"Tuyere" Under The Property Management Industry Report: Performance Against The Trend To Enhance Interest In Capital

In the traditional real estate enterprises due to the impact of the epidemic situation and regulation and control of growth difficulties, the property management industry is on the contrary thriving.

Recently, listed property management companies have issued interim performance reports. Although the scale of assets and revenue is not large, both growth and P / E ratio of listed property management companies are generally higher than that of traditional real estate enterprises. At the same time, the development of value-added business makes the property management enterprises maintain a higher profit margin. In addition, more and more enterprises horizontal layout of non residential property management field, business diversification trend began to appear.

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In the pursuit of capital, property companies set off a boom in recent years. Since the beginning of the year, six property management enterprises, including Xingye Wulian, Yixing group, Jianye new life, Financial Street property, Hongyang service and Zhengrong service, have landed in the capital market. Another 9 companies have already submitted forms and are expected to be listed within the year.

Although the stock price fluctuates, the development prospect of this industry is still generally optimistic. According to the analysis of the scale of real estate sales in 2017-2 years, the scale of real estate sales will be released in the future. It is expected that the next two years or so will be the window period for property service enterprises to go public.

Revenue and profit rose

After six enterprises landed in the capital market, there are 28 listed property management enterprises. According to the China Daily News, in the first half of this year, the total revenue of 28 listed enterprises was 38.58 billion yuan, with an average of 1.38 billion yuan.

Among them, there are 7 enterprises that exceed the average revenue in the industry. In addition to colorful life, they also include country garden service, green city service, elegant life service, investment accumulation surplus, poly property and Zhonghai property. The management area advantage brought by large-scale real estate enterprises has become an important support for their performance.

Over the same period, the net profit of 28 listed companies was 5.47 billion yuan, up 49.6% year-on-year, and the average net interest rate was 14.2%, 0.9 percentage points higher than the same period in 2019.

In the first half of this year, the service income of country garden reached 6.27 billion yuan, an increase of 78.4% over the same period of last year; the net profit attributable to the parent was 1.34 billion yuan, up 61.6% year on year. Property management companies have become the largest revenue in the industry.

By the end of June, country garden's service area under management was 320 million square meters, although it was not the largest in the industry, it was one of the only four listed property management enterprises with an area of more than 300 million square meters (the remaining three were Yahuo service, poly property and color life).

Among the large listed property management enterprises, in the first half of the year, the income of ya life service was 4.0 billion yuan, with a year-on-year growth of 78.5%; the income of poly property was 3.6 billion yuan, with a year-on-year growth of 27.6%; the service income of green city was 4.4 billion yuan, with a year-on-year growth of 20.1%. This is also the current listed property companies, the largest revenue scale of the four companies.

It is different from the situation that the income of many traditional real estate enterprises has declined due to the impact of the epidemic. Among the 28 listed property management enterprises, except for blessing life service and colorful life, the other enterprises achieved positive income growth in the first half of the year, and the growth rate of 8 enterprises was more than 50%. Over the same period, the net profit attributable to the parent of the 28 listed property companies increased positively.

There is a strong positive correlation between the rapid growth of performance and the improvement of management scale. It is reported that in the current property fee standard "limit high" environment, property management enterprises want to quickly increase income, expand the management scale is the main means. Among them, the property management companies of some large real estate enterprises, as well as the enterprises that realize the rapid growth of the scale under management through merger and acquisition, have realized the rapid increase of income.

Value added business

The rapid growth of property management company performance, in addition to the support of scale, is also in the diversification of business. Among them, the development of value-added services can bring about the synchronous increase of scale and profit margin.

The main business of Jianye new life is divided into property management and value-added services, life services, commercial asset management and consulting services. In the first half of this year, the gross profit margin of the three businesses was 31.7%, 40.1% and 69.8%. It can be seen that the profit margin of non main business is obviously higher than that of property management business itself.

In the first half of 2020, the revenue of Binjiang will be 1.64 billion yuan. Among them, due to the increase of pre delivery services, consulting services, community space services and projects, the non owner value-added service income increased by 9.5% to 121 million yuan, accounting for 29.2% of the total income; due to the continuous growth of customized home decoration, parking space and storage room sales, the owner's value-added service income increased by 165.6% to 40.1 million yuan, accounting for 9.6% of the total revenue.

In the first half of the year, the gross profit rate of Binjiang service increased from 28.9% in the same period of last year to 32.9% due to the rapid growth of value-added services for owners with high gross profit.

In the first half of 2020, the income of community value-added services provided by country garden was about 603 million yuan, a year-on-year increase of 96.2%, accounting for 9.6% of the company's total revenue, an increase of 0.9% compared with the same period last year.

During the performance meeting, Li Changjiang, executive director and President of country garden services, said that if the property service is a trillion level blue ocean, then the value-added service is a 10 trillion level blue ocean, and country garden service is just beginning. "We hope that the company's value-added service revenue share can double or even more in the future, and the profit share may be even higher than the revenue share."

Jiahe JIAYE believes that the operating conditions of all the enterprises in the comprehensive industry in the first half of the year and the continuous growth of their hematopoietic capacity are mainly due to three factors:

1. During the epidemic period, community value-added services became a new growth point. In the first half of the year, the average value of community value-added services of 28 property enterprises increased by 40.3% year-on-year;

2. Most property enterprises continue to develop high profit non residential business, mainly office property and commercial property;

3. Under the influence of the epidemic situation, the implementation of financial and tax subsidy policies by many governments has played a certain role in optimizing the overall profit level of property enterprises.

This also makes the capital market recognition of property management business, to be significantly stronger than real estate. On September 4, country garden closed at HK $9.7 with a P / E ratio of 5.1, while country garden services, which is also listed in Hong Kong shares, closed at HK $54.1 with a P / E ratio of 62.83.

Still in "horse race enclosure"

In recent years, capital continues to increase the pursuit of property management enterprises. From 2014 to 2019, there were 1, 2, 2, 1, 6, and 11 property management enterprises listed.

Since this year, six property management enterprises have landed in the capital market, with a total net financing of 4.39 billion yuan. According to public information, nine companies have submitted their forms and are expected to be listed by the end of the year, with a total financing amount of about 25 billion yuan.

The total financing amount of 15 property companies in the whole year was about 30 billion yuan, 2.9 times of that in 2019, according to e-jukerui. The upsurge of listing of property management companies reflects two trends: 1. The demand for short-term expansion of property management companies is strong, and there is a demand for financing; 2. Under the test of the epidemic situation, the property sector of the secondary market performs well, the value of property companies is affirmed by the market again, and the financing channels of property management companies are becoming more and more smooth.

"It is expected that the next two years or so will be the window period for property service enterprises to go public." Wang Zhaochun, deputy director of the Standardization Working Committee of the China Association for things and materials, said.

Hua'an Securities pointed out that in this round of market expansion, the annual sales volume of commercial housing from 2017 to 2019 reached a peak of about 1.7 billion square meters. "Corresponding to the sales scale of commercial housing in recent three years, the incremental scale of the property management industry in the next 2-3 years will enter the accelerated release period."

At the same time, "with the rise of regional economy, China's commercial housing market will gradually return to the reasonable center, and with abundant stock resources, the scale and performance of the property management industry will have considerable room for improvement."

In the process of "horse race enclosure", scale is still the focus of the industry. From the analysis of the Prospectuses of listed companies, the proportion of listed companies to be used for acquisition and strategic investment is as high as 60% - 70%. During the period of mid season report, executives of several property management companies said that they would seize the opportunity of merger and acquisition in the future and further expand the scale of management. Among them, commercial, office and other non residential areas are also considered by enterprises.

This is likely to further intensify the wave of mergers and acquisitions that have emerged. Wang Zhaochun said that the emergence of large-scale M & A in the industry means that the strategic turning point of the industry has come, and the main method to eliminate competitors has changed from "product + price" to capital.

Affected by this, the trend of increasing the concentration of the property management industry will also be strengthened. Hua'an Securities pointed out that the improvement of industry concentration mainly lies in the following aspects: 1. Most leading companies in the property management industry have associated real estate developers and fully enjoy the endogenous growth brought about by the internal resource transportation of the group. 2. The head enterprises take advantage of the capital market to realize the double line expansion of scale and business, and promote the improvement of concentration.

According to the data, from 2016 to 2019, the management area of the top 100 property management industry increased from 27.25 million square meters to 42.79 million square meters, and the market share increased to 43.6%.

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