The property industry is surging.
The other dayCNAC ShandaThe amendment for the purchase of 100% equity interest in China Merchants property and related party transactions has been issued. After the completion of the transaction, the total revenue of AVIC property and China Merchants property in the first half of the year will exceed 3.5 billion yuan. Earlier, Yashi Services also completed the acquisition of a 60 per cent stake in China Minsheng Investment property, which managed more than Poly property, which submitted its prospectus to the Hong Kong Stock Exchange in June. The head pattern is about to change.
On the other hand, the second wave of property company listing is about to begin. Incomplete statistics, at present, there are 5 Hong Kong stocks and 2 A-shares. With the recent listing of two property companies, Xinyuan Service and Blu-ray Garbo Service, up to now, the number of property sector enterprises has reached 17, and the future is expected to expand to 24.
In terms of the market, Xinyuan service rose 41.83% on the first day of listing, including funds and other factors, but the property value has been found to be an indisputable fact. In this way, Sina Finance combed the performance of 15 property companies that have been listed for a long time (excluding the newly listed Xinyuan service and Blu-ray Garbo service) and found that the growth rate of some head property companies slowed down. China Shipping property, Greentown service gross profit margin is low in the industry. And with the acceleration of mergers and acquisitions, who is the king of property becomes a suspense.
The growth rate of head property companies slows down and Greentown services have declined for two consecutive years.
First of all, let's look at the performance of listed property companies in the first half of the year.
As most property companies have had large mergers and acquisitions since July, the results in the first half of the year have not yet reflected the results of mergers and acquisitions, and the ranking of property companies has not changed much. Greentown Service is ahead of Country Garden Services Holdings with a slight lead of 3.665 billion yuan, winning the first place of 15 listed property companies.
From the perspective of revenue scale, only Greentown Service and Country Garden Services Holdings are more than 3 billion yuan. With lottery life as the dividing line, 10 of the 15 property companies had revenue of less than 1 billion yuan in the first half, and the proportion of the second echelon reached 66.7%. This also reflects the small and scattered characteristics of the property industry, and the market concentration is not high.
Note: the recent listing of Xinyuan Service and Blu-ray Garbo Service are not included in the scope of statistics. Source: wind
In terms of growth rate, in the first half of the year, most property companies achieved double-digit year-on-year growth, only lottery life, blessing life services increased by 3.11% and 1.79% over the same period last year.
It is worth noting that vertically, most of the second-tier small and medium-sized property companies maintained a higher growth rate than the same period last year, but the growth rate of three head property companies slowed significantly compared with the same period last year. The growth rate of colorful life dropped sharply by 132.2 percentage points, the growth rate of elegant living services dropped by 43.36 percent, and the growth rate of Greentown services dropped by 7.74 percent. Although the growth rate of Greentown service has slowed the least, its growth rate in 2018 has dropped by 7.37 percentage points compared with the same period last year, and in 2019, Greentown service has been reported to have slowed for two consecutive years.
Source: wind
You know, the revenue of the property industry is not seasonal, and there is little difference between the reported growth rate and the annual report growth rate from previous years' data. So far, the above three only elegant living services have made acquisitions in July, and it is not unexpected that the growth rate of life in 2019 will drop sharply, while that of Greentown services will slow for two consecutive years. Both are companies that have been listed for more than three years.
And the growth rate of 3 of the five head property companies has slowed down, which may also convey the difficulty that the head property companies want to move up to a higher level in scale. In addition to relying on the parent company and expanding third-party projects, M & An expansion has become an important path.
The reason why Country Garden Services Holdings can maintain a high growth rate of 74 per cent is closely related to mergers and acquisitions. Since landing in the capital market in June 2018, the company has acquired five property management companies at a total cost of 683 million yuan at the end of 2018. In July 2019, Country Garden Holdings Wisdom property Services acquired a 100% stake in Hong Kong Union Real Estate Services for 375 million, which ranks 17th among the top 100 Chinese property services enterprises in 2019.
The market also prefers this simple and effective approach. On the news of Country Garden Holdings's acquisition of Hong Kong Union Real Estate, the company's share price rose more than 4 per cent to HK $18.88; China Minsheng Investment, the acquisition of Acer Life Services, rose 8.36 per cent on the day; and AVIC Shanda has risen 20.45 per cent since it announced the acquisition of China Merchants property.
Reciprocal gross profit margin of China Shipping property and Greentown service
In terms of profitability, the average gross profit margin of 15 property companies is 30%, and the average net profit margin is 14.25%. According to the gross profit margin from high to bottom, except for the performance of individual companies "unexpected", ranking and revenue scale is roughly the same, gross profit margin is closely related to the size.
Among them, blessing life service and Olympic garden health two outstanding performance, respectively, 42.58%, 39.57% gross profit margin at the top, showing a small and beautiful posture. By contrast, head property Greentown Service and China Shipping property accidentally ranked at the bottom with a comprehensive gross profit margin of 20.13% and 19.28%, which was about 10 percentage points lower than the industry average, contrary to the size advantage of the company.
Source: wind
The income of the property industry is generally divided into three parts: property basic services (mainly charging basic property fees), non-owner value-added services (co-marketing, etc. related to developers, gross profit margin 30%-50%), owner value-added services (including community value-added services such as cleaning, gross profit margin 50%-60%). In the basic property part, due to the price restrictions of property fees and difficulties in price increases, the gross profit margin is on the low side. Relatively speaking, the value-added services with higher gross profit margin in recent years have become a more imaginative part.
This paper selects property services with larger revenue and community value-added services with higher gross profit margin, and further analyzes two businesses that can have a greater impact on comprehensive gross profit margin, and finds that Greentown service, whether it is property service or community value-added service, segment gross profit margin is the lowest in the statistical range.
In the first half of the year, the gross profit margin of community value-added services of Greentown service was only 31.1%, a difference of 50 percentage points from the gross profit margin of colorful life, which is famous for value-added services. Not only that, the gross profit margin of 11.9% for basic property services is also the lowest among disclosed property companies. However, according to the Greentown service, the unit price of property fee is 3.16 yuan / month / square meter, which is higher than the level of 2.3 yuan / month / square meter in the industry. It seems that companies should rethink the issue of cost control.
Note: only 10 medium-sized newspapers fully disclose all parts of gross profit margin data source: company announcement arrangement
On the contrary, Zhonghai property, which is also lagging behind, is in the normal range of the industry, but property services with low gross profit margin account for 80%, and community value-added services with high gross margin account for only 2% in the revenue structure. as a result, the company's comprehensive gross profit margin is only 20%.
Another noteworthy is that the property service gross profit margin of China Shipping Properties in the first half of the year fell by 9 percentage points compared with the same period last year, and the same situation occurred in half of the property companies. The reasons include increased investment in property services, increased personnel, rising labor costs, lower third-party property fees and other factors. In the future, with the increase of labor costs and the strong rigidity of the unit price of property fees, the gross profit margin of property services may become a high probability event.
In terms of the net profit rate of sales, the gross profit margin above the average gross profit margin of lottery life, Hehong service and Zhongao to home has achieved a lower net profit margin, and the rate during the period is worth paying attention to.
Source: wind
On the whole, the property management industry is an industry that only needs light asset management to continue to create stable cash flow, with both growth and anti-volatility attributes. But compared with other industries, the roe level of the property industry is not high, the half-year roe of 9 is less than 10%, the property industry is still the king of scale.
The project property fee of related housing enterprises is on the high side. Non-residential property attracts attention.
While studying profitability, we also found some phenomena worthy of attention.
Many listed property companies belong to split listing from housing enterprises, although they have been listed independently, but the dependence on related housing enterprises is still the main theme in the short term. The management area obtained by affiliated housing enterprises accounts for most of the total area, and the proportion of the third-party project area of the seven listed property companies is about 20% to 35%.
Source: company announcement
The property fees related to related parties are basically higher than the average residential level of 2.3 yuan / month / square meter of the top 100 property companies, while the third-party projects are lower than the average. For example, elegant living services come from Agile andGreenland HoldingsThe average property fee is 3.04 yuan / month / square meter, 2.04 yuan / month / square meter for the third party project, 3.35 yuan / month / square meter for Yongsheng Life from Xuhui Group and 1.93 yuan / month / square meter for the third party project. The average property fee of Poly property from the internal project of Poly Group is 2.21 yuan / month / square meter, and the external project is 1.47 yuan / month / square meter.
In the past two years, in order to seize the market and increase the extension of third-party projects, the proportion of third-party projects has gradually increased, which is bound to lead to a decline in gross profit margin, so many property companies begin to focus on non-residential properties with higher property fees. Take Poly property as an example, public property grew by 900% in 2018 compared with the same period last year, most of which were external projects.
According to the opinion index, 67.27% of the expansion projects of the 20 typical property service enterprises from January to June this year come from non-residential properties, while residential properties account for only 32.73%.
Another phenomenon is that with the acceleration of the listing process, the regional competition of property companies begins to be fierce. Among the companies waiting to be listed are Blu-ray Garbo Service in Sichuan, Silver City Life in Nanjing, Xindazheng property in Chongqing, Kaiyuan property in Hangzhou, and Guangdong-Hong Kong-Macau Greater Bay Area's neighborhood. Regional property companies account for about 80 per cent of the income in the "base". After the listing of these enterprises, the financial strength has been enhanced, and expansion has become inevitable.
Among the listed property companies, there are mainly two listed property companies in South China, namely, Lottery Life and Olympic Garden Health. There are in Zhejiang area.Nandu property, Binjiang Service and Greentown Service. To sum up, property companies are born in real estate enterprises, but are not limited to real estate enterprises, and the regional competition is becoming more and more fierce.
The market premium is reduced and the listing of Blu-ray Jiabao service is only up 15%.
The enthusiasm of the market for property continues unabated, but the listing dividend is decreasing. With the expansion of the listed property sector, companies can enjoy less and less valuation premium. At present, there are five property companies listed in 2019, the first three PE is about 30 times, the latest Xinyuan service PE is 18.98 times, Blu-ray Garbo service is 16.85 times, the valuation is low.
When the first property stock Lottery Life Hong Kong stock listed in 2014, the PE on the first day was as high as 81.25 times. In 2018, the PE on the first day of listing of Country Garden Services Holdings and Ya Life Services in 2018 was about 50 times, and in the second half of the year, due to the weakening of the Hong Kong stock market, the first day PE of China Shipping property was 40 times, and the PE of small and medium-sized Kaisa and Yongsheng on the first day of life was 21 times and 25 times respectively.
Horizontal comparison of the current valuation level, most property companies PE than the first day of listing has varying degrees of decline, property valuation tends to be rational. Color Life, the longest-listed company, is now valued at just 9.8 times after experiencing a high premium. But the head property company is still favored by the market.
Up to now, only 3 of the 16 property companies have experienced a cumulative decline, namely, Cai Life, Zhongao to Home, and Binjiang Service.
In terms of market capitalization, only Greentown service exceeds the market value of related real estate enterprises, and the market value of most real estate enterprises listed on the stock market is only about 20% of that of related real estate enterprises. Property companies such as color life and elegant life services, which have grown through mergers and acquisitions, have a higher proportion of market capitalization, 85% and 76%, respectively. On the first day of listing, the market capitalization of Xinyuan service far exceeds that of Xinyuan real estate. For small real estate developers, the benefits of split property listing are obvious. In the long run, the market still prefers head property companies.
There are a large number of reserve troops to be listed
With the listing of Xinyuan service and Blu-ray Garbo service, there are currently 4 queuing property companies and 2 A-shares in Hong Kong. The number of reserve troops of property companies to be listed is still large.
Among them, the listing of Poly property will undoubtedly stir the original head pattern, which has attracted much attention from the market. In addition, China Merchants property is listed through CNAC Shanda A shares, and the merger of the two properties will also create a head property company.
Note: Xinyuan Service and Garbo Service are listed a few days ago, and the previous annual data are included in the statistics of unlisted companies.
In terms of revenue, the larger property companies to be listed are Poly Properties (4.23 billion yuan), China Merchants property (3.125 billion yuan) and Baolong Commercial (2.91 billion yuan), of which Baolong commercial properties account for a large proportion. Poly Properties and China Merchants Properties are mainly residential properties.
In terms of profitability, the gross profit margin and net profit margin of the seven properties still in line are lower than the average of 30% and 14% of listed property companies, respectively. Among them, China Merchants property ranked at the bottom with a gross profit margin of 7.79% and a net profit rate of 4.7%.
The asset-liability ratio of property companies waiting to be listed is slightly higher (the average asset-liability ratio of listed companies is 50%). From the perspective of debt structure, in addition to the related funds with the real estate parent company, most of the property management industry are operating liabilities, interest-bearing liabilities are not much. Increase the financing channels after listing, and the asset-liability ratio is expected to decline.
According to media estimates, before the new third board delisted property companies in line with Hong Kong stock listing requirements, there are the first property, Midea property, Construction Investment Industry, Yinzhong property, Goldilocks shares 6.
The head pattern of constant mergers and acquisitions has changed.
The pace of mergers and acquisitions of head property companies began to accelerate significantly in the second half of the year.
In July, Country Garden Services Holdings bought a 100% stake in Hong Kong Union Real Estate Services for 375 million, which ranks 17th among the top 100 Chinese property services companies in 2019. After that, he bought China Evergrande Group for 190 million.Jiakai city100% equity in the property. According to the revenue data of the first half of the year, the difference between Country Garden Services Holdings and Greentown service is only 147 million yuan. Whether it can surpass Greentown service through continuous mergers and acquisitions has become a focus.
In September, Yashi Services acquired a 60% stake in Zhongmin property for 1.56 billion yuan and no more than 500 million yuan for Xinzhongmin property. It is reported that Zhongmin property is currently the largest third-party property group, with a total management area of about 290 million square meters. According to the 2019 semi-annual report, the contract area of Yashi service is about 325 million square meters. The total contract area of the two is about 615 million square meters, or will exceed Country Garden Services Holdings's 580 million square meters, becoming the first in the industry.
According to the draft related party transaction released by CNAC Shanda in October, according to the data at the end of 2018, the operating income of Greentown service, the first listed property management company, is 6.71 billion yuan.Citic Construction InvestmentData from the Securities Research report show that by the end of 2018, CNAC Shanda and China Merchants Properties totaled 6.638 billion yuan.
In the first half of the year, the operating income of China Merchants property reached 1.613 billion yuan, and the income of CNAC Shanda property services business reached 1.996 billion yuan, totaling 3.609 billion yuan. According to the revenue statistics of the first half of the year, the combined income of the two is second only to Greentown service of 3.665 billion yuan, ranking second among listed property companies.
According to the revenue dimension, the scale of China Merchants property and Country Garden Services Holdings is relatively close to that of Greentown service, while elegant life has an advantage in the management area. All three acquisitions took place after July, and the effect of the merger will be reflected in the 2019 annual report. Can Greentown service keep the property first, and who will be the leader of the property company? We'll see.