As Chinas largest residential service provider, shells boots for housing listing are about to fall.
On July 24, us time, shell housing (hereinafter referred to as shell) officially submitted an IPO application to the New York Stock Exchange, with the stock code of BEKE. It is reported that Goldman Sachs, Morgan Stanley and Huaxing capital are the joint lead underwriters of shell IPO.
It is understood that the main body of the listing is shell. In addition to the platform company Shell looking for housing, it also includes Lianjia, Deyou, finance, decoration and other businesses. Before landing on the capital market, shell house hunting was already the largest residential service provider in China, and chain house was the largest real estate brokerage agency in China.
Founded in April 2018, shell house search is a service platform for quality living. Different from the strong asset heavy property of chain home real estate, shell house is more Internet colored and asset light, so it is regarded as the main body of listing.
Since 2015, the chain family has completed the scale expansion through a series of mergers and acquisitions, and its regional layout has also expanded from Beijing to a number of core first and second tier cities. In 2018, Lianjia launched its real estate brokerage brand Deyou to carry out franchise business.
In addition, chain home has long been in the financial, decoration and other business layout, and its long-term rental apartment brand has developed independently.
In 2016 and 2017, Lianjia completed round B and round C financing successively, of which the scale of round B financing was 6 billion yuan.
In March 2019, the original investors shares in chainhome were transferred to shell for housing through the agreement mirror image. At the same time, shell housing to start d-round financing. After this round of financing, the value of shell to find a house is more than 10 billion US dollars.
In these rounds of financing, shell has introduced a large number of investors, including Huaxing capital, Hillhead capital, Jingwei China, Baidu, Tencent, new hope group, and real estate enterprises such as Vanke, rongchuang and country garden.
Similar to the listing path of many technology companies, shell is listed in the US stock market under the structure of vie. In July 2018, shell established shell holdings as a holding company in the Cayman Islands, and since then a series of intermediary holding entities have been established to control domestic business entities.
According to some analysts, the value of shell after listing is expected to reach 20 billion US dollars.
Commission constitutes the main income
As of June 30, 2020, shell platform has connected more than 42000 real estate brokerage stores and 456000 brokers, and has deployed 103 cities in China.
According to the prospectus, in 2018, the gross transaction volume (GTV) reached RMB 1153 billion, and increased to RMB 212.8 billion in 2019, with a year-on-year increase of 84.5%.
The prospectus also shows that shells income mainly comes from the Commission of housing transaction services. Among them, the income of second-hand house transaction and new house transaction in 2019 is 24.6 billion yuan and 20.2 billion yuan respectively.
Some analysts believe that the chain family contributed a large part of the income. As the largest real estate brokerage agency in China, chainjia has a large scale of business in second-hand housing transaction and new housing agency. In the short term, chain will continue to provide performance support for listed companies.
At present, the most important cost of shellfish is the human cost and the digital investment of the platform. Because the cost is still in the construction period of the platform, this part of the cost is high, and the shell is still in a loss state. According to the prospectus, the net operating loss of shell in 2019 is 2.18 billion yuan.
Analysts believe that with the expansion of the platform, the scale effect is highlighted, and the shell is expected to gradually achieve profitability in the future.
In addition, due to the rapid development of business and smooth financing channels, shell has abundant cash flow. The companys cash and cash equivalents in 2017, 2018 and 2019 were RMB 8.2 billion, RMB 12.8 billion and RMB 31.9 billion respectively.
It will continue to expand in the future
As Chinas real estate market gradually enters the stock age, the value of real estate brokerage services is further highlighted, and the market space of head brokerage companies and platform service enterprises is generally optimistic. This is also considered to be an important background for shell to find housing financing smoothly and start the road of listing.
According to CIC insightful consulting, China has the largest housing market in the world in terms of GTV and the number of second-hand and new house sales and rental transactions in 2019. It is expected that the market will enter a period of stable growth, and the second-hand housing trading market will become more important and will grow at a compound annual growth rate of 12.4%, from RMB 8.4 trillion in 2019 to RMB 15.1 trillion in 2024.
The agency pointed out that it is expected that by 2024, the total GTV of house sales and leasing realized through real estate brokerage services in China will increase from RMB 10.5 trillion in 2019 to RMB 19.1 trillion, and the penetration rate of brokerage services will increase from 47.1% in 2019 to 62.2%.
According to the prospectus, shell will focus on four key growth strategies in the future: sustainable development of infrastructure, improvement of efficiency and experience; further improvement of service quality and investment in talents; expansion of service scope; and selective strategic investment and acquisition.
(author: Zhang Min, editor: Li Qingyu)
Source: responsible editor of 21st century economic report: Wang Fengzhi_ NT2541