On November 28, 2023, Hopefield International Holding Limited (“Haohui International”), a haohui international holding limited company from Foshan, Guangdong, submitted a prospectus on the Hong Kong Stock Exchange to be listed on the Hong Kong Main Board.

Link to Haohui International's prospectus:

https://www1.hkexnews.hk/app/sehk/2023/105943/documents/sehk23112801031_c.pdf

Main business

Haohui International, as a property developer that focuses on revitalizing non-performing loan mortgaged properties for sale and rental, unlike traditional real estate developers, Haohui International focuses on identifying and acquiring non-performing loan collateral properties. The company uses its expertise and industry knowledge to identify and develop non-performing property assets with rising potential.

China's real estate market is currently in the adjustment phase. According to Cushman & Wakefield's report, the total balance of non-performing loans to public real estate of 17 banks listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange increased 72.0% from RMB 149.1 billion on December 31, 2021 to RMB 256.4 billion on December 31, 2022. According to statistics from the China Real Estate Housing Information Service Platform, on December 31, 2022, 126 key real estate projects across the country were suspended. Seizing this valuable opportunity, Haohui International plans to use its insight into non-performing loan collateral properties to seize high-quality business opportunities with potential for development.

Haohui International strives to identify and transform bad residential property assets with good value and potential in the Greater Bay Area and surrounding cities, including Li'an Ideal Home in Yangchun City, Guangdong Province, and Wanrui Ideal Washington. The company continues to focus on developing residential properties in the Greater Bay Area and has also expanded its business to other regions, including Daqing City in Heilongjiang Province.

Haohui International obtained property collateral for non-performing loans through asset management companies, judicial auctions, cooperation with property developers, or acquisition from them. The company's flagship project, Lian Garden, is a residential, commercial and retail complex located in Foshan. The company obtained it through an asset management company and is a successful example of the company's revitalization of distressed property assets.

During the track record period, Haohui International has completed four property projects (namely Ruian Garden Phase II, Ruian Ideal Home, Champagne Town Phase I, and Nanyue Plaza), and has two property projects under development (Wanrui Ideal Washington, Champagne Town Phase II), and two future development projects (Ruian Garden Phase 5, Enping Plot). Ruian Garden Phase I was completed and sold before the company acquired the project. The company also holds long-term investments in properties (South Plaza, Ruian Garden Phase I, Phase II and Phase IV properties).

As of September 30, 2023, Haohui International has a total of ten property development projects at various stages of development, located in Foshan, Yangchun, Enping, and Daqing, Heilongjiang. As of the same date, the company's total land reserve was approximately 491,200 square meters, including (i) the total unsold and pre-sold floor area of completed properties and 115,700 square meters of leasable construction area for investment; (ii) the planned construction area under development of 151,500 square meters; and (iii) the estimated floor area of 22.39 square meters for future development.

Haohui International's business operations are mainly composed of two business segments: (i) property sales and (ii) property leasing. The company's revenue mainly comes from the sale of residential properties developed by the company and rental income from commercial properties developed by the company.

Shareholder structure

According to the prospectus, in Haohui International's shareholder structure before listing,

Mr. Deng Xihua holds 43.65% of the shares through Hongjing Real Estate;

Mr. Shen Zubang holds 43.65% of the shares through Hongyao Real Estate;

Mr. Shen Kanghua (brother of Mr. Shen Zubang) holds 6.13% of shares through Hongshang Real Estate;

Mr. Tang Chi-ho (eldest son of Mr. Deng Xihua) holds 6.13% of the shares through Hongke Real Estate;

Mr. Wong Kin-hung held 0.44% of the shares through Hongshi.

The above shareholders are concerted actors. Mr. Deng Xihua and Mr. Shen Zubang have the final decision-making power and hold 100% of the shares in total.

Management

Haohui International's board of directors consists of 7 directors, including 4 executive directors and 3 independent non-executive directors.

Board of Directors (7 members)

Executives (6)

Executives include Mr. Deng Xihua, Executive Director and Chief Executive Officer, Mr. Shen Kanghua, Executive Director and Chairman, Mr. Shen Zubang, Executive Director, Mr. Tang Chi-ho, Executive Director, Mr. Tang Chi-fung, Director of Operations, Mr. Deng Zhifeng, Director of Operations, and Ms. Cai Yirong, Chief Financial Officer and Company Secretary.

Company performance

According to the prospectus, in the past 2020, 2021, 2022 and the first half of 2023, Haohui International's operating income was 115 million yuan, 182 million yuan, 286 million yuan and 310 million yuan, respectively, and the corresponding net profit was 24.323 million, 454.94 million, 65.710 million and 46.208 million yuan, respectively.

Intermediary team

Haohui International's intermediary team for this IPO mainly includes: Dongxing Securities (Hong Kong) as its sole sponsor; Deloitte as its auditor; Zhong Lun as the company's Chinese lawyer; Jingtian Gongcheng (Hong Kong) and Leung Ho-ran as the company's Hong Kong lawyers; Cinda and Fangda as their brokerage firm China lawyers and brokerage firm Hong Kong lawyers; and Dai Delliang as its independent industry consultant and independent property appraiser.