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.

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.

At the same time, most of its income comes from providing property management and related services to the projects of Financial Street affiliated group, and the related income accounts for more than 80% of the property income of Financial Street.

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.

In order to achieve sustainable development, Financial Street real estate plans to expand its geographical coverage. From the perspective of the investment direction of the listed proceeds, the ways to expand its business include: about 60% of the net proceeds will be used to seek strategic acquisition and investment opportunities, new branches and subsidiaries; about 20% will be used to develop value-added service business; about 10% will be used to build information technology and intelligent facility system Upgrade; about 10% will be used for working capital and general corporate purposes.

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.

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.