Financial Street property IPO is reducing dependence on Financial Street affiliated group

category:Finance
 Financial Street property IPO is reducing dependence on Financial Street affiliated group


Financial Street property will issue 90 million H shares at a price of HK $7.16-7.56 each, raising HK $644-680 million.

According to the prospectus, by the end of 2019, Financial Street property has managed 144 property projects across the country, with an area of about 1986 million square meters under management. In 2019, it achieved revenue of RMB 997 million and net profit of RMB 113.4 million.

Financial Street property starts from the property management service in Beijing Financial Street area. The construction area of commercial property (including office building, complex building, retail commercial building and hotel) under management is about 8 million square meters, accounting for 40.3%; non-commercial property (including residential property, public property, hospital, education property and others) is about 11.8 million square meters, accounting for 59.7%.

Although the proportion of commercial property in the management area is less than half, it contributes more than 60% of the total income. From 2017 to 2019, the related income of commercial property of Financial Street property accounted for 70.3%, 67.6% and 64.9% of the total income respectively.

However, this proportion shows a downward trend year by year. Financial Street properties are reducing their dependence on Financial Street affiliated groups.

Generally speaking, the gross profit rate of commercial property service is higher than that of non-commercial property. From 2017 to 2019, the gross profit rates of commercial property management in Financial Street are 25.3%, 22.5% and 24.6% respectively, while the gross profit rates of non-commercial property in the same period are 5.5%, 11.9% and 10.5% respectively.

Therefore, Financial Street property also said that it may not be able to maintain the current growth of business property management business, which will have a negative impact on the gross profit rate.

Among them, strategic acquisition and investment in other property management companies or downstream service providers account for the largest proportion, with a planned investment of HK $350 million. The scale threshold for potential acquisition or investment targets is: revenue of at least HK $40 million, net profit of at least HK $4 million and construction area of property under management of at least 1 million square meters in the latest fiscal year. In terms of geographical scope, the first two years after the listing of Financial Street property plan, it is the first choice to be located in Beijing Tianjin Hebei region, Yangtze River Delta and Dawan district. Since 2023, it has been seeking opportunities in Chengdu, Chongqing, Wuhan and other major cities in Southwest China and central China. In terms of business types of investment objectives, priority will be given to property management companies focusing on business property, as well as security, cleaning and gardening companies downstream of the property management industry chain. Source: editor in charge of Economic Observer: Wang Wenhua_ NF5982

Among them, strategic acquisition and investment in other property management companies or downstream service providers account for the largest proportion, with a planned investment of HK $350 million. The scale threshold for potential acquisition or investment targets is: revenue of at least HK $40 million, net profit of at least HK $4 million and construction area of property under management of at least 1 million square meters in the latest fiscal year.

In terms of geographical scope, the first two years after the listing of Financial Street property plan, it is the first choice to be located in Beijing Tianjin Hebei region, Yangtze River Delta and Dawan district. Since 2023, it has been seeking opportunities in Chengdu, Chongqing, Wuhan and other major cities in Southwest China and central China.