From the delisting of the new third board on April 11 to the hearing of the Hong Kong Stock Exchange on December 1 this year, poly property, backed by the central enterprises, will soon land on the Hong Kong stock exchange, becoming the 18th mainland property company listed in Hong Kong.
Poly property once landed on the new third board in August 2017, but chose to delist within two years, and then submitted an application for listing to the Hong Kong Stock Exchange on August 7. Compared with the new three board which is not active, poly property believes that listing in Hong Kong can improve the financing capacity, expand the financing channels and shareholder base.
According to market news, poly property plans to raise $500 million this time. The raised funds will be used to acquire or invest in property management companies; further develop value-added services; upgrade digital and intelligent management systems; and use for operating funds and general corporate purposes.
With the arrival of the era of real estate industry stock, the competition among property companies is becoming more and more fierce, and the capacity of scale expansion has become one of the important indicators to measure property companies.
Since April this year, poly property has increased its horsepower in scale expansion. In just two months, the newly added management area is 62 million square meters to 260 million square meters, ranking fourth among listed property companies, lagging behind color life, country garden service and elegant life.
As of June 30, 2019, the contract management area of poly property is 455 million square meters, covering 27 provinces and 148 cities in China, with a total of 817 properties, including 565 residential communities and 281 non residential communities. The property developed by the parent company Poly accounts for 43.1% of the management area.
From 91.9% in 2016 to 43.1% today, although the proportion of poly development property in the total managed area of poly property is shrinking, from the perspective of income, the property developed by poly development is still the main source of income of poly property, accounting for 98.7%, 95.9%, 88.6% and 82.8% in 2016-2018 and the first half of 2019, respectively.
In addition to the large proportion of management area, another important reason for poly development property to account for the main income source of poly property is that the management fee charged by poly property from the property developed by poly development is significantly higher than other external development projects.
Data shows that in 2016-2018 and the first half of 2019, the average property management fees charged by poly property from the property residential community developed by poly property are 2.12 yuan, 2.19 yuan, 2.21 yuan and 2.27 yuan per square meter per month respectively, while those from other property developers are 1.19 yuan, 1.31 yuan, 1.47 yuan and 1.48 yuan.
For the reason of charging lower property management fees for residential communities developed by other property developers, poly property said that the main purpose is to increase the market share of property management of external expansion projects, and it obtains a number of existing service contracts around the property under management from small and medium-sized developers.
While relying on the parent companys blood transfusion and bidding to increase market share, M & A has also become an important measure for property companies to rapidly expand their scale.
For the acquisition or investment of property companies, poly property has its own set of standards, which requires that the property companies have a management area of not less than 3 million square meters, an annual income of not less than 35 million yuan, and a well-known brand and good corporate reputation.
According to the data provided by the China Academy of information technology, in 2018, there were more than 200 companies with management area of no less than 3 million square meters and annual income of no less than 35 million yuan among the top 100 enterprises of server service. Therefore, poly property believes that there are enough suitable target companies in the market to help it expand its scale.
In addition, it is worth noting that the proportion of non residential buildings in the outward expansion projects of poly property has increased significantly. In 2016 and 2017, 4.5% and 9% of the total in-service area of non residential projects of poly property expansion accounted for, while the figures rose to 36.7% and 51.5% in 2018 and the first half of 2019.
The proportion of non residential projects in management area of poly property is significantly higher than that of other comparable property companies. CITIC Securities pointed out that the non residential business increment of poly property is mainly public facilities, urban management and schools. Non residential requires higher quality of managers, including professional skills and shareholder background.
This is also a point that poly property is significantly different from other peers. At the end of November this year, poly property signed strategic service agreements with 8 Urban Investment and cultural investment units from Baoshan, Tangshan, Dalian, Xian, Heze, etc. Among them, Luodian town government of Shanghai city introduced poly property for global management. Since 2016, poly property has also taken over the overall operation and management of Xitang ancient town, Zhejiang Province.
In terms of schools, in 2018, poly property acquired 60% of the equity of Hunan poly Tianchuang with RMB 78 million, and began to build a nationwide campus property management platform.
However, due to the low average price of public services, the proportion of non residential income of poly property is not high. In the first half of 2019, the proportion of income from residential, commercial and office buildings and public and other properties accounted for 74.9%, 13.2% and 11.9% respectively.
CITIC Securities pointed out that the profitability of public service property orders in the early stage is not high, but this kind of orders has the possibility of superposition of basic services (i.e. menu service), and there is still the possibility of continuous increase of income and gross profit rate in the future. More importantly, this segment has few competitors, strong first mover advantage and large potential development space.
In terms of revenue, in the first half of 2019, the income of poly property was 2.82 billion yuan, that of other major property companies in China, such as Vanke property was 5.28 billion yuan, that of green city service was 3.66 billion yuan, that of Zhonghai property was 2.4 billion Hong Kong dollars, and that of country garden service was 2.016 billion yuan.
From the perspective of profit margin index, the past performance of poly property lags behind some peers. From 2016 to 2018, the gross profit margin of poly property is 16.7%, 17.9% and 20.1% respectively, while that of country garden service in 2018 is 37.7%, Yaan life service is 38.2% and Xincheng Yue is 29.5%.
In the first half of 2019, due to the continuous increase of community value-added services, the gross profit margin of poly property increased to 23.6%. Poly property said that in the future, it will increase service charges and expand value-added services, while controlling service costs through standardized, digital and intelligent management.
Source: editor in charge of interface news: Yang bin_nf4368