Company profile: Yincheng Life Service is a famous property management service provider in China. It has more than 20 years of industry experience and provides diversified property management services and value-added services for living communities. The company transformed from a local property management service provider in Nanjing to one of the leading property management service providers in Nanjing and Jiangsu Province. According to Frost & Sullivan's report, in terms of 2018 revenue, the company ranked first and fifth among property management service providers in Nanjing and Jiangsu, respectively, and ranked 34th among China's top 100 property service companies in 2019. Currently, the company's property management services cover 10 cities in China, including 7 cities in Jiangsu Province and 3 cities in other provinces in the Yangtze River Delta region. It manages a construction area of about 19.6 million square meters and manages 197 properties, including 89 residential properties and 108 non-residential properties, serving more than 100,000 households. Sino-Thai view: The Yangtze River Delta region has strong potential for property management opportunities: According to Frost & Sullivan's report, the total construction area under management by property management service companies in Jiangsu Province increased from 2.25 billion square meters in 2013 to 2.86 billion square meters in 2018, with a compound annual growth rate of 4.9%. The total construction area of residential properties under management reached 2.25 billion square meters in 2018, with a compound annual growth rate of 5.0% from 2013 to 2018. The total construction area under management of non-residential properties reached 6100 million square meters in 2018, with a compound annual growth rate of 4.5% from 2013 to 2018. The total construction area under management is expected to reach 3.56 billion square meters in 2023, and the compound annual growth rate from 2018 to 2023 is expected to be 4.5%. Since Shanghai and the Yangtze River Delta region are regarded as economic centers and international gateways respectively, the Chinese government has continued to provide necessary policy support for the development of urban agglomerations in the Yangtze River Delta region, bringing development opportunities to property management service companies in major cities in the Yangtze River Delta region. In terms of operating performance: In the 2016-2018 fiscal year and as of April 30, 2019, the company achieved operating income of 220 million yuan, 340 million yuan, 520 million yuan and 210 million yuan respectively, of which nearly 80% of revenue came from property management services, and 20% from value-added services; gross margin was 21.7%, 16.7%, 14.5% and 15.3%, respectively. Gross margin showed a downward trend, mainly due to (1) the company's early work being hired to replace existing property management companies at the time, production costs were high. The overall situation improved to meet normal service standards The profitability of the two to three-year projects was low, and gross margin decreased during the track record period due to continued business expansion (2) The average wage of employees increased due to the increase in the minimum wage in accordance with government policies; the net interest rate was 10.2%, 6.5%, 5.8% and 5.4%, respectively. In terms of valuation: Based on the calculation of 270 million shares after the global public sale, the company's market value is HK$51-610 million, which is lower than that of its Hong Kong stock peers. The company's price-earnings ratio in 2018 was about 16.9-20.2 times, lower than the industry average; in 2018, the net price-earnings ratio was about 2.75-2.92 times, lower than the industry average. In terms of profitability, the ROE and ROA in 2018 were 43.2% and 7.9%, respectively, higher than the industry average. According to our statistics, a total of five property management companies went public in Hong Kong this year. None of them went bankrupt on the first day. However, considering that this company is too small and its valuation is too high, we suggest that it be prudent to apply for purchases. Combining the company's industry position, performance, and valuation level, we gave it a score of 65, with a rating of “subscription”. Risk warning: (1) market competition risk, (2) business is too concentrated in Nanjing, and (3) any adverse operational development of major shareholders will affect the company's ability to obtain new property management agreements