Recently, there has been a new development in a company that has been suspended for 11 years.

Zhitong Financial APP learned that Natural Dairy (00462) submitted a prospectus to the Hong Kong Stock Exchange on August 31 to apply for listing on the main board, with Raff Aello as the exclusive sponsor.

Through the prospectus, we learned that Natural Dairy hopes to stop the existing food and beverage, health products and dairy products related business through restructuring. When the acquisition is completed, it will enter the real estate market.

Transformation and renaming, aiming at real estate this time

The stock symbol of natural dairy products first belongs to Fumao Holdings, which is mainly engaged in the related business of audio-visual broadcasting system and broadcasting equipment. However, the recession in the industry made the company's development not going well, and the company suffered a loss in the second year of listing. In order to improve its operation, the company began its first transformation into iron ore mining.

It changed its name to China Jinhui Mining in 2008. However, Jinhui Mining is actually mainly engaged in the project business of engineering system integration in the optical disc storage media production industry. It may be that the span of the industry is large, and this transformation has not brought good development for Jinhui Mining, resulting in continuous losses and insufficient cash flow. This led to a second transformation of the company.

At that time, the "melamine incident" had a great impact on China, and Jinhui Mining, which was looking for improvement, turned its attention to the dairy industry. UBNZ Assets, which owns four farms in New Zealand, was acquired in 2009 and later renamed Natural Dairy. After completing the acquisition, Natural Dairy took a fancy to Crafar, New Zealand's largest private farm, with 22 farms.

Instead, the acquisition was unsuccessful, and trading in natural dairy products was suspended from September 7, 2010. On December 13, 2017, natural dairy products were listed as the third stage of delisting procedures by the Hong Kong Stock Exchange, and many of its subsidiaries were in the stage of abnormal operation or liquidation.

However, natural dairy products still did not give up, issued an announcement in 2018 to acquire a real estate developer, and submitted a resumption proposal to the Hong Kong Stock Exchange. In February this year, the listing Appeal Committee of the HKEx overturned the decision to cancel the listing of natural dairy products.

This transformation into the real estate industry, how about the target group of the planned acquisition? Let's make a specific analysis.

Development and sales business-based, stable performance

Zhitong Financial APP learned that the target group of the acquisition, located in Shangshui County, Zhoukou City, Henan Province, is a senior residential and composite real estate developer with 14 years of industry experience. Zhoukou is a new third-tier city and the third most populous city in Henan Province.

Nowadays, green environmental protection is promoted, and the target group is also focused on building green communities. At the same time, implement the concept of "my family lives in the park" to bring convenience and added value to consumers. For example, Renghuicheng, one of the major real estate development projects, has a total greening rate of more than 35%. And gradually established a "Ronghui" brand image, at the same time, market awareness has also been improved.

The main business of the Target Group can be divided into two parts, one is the development and sale of residential real estate and its supporting commercial and composite real estate, and the other is the rental of real estate developed by itself and held or acquired for investment purposes. To put it simply, real estate development and sales, as well as real estate investment.

As can be seen from the performance, the revenue of both businesses maintained continuous growth from 2018 to 2020. Among them, it is obvious that real estate development and sales account for a large proportion of total income, accounting for 97.92% in the first four months of this year. Although the income from real estate investment is relatively small, it has not been excessively reduced even because of the epidemic, which can be described as a stable source of income.

In addition to real estate development and sales, the target group also retains some of the real estate in its development projects and acquires desirable properties for rent collection. As these properties are the long-term investment targets of the Group, they are regarded as investment properties and enrich the income model of the Group.

The rental rate of investment property was 64.3% in the first four months of this year. The previous rental rates for the whole year from 2018 to 2020 were 54.7%, 72.5% and 62.3%, respectively. Rental rates are also returning to pre-epidemic levels.

In addition, the group also classifies the projects in its business. Including completed projects, projects under construction, held for future development projects and investment properties. Among them, the completed projects and investment properties can be understood as the projects that have brought benefits to the group, with 87682 square meters and 55811 square meters respectively. The other two projects will bring revenue to the Group in the future, with 191000 square meters under construction and 259100 square meters for future development projects.

The project under construction is expected to be completed from 2022 to 2023, and the future development project is expected to be completed from 2024 to 2025. It can be seen that the group is not limited to the present, but also planning for future development, so can the future development of the industry provide sustainable power for the target group?

The prospect of market development is good.

According to Frost Sullivan's report, the driving force of China's real estate market comes from the following.

The first is the acceleration of urbanization. From 2015 to 2020, China's urban population increased from 793 million to 902 million, with a compound annual growth rate of 2.6 per cent. At the same time, the urbanization rate increased by 6.6%. With sustained development, the compound annual growth rate of urban population is expected to be 2.7% from 2020 to 2025. The growth of population will certainly increase the demand of the real estate market.

The second is the growth of disposable income. Driven by the development of macro-economy and urbanization, the average income of urban households and rural residents has increased in recent years. From 2015 to 2020, the per capita disposable income of urban households increased from 31200 yuan to 43800 yuan, with a compound annual growth rate of 7 percent. In addition, the per capita net income of rural residents also increased from 11400 yuan to 17100 yuan, with a compound annual growth rate of 8.4 percent. Rising incomes also make residents more likely to invest in real estate.

Finally, there is the availability of various loan channels. From 2015 to 2020, real estate investment increased from 9.5979 trillion yuan to 14.1443 trillion yuan, with a compound annual growth rate of 8.1%. China's current real estate mortgage market is more mature, the development of this market helps land developers and buyers, have a variety of financing channels. Such as banks, non-bank financial institutions and private microfinance companies. Different kinds of loan channels will meet the needs of more customers.

As mentioned earlier, the target group is located in Henan Province, and the good development of the national real estate market will also bring impetus to the local real estate market in Henan Province.

Compared with other developed provinces, Henan has a low urbanization rate, reaching 52.4% last year. From 2015 to 2020, the compound annual growth rate of urban population in Henan was 3.3%, which was higher than the overall level of our country. The improvement of the urbanization rate in the future will also drive the growth of the demand of the real estate market and help the market to develop continuously.

In addition, Henan's own economy has also achieved rapid development, with a compound annual growth rate of 8.3% of nominal GDP from 2015 to 2020. The development of macro-economy is closely related to real estate, which also promotes the development of local real estate market in Henan. At the same time, the government is supporting the development of the market. For example, the shantytown transformation policy has not only accelerated the urbanization process of Henan, but also improved the utilization rate of land. Local governments have also introduced preferential policies to support the urbanization of the rural migrant population and increase the demand for real estate.