Viewpoint networkUnder the influence of macro-control, China's real estate industry has ushered in a great change, and real estate enterprises are gradually saying goodbye to the era of fast turnover and high growth.
On the contrary, the property industry from the blue sea to the red sea has entered the stage of horse racing enclosure.
According to third-party statistics, in 2021, the amount of mergers and acquisitions in the property industry was nearly 36 billion yuan, nearly four times that of 2020.
Entering 2022, the drama of property acquisition and merger is still going on.
Since the first half of the year, many property companies, including Country Garden Services Holdings, China Resources Mixc Lifestyle Services, New Hope Service, time Neighbourhood, Zhongao to Home, and so on, have made some gains in mergers and acquisitions.
According to the latest news, on June 16, two acquisitions in the property services industry officially came to an end.
First, Jinke Services announced that it would end its acquisition of a 73.56 per cent stake in Jiayuan Services; second, China Merchants plans to acquire a 67 per cent stake in Xinzhong property at a cost of 536 million yuan.
In fact, the acceleration of mergers and acquisitions in the industry is partly due to the sudden changes in the real estate industry. after all, property companies are often one of the most valuable and easily realizable assets in the face of declining sales and tight financing.
On the other hand, for property enterprises, M & A can help to expand the scale rapidly, which is the only way to "become bigger and stronger".
Prior to this, at the 2022 Viewpoint property Conference held by opinion institutions, you Jianfeng, chief strategy officer of New City Hyatt Service Group, said: "M & An is a growth mode that can not be ignored from the international market." from business to later growth is mainly achieved through mergers and acquisitions. "
Yao Ping, party committee secretary and vice president of Jindi Wisdom Service Group, also believes that in the coming period of time, the integration within the industry will not stop, and the number one player may be born.
In other words, under both subjective and objective factors, the industry has entered the stage of "big fish eat small fish" or even "big fish eat big fish".
However, whether it is carried out like the surplus of investment promotion or the collapse of Jinke service, there are no more than two factors-whether the assets are of high quality and whether the price is reasonable.
After all, the property industry is gradually stepping down from the altar and the valuation is returning to rationality. under such circumstances, mergers and acquisitions of enterprises no longer tend to be blind, but change from "quantity" to "quality".
Terminated transaction
The merger and acquisition, which has been brewing for 23 days, has finally come to an end, but this time the outcome is not as expected.
On the evening of June 16, Jinke Wisdom Services Group Co., Ltd. announced that it had terminated the acquisition of a 73.56% stake in Jiayuan Services.
According to the announcement, the termination of this transaction is the result of discussions between the two sides.
Jinke Services mentioned in the announcement that the parties have decided not to conduct potential transactions and the framework agreement has been terminated accordingly. In addition, as at the date of the announcement, apart from the termination agreement of the Framework Agreement, the parties to the Framework Agreement have not entered into any final agreement or arrangement for potential transactions, nor have they made any payment.
At the same time, within 6 months from the date of this announcement, Jinke Services and its parties acting in concert shall not announce an offer or possible offer for the shares of Jiayuan Services, or acquire the shares of Jiayuan Services if it will lead to a compulsory offer.
In fact, sporadic news of the acquisition spread in the market as early as late May.
On the morning of May 23, Jinke Service suddenly announced a temporary suspension of trading. On the evening of the same day, Jiayuan International, which had been suspended for five days due to the sharp fall in its share price, also said that it would continue to suspend trading for a short time, pending an announcement that the company might sell a non-wholly-owned subsidiary.
As soon as the news came out, it immediately triggered speculation: whether selling Jinke property is true? And why did you sell it?
However, on the sale of the property at that time, a person close to Jiayuan Holdings told the new media that Jiayuan had not yet disclosed official information and was still in the process of preparation.
Who would have thought that the boots would land the next day, Jinke Service a notice confirmed all previous speculation.
According to the plan at that time, Jinke Services planned to acquire about 73.56% of all issued shares of Jiayuan Services, but did not disclose the consideration of the transaction and the method of acquisition. According to market news, Jinke is expected to pay a consideration of US $200m, or about RMB 1.33 billion.
200 million US dollars is not a small sum. Is Jiayuan service worth 200 million US dollars after all?
It is understood that Jiayuan Service successfully listed in Hong Kong on December 9, 2020, following the boom of property listing. 2021 is the first full fiscal year after its listing. According to the financial report, the company's managed area reached 21.9 million square meters, an increase of about 33% over the same period last year. The contract construction area is 62.7 million square meters, an increase of about 26.3% over the same period last year.
Based on the transaction consideration of 1.33 billion yuan and the net profit of 104 million yuan (the net profit of Jiayuan service in 2021), the PE of Jinke service's acquisition of Jiayuan service reached 12.78 times.
Prior to this, when China Resources Mixc Lifestyle Services acquired Zhongnan Service (the management area is equivalent to Jiayuan Service), PE was close to 13 times, while China Resources Mixc Lifestyle Services acquired Yuzhou property, PE reached 13.93 times.
By rough comparison, the $200 million consideration seems fair.
In early June, there was news that Jinke Service found that the quality of Jiayuan service itself was poor when it further negotiated the price.
The above news mentioned: when Jinke Service negotiated the property merger with the real controller of Jiayuan Department, the condition offered by Jiayuan Department was to package Jiayuan Service and Zhongtian City Investment Company together to sell Jinke Service.
It is understood that in August last year, Zhongtian Financial planned to sell 18 billion of its stake in Zhongtian City to Jiayuan, and the price fell to 8.9 billion yuan three months later.
Even if the price is halved, Jiayuan has not paid the transaction in full. In February this year, Zhongtian Financial disclosed that the company received the first phase equity transfer price of Jiayuan Group's acquisition of Zhongtian City Investment Group, but did not receive the second and third phase equity transfer price.
Zhongtian Financial announced again on March 29th that it had received a deposit of 1.58 billion yuan paid by Jiayuan Group, accounting for 17.75% of the equity transfer price of this transaction, but it had not yet received the second phase of equity transfer price on time. The delayed payment of the remaining equity transfer price of this transaction has a certain impact on the company's operating fund planning.
The relationship between Jiayuan and Zhongtian Investment has not been sorted out yet, and this way of packaging and selling will undoubtedly make Jinke Service face great risks and uncertainties in the follow-up development, and may even affect the subsequent profit expectations of the target enterprises. this is perhaps the most important reason for the failure of the deal.
However, for Jinke, terminating the deal may not be able to expand its scale through this acquisition, but it is much better than taking over "bad assets".
For Jiayuan Services, in the face of Jiayuan's liquidity crisis, the termination of the acquisition has undoubtedly reduced a port for the return of funds; in the future, Jiayuan Services may continue to look for the next "white knight".
Attract investment and accumulate surplus.
Contrary to the collapse of Jinke Services acquisition, China Merchants' surplus successfully acquired their favorite "goods" on June 16.
According to a notice issued by China Merchants surplus, the company recently received a "notification letter from the Southwest United property Exchange on matters related to the transaction" and identified the investment surplus as the transferee for the 67% equity project of Xinzhong property listed on the Southwest United property Exchange.
After the completion of the transaction, China Merchants will hold a 67% stake in Xinzhong property and Xinzhong Hong Kong will hold a 33% stake in Xinzhong property.
According to the data disclosed by the announcement, as of December 31, 2021, Xinzhong property assets totaled about 611 million yuan, with net assets of about 219 million yuan, operating income of about 410 million yuan and net profit of about 40 million yuan.
The price for China Merchants surplus to acquire a 67 per cent stake in Xinzhong property is 536 million yuan, which is also calculated according to the above method, the acquisition of PE is as high as 20 times.
Jinke Services less than 13 times PE acquisition of Jiayuan Services choose to give up, why is the remaining investment willing to spend 20 times the price to buy Xinzhong property?
Obviously, this acquisition can once again expand the scale of the investment surplus, but more importantly, the assets under management of Xinzhong property can form strategic coordination.
At the performance meeting in March this year, Nie Liming, chairman of the investment surplus, repeatedly mentioned the importance of mergers and acquisitions to the development of the investment surplus in 2022. He said that he will actively seize the opportunities in the M & A market and promote the landing of more high-quality projects. M & An is the next core focus of the company, and the investment promotion surplus has regarded M & An as a long-term development strategy.
Nie Liming stressed that the investment surplus will pay attention to two points in the acquisition. First, the price should be reasonable, because after the valuation is too high, it will form a burden on the future long-term operation; second, the acquisition target should be coordinated with the company's strategy and be able to exert synergy value.
It is understood that China Merchants surplus successfully acquired China Southern Airlines property and Shanghai Airlines property in the last quarter of 2021, and locked in Shenzhen Huiqin property Company, which belongs to China Merchants Bank Jinzun Group. These acquisitions focus on aviation and banking property services, both of which now account for a significant proportion of China Merchants' own business.
The Xinzhong property acquisition mainly provides comprehensive property management services and bank auxiliary services for customers of banking financial institutions. By the end of July 2021, Xinzhong property had 241 projects under management, with a construction area of about 5.59 million square meters, distributed in 26 provinces and municipalities directly under the Central Government, of which the construction area of office property under management was about 4.57 million square meters, accounting for about 82 percent.
Xinzhong property in the management of property types highly coincides with the focus of the investment surplus in the past, this acquisition can undoubtedly improve the enterprise's value-added service capacity, broaden profit points, and further build its own moat, which may also be an important reason for the investment surplus to accept 20 times PE.
For property enterprises, M & An is not only a means of scale expansion, but also an important way for companies to adjust business structure and optimize asset quality.
The increase and decrease of the investment surplus and Jinke services reflect the great changes in the industry and market environment, and property service enterprises pay more attention to the economic benefits and M & A risks brought by the transaction itself.