the profitability of listed material enterprises, it is necessary to expand their business scope and increase additional services, especially through science and technology enabled community services to improve efficiency and open the imagination space of profitability.
Bai Wenxi believes that the proper way for listed property companies to improve their profitability is to explore the third-party market to reduce their business dependence on affiliated real estate enterprises and improve their independent development ability and innovative income sources.
In 2022, listed property companies will undoubtedly face new challenges. Under the background of the rapid increase of industry concentration, it is imperative to expand the scale, but at the same time, it is also worth thinking about how to integrate resources, increase muscle and reduce weight after reaching a certain volume, and post investment management may be put on the agenda Citic Securities Company Limited(600030) research report points out that 2022 is a year to test post investment integration, and strong M & A companies are expected to stop and sort out their brands and teams.
