Affected by the adjustment of the real estate industry, the property management industry experienced a new round of reshuffle in 2021, and the industry pattern is being reshaped. Some property enterprises have made great progress in acquisition and merger, while some property companies have disappeared from the public view. With the disclosure of the 2021 annual report coming to an end, in addition to Evergrande property and many other property enterprises delaying the issuance of the 2021 annual report, looking at the 2021 annual report released by some property enterprises is also a matter of joy and sorrow.
According to the summary of the annual report data of 50 key listed property enterprises by Zhuge housing search data research center, in 2021, the total revenue of 50 listed property enterprises reached 180.05 billion yuan, a year-on-year increase of 45.2%, and the Matthew effect was highlighted again. Although the property management industry is still in the golden age of development, the leading property enterprises occupy an absolute leading advantage, and the property track is becoming more and more crowded. In addition, the “sequelae” of expansion and the “dependency” of the parent company have become the bottleneck of the development of property enterprises.
The total revenue of top 10 material enterprises accounted for 64.3%
Affected by the adjustment of the real estate industry and the repeated epidemic and other factors, the property management industry in 2021 is also particularly difficult. Under the background that some real estate enterprises sell their property business, mergers and acquisitions in the industry are becoming more and more frequent.
According to the data of China Association for physical research, in 2021, 29 listed property companies launched 53 mergers and acquisitions, and the total amount of mergers and acquisitions reached 35.588 billion yuan, 3.77 times that of 2020.
M & A has become the main way for property enterprises to expand their scale. Among the 50 key property enterprises selected by Zhuge housing search data research center, 49 other property enterprises have announced the area under management except Shanghai Pudong Development China. According to the data, in 2021, there were 16 property enterprises with a management area of more than 100 million square meters, three more than in 2020.
In terms of the area under management, country garden’s service is far ahead. Its area under management in 2021 was 766 million square meters, an increase of more than 100% over 2020. The scale expansion of country garden services is closely related to the M & A activities in 2021, including the M & A of large property companies such as Blu ray Jiabao, R & F property and neighborhood music Holdings under color life services.
It is worth mentioning that hejingyouhuo achieved an ultra-high growth of 395.4% in the area under management in 2021 through acquisition and merger.
With the expansion of the scale of property enterprises, the level of revenue is also rising. According to the data of Zhuge housing search data research center, in 2021, the total operating revenue of 50 key property enterprises reached 180.05 billion yuan, a year-on-year increase of 45.2%. Among them, the total revenue of TOP10 property enterprises reached 115.71 billion yuan, accounting for 64.3% of the total revenue of 50 property enterprises. It can be seen that the head property enterprises occupy most of the market share, and the industry “Matthew effect” continues to be staged.
In terms of quantity, there are five property companies with a revenue of 10 billion or more in 2021, an increase of two compared with 2020. They are all property companies under large real estate enterprises. Among them, the service revenue of country garden still occupies an absolute advantage, with a revenue of 28.843 billion yuan; Secondly, it provides services for elegant life, with a revenue of 14.08 billion yuan; Greentown services and poly properties followed, with revenue of 12.57 billion yuan and 10.78 billion yuan respectively; The fifth ranked China Merchants Property Operation & Service Co.Ltd(001914) achieved a revenue of 10.59 billion yuan. Poly property and China Merchants Property Operation & Service Co.Ltd(001914) ranked among the revenue team of 10 billion for the first time.
The total revenue of China Resources Real Estate Co., Ltd. and Shimao Real Estate Co., Ltd. is RMB 10 billion in 2025, including the same income of property demolition service companies of China Resources Co., Ltd. and Shimao Real Estate Co., Ltd.
It is worth noting that due to the liquidity crisis of Evergrande real estate in 2021, its Evergrande property has also been affected, and the 2021 annual report has not been released so far. Among the 50 real estate enterprises, the lowest revenue is German business industrial investment service. In 2021, the revenue will reach 250 million yuan, even less than 1% of country garden’s service.
get rid of the “dependence” of the parent company
At present, most property enterprises are separated from real estate enterprises, and their development is inevitably inextricably linked with the parent company. They even rely heavily on related real estate enterprises to undertake a large number of real estate projects developed by the parent company. However, with more and more enterprises joining the property track and the accelerated adjustment of the real estate industry, over reliance on the parent company has become a disadvantage and weakness for the long-term development of property enterprises.
From the second half of 2021, the direct reason for many property enterprises to close mergers and acquisitions is that the parent company urgently needs capital return and blood transfusion to sell assets for self-help. Therefore, it is more urgent and necessary to get rid of the influence of the parent company. In this context, the third-party expansion of property enterprises has become an important channel to gradually get rid of the dependence of the parent company.
According to the data of Zhuge house search, 32 of the 50 property enterprises released the third-party expansion data in 2021. The proportion of the third-party management area of these 32 enterprises increased from 49% to 59.9%, an increase of 10.86 percentage points.
Previously, country garden services also relied heavily on the parent company country garden group. However, in 2021, country garden services actively strengthened third-party outreach, ushered in a qualitative improvement and significantly reduced its dependence on the parent company.
At the performance conference, country garden service management said that from 17% of the related party transaction revenue of sister companies in 2018 to now, the proportion of connected transactions with Country Garden Holdings has decreased to 7%, which is far lower than the level of peers. At the same time, the contribution of third parties has increased year by year, accounting for 59% of the charged area and 53% of the reserve area.
From the perspective of the proportion of the third party in the management area, Yincheng life service ranks first with 89.8%, which can be described as the most “independent” material enterprise. However, there are still some material enterprises that cannot escape the “dependence” of the parent company. For example, the third-party management area of CNOOC property and Lingyue service group accounts for less than 30%. Most of the projects of CNOOC property come from the parent company, and only less than 30% come from the third-party expansion.
increasing income without increasing profit under accelerated expansion
Although the overall revenue of property enterprises increased steadily last year, high revenue did not bring high profits. The level of revenue is the external expression of the development level of property enterprises, and profitability is an indicator that truly reflects the operation level of property enterprises.
According to the statistics of Zhuge housing search data research center, in 2021, 50 key property enterprises achieved a net profit of 24.46 billion yuan, a year-on-year increase of 49.6%; The gross profit was 49.81 billion yuan, up 43.9% year-on-year; The average gross profit margin was 29.8%, down 0.3 percentage points from 2020. It can be seen that the net profit and gross profit of property enterprises have increased significantly in 2021, but the gross profit margin has decreased slightly compared with 2020, and the profitability of enterprises is facing a decline.
Of which, China Merchants Property Operation & Service Co.Ltd(001914) is at the bottom with a gross profit margin of 13.76%. In 2021, the revenue level of China Merchants Property Operation & Service Co.Ltd(001914) exceeded 10 billion, and the management area also expanded significantly. However, under such high growth, the gross profit margin was slightly weak, even less than half of the average gross profit margin.
The gross profit margin of Pujiang China in 2021 was 14.29%, slightly higher than China Merchants Property Operation & Service Co.Ltd(001914) , and the gross profit margin of Pujiang China has declined for five consecutive years.
In this regard, Wang Xiaoyi, chief analyst of Zhuge housing search data research center, said that the merger and acquisition of property enterprises has accelerated and diluted the profit margin. The imperfect operation of third-party projects obtained through merger and acquisition in the short term affects the overall profitability of property enterprises. In addition, repeated outbreaks are also an important factor affecting the loss of gross profit.
industry reshuffle will still intensify
The property management industry is still in the stage of accelerated development, which is the consensus of most people in the industry. However, the industry reshuffle will continue, “big fish eat small fish” and “big fish eat big fish” will continue to be staged.
At the performance conference, many property companies expressed that they would achieve scale growth through acquisition and merger this year. Lin Feng, non-executive director and chairman of the board of directors of Yuexiu service, said that the expansion area in 2022 is expected to double that of 6 million square meters in 2021. It takes a two legged approach, that is, acquisition and expansion, in order to achieve the growth goal.
Li Changjiang, executive director and President of country garden service, said: “the time for large-scale acquisition of country garden service has ended, but it does not mean that M & A will not be accepted. Country Garden Service adheres to high quality and collects M & A according to its own needs, and will not give up in case of opportunities.”
In this regard, Xiao Yunxiang, a senior analyst at Tongce Research Institute, said that with the rise of the listing tide of property enterprises in previous years, the horizontal acquisition of property management enterprises has become more and more intense, because for the property management industry, only by obtaining the management area can we obtain more business opportunities. At present, a large proportion of the increase in the management area of many property enterprises comes from the input of the parent company. With the reduction of the overall scale of the real estate market, the acquisition and M & a competition between property enterprises will become more intense in the future.
In the view of Jiahe JIAYE Property Service Research Institute, the scale of property enterprises will maintain rapid growth in the future, and the business and profit model will be continuously optimized and iterated. On the basis of a certain scale, enterprises with better models, strong hematopoietic capacity and core competitiveness will win more advantages, and can continue to expand their layout efficiently through acquisition and M & A in the process of industry adjustment.
“The situation that the strong are always strong is gradually formed, but after the scale of property enterprises reaches a certain extent, how to improve the property management level and find new growth points in the later stage has become a problem that enterprises must think about. Developing third-party business to reduce the dependence on affiliated real estate enterprises and improve their independence has become the only way for listed property enterprises to improve their profitability.” Wang Xiaoyi said.
