Viewpoint networkOn January 16, according to the Hong Kong Stock Exchange, the status of Longhu Zhichuang's life prospectus changed to "invalid".

It is reported that Longhu Zhichuang first submitted its prospectus on January 7, 2022 and expired on July 7. Immediately after that, Longhu submitted a prospectus again on the night of its failure, indicating its determination to list the property.

According to people familiar with the matter to the opinion of the new media, Longhu Smart Chuang Life twice through the hearing, affected by the valuation of the property stock is not in a hurry to arrange listing, is still waiting for the opportunity.

Longhu said that the application materials of Longhu Smart Chuang Life are still being updated continuously, and the follow-up will make flexible decisions according to market conditions and control the listing rhythm.

Dragged down by the real estate downturn and the lack of room for imagination in the business model, although the performance of property companies in 2022 is still relatively sound, but the continued decline in property stock valuations has become a reality.

The property has not passed the winter.

In the past few years, although it is not uncommon for large-scale spin-off and listing of real estate enterprises, the obvious trend is that it has gradually changed from upsurge to freezing point.

Public data show that from 2019 to 2022, 9, 19, 34 and 3 companies were listed respectively, while 11, 18, 14 and 6 companies were successfully listed in the same period.

According to statistics, the price-to-earnings ratio of most typical property enterprises is much lower than that of their first day of listing. For example, China Resources Mixc Lifestyle Services, China Shipping property, Poly property and Country Garden Services Holdings had a price-to-earnings ratio of 103.04 times, 35.89 times, 46.86 times and 53.22 times respectively on the first day of listing, and dropped to 37.85,23.64,21.06,11.75 times as of December 29th, 2022.

Winter is not over, but the decision-makers of enterprises have different choices, some listed under pressure, some wait and wait.

As far as everything is concerned, the property management platform from the real estate leader Vanke chose the former, but failed to get rid of the impact of the environment.

The day before its listing on September 28, 2022, Wayoyun closed down about 8.21% to HK $45.3. At 09:30 on the day of listing, everything fell 6.99 per cent to HK $45.90. This is almost a "half discount" compared with the valuation of HK $113 per share, which peaked at the end of 2021.

At that time, Yu Liang said, "Vanke does not care about the valuation of everything Cloud when it goes public, but more about its long-term performance in the future. Time will prove the value of everything Cloud."

Financial data show that by the end of June 2022, Wayoyun had a contract area of about 930 million square meters for residential consumer services in community space, 160 million square meters for commercial and urban space services, and 140 million square meters for management and construction.

There is a view that companies backed by PE (private equity investment) will "bleed" to go public, otherwise they will lose money, so it doesn't matter much in terms of valuation. Others say that the timing of listing may have something to do with Wayun's judgment of the future.

In fact, even if the opening break, everything Cloud is also one of the highest valuations of the Hong Kong property sector at that time.

Before everything Cloud, on July 8, 2022, Shandong Province, a state-owned enterprise known as the "first share of Shandong property", officially listed on the Hong Kong Stock Exchange. it also suffered a first-day break, closing down 25% from its offering price.

Property stocks have experienced an upsurge of listing, M & A differentiation and so on, and now they have left a gradually calm market.

Wait and see Dragon Lake

Under the above circumstances, Zhong an Wisdom Life and Longhu Smart Life choose a rational wait-and-see attitude to control the listing rhythm according to the market situation.

On the evening of January 12, Zhong an Wisdom Life announced that it would postpone the listing of shares and return the application for public offering and priority offering in Hong Kong.

It is understood that on December 28, 2022, the prospectus submitted by Zhong an Wisdom Life of Zhongan Group has passed the hearing. This is the second time that Zhong an's proposed spin-off property listing has been approved by regulators, the last one was on April 22, 2022, but the company did not carry out the spin-off at that time, and now it has submitted the table for the third time.

Longhu's wait-and-see attitude was shown at the Longhu interim performance meeting held last year. Zhao Yi, executive director and chief financial officer of the group at that time, said, "at present, the market mood is not good. We will pay attention to the market and do not worry. Instead, we will shift the focus of development to endogenous, focusing on the endogenous conversion rate, the efficiency of the takeover, and the increase in endogenous gross profit margin, including reducing reliance on low-quality mergers and acquisitions."

This calm statement may have something to do with the fundamentals of Longhu Wisdom creating a good life.

From the original Longhu property to upgrade to Longhu Wisdom Service in 2018, and then officially unveiled as Longhu Smart Life in 2022, after three rapid evolution, the company has integrated Longhu's original core competencies such as property management and commercial operation.

According to the prospectus disclosed in July last year, the income of Longhu Smart Life in 2019, 2020 and 2021 was 4.369 billion yuan, 6.468 billion yuan and 11.056 billion yuan respectively, an increase of 48.04% and 70.93% respectively. In the first four months of 2022, operating income was 4.06 billion yuan, an increase of 38.6% over the same period last year.

From 2019 to 2021, the gross profit of Longhu Smart Chuang Life was 1.278 billion yuan, 1.666 billion yuan and 2.943 billion yuan respectively, an increase of 30.35% and 76.65% over the same period last year. In the first four months of 2022, the company made a gross profit of 1.106 billion yuan.

Longhu Zhichuang said the increase was mainly due to increased income from residential and other non-commercial property management services, business operations and property management services divisions, enhanced economies of scale and effective cost control measures.

In terms of profitability, the corresponding gross margins in 2019, 2020, 2021 and as of April 30, 2022 were 29.25%, 25.76%, 26.62% and 27.24%, respectively, with fluctuations during the period.

Specifically, the gross profit margin of commercial operations and property management services is slightly higher than that of residential and other non-commercial projects, while in residential management services, the gross profit margin of independent third-party projects is much lower than that of Longhu and its joint venture companies.

In this regard, Longhu Zhichuang Life said that residential properties developed by Longfor Group are mainly medium-and high-end residential properties in first-and second-tier cities, with higher rates, while projects developed by independent third parties usually have a low gross profit margin. The reason is that the operating system used before the takeover is not advanced enough, resulting in poor maintenance of property conditions, resulting in higher renovation and upgrade costs after the takeover.

In terms of scale, according to the agency's forecast, by the end of 2022, the living area of Longhu Zhichuang continues to grow, reaching 335 million square meters, with a contracted area of 513 million square meters. At the same time, it operates more than 70 shopping malls.

Longfor Group's report also showed that Longhu Smart Life had signed commercial operation service contracts with 135 shopping mall projects as of June 30, 2022, which means that more shopping malls will be opened in the next few years.

At present, Longhu Smart Life property management and business operation services, involving consumption, entertainment, catering, life, medical, education, office, corporate services, real estate asset management, science and technology solutions and other aspects.

According to the Frost Sullivan report, there are a limited number of companies in China that provide both property management services and shopping center operation services, and Longhu Zhichuang ranks among the top companies in terms of operating income in the list of all-format property management companies.

Zhao Yi also said that in the future, the income of Longhu Smart Chuang's life will grow by more than 40%, and it is entirely expected that the annual profit will increase by more than 50%.

For the invalidation of the prospectus, perhaps the "cold winter" has not passed, Longhu is also very calm, as if waiting for the warm sun.