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Breaking hair should also be listed!In half a month, 6 property enterprises ran into the Hong Kong Stock Exchange
Source: International Finance News
Wu Dian
After intensively handing over forms, Hong Kong stocks ushered in the climax of listing of property management companies.
As of July 16, six property companies including Zhongjun Commercial Management, Landsea Green, Leading Services, DXN Services, Rongxin Services, and Kangqiaoyue Life have successively landed on the Hong Kong Stock Exchange in July. The number of listed property companies on the Hong Kong stock market has also increased. There are 56 companies.
After the climax, the enthusiasm for property IPOs still shows no signs of retreat.
Data show that there are still 23 real estate companies in the capital market waiting to be listed. The executive vice president of the Zhejiang Branch of the Zhongzhi Research Institute told reporters that at least a dozen companies will be listed in the second half of the year, and the number of listed companies is expected to exceed 20 this year.
Yang Xi, general manager of the China Institute of Materials Research, is more optimistic about this number. It believes that 2021 will definitely break the record of 18 real estate companies going public in 2020. There may be more than 30 real estate companies listed, and the number of listed real estate companies in the entire industry will exceed 70.
6 half-month listings
While a large number of real estate companies “run” into the market, the differentiation of real estate valuations continues. The stock price performance on the first day of listing reflects the attitude of the capital market to some extent.
On July 16, Rongxin Services and Kangqiaoyue Life went public at the same time, and both broke their deals at the opening of the market. As of the close, Rongxin Services rose slightly by 0.41%, and Kangqiaoyue Life’s decline narrowed to 1.09%. The share price of Zhongjun Commercial Management, which was listed on July 2, rose 8.11% on the first day, Landsea Green rose 41.51%, and Lingyue Services and DXN Services closed at the issue price.
The performance of the difference is inseparable from the attributes of the enterprise itself.
An industry insider told reporters that both the commercial management services of Zhongjun Commercial Management and Landsea’s green green buildings are favored by the market, which has provided blessings for its own valuation.
In contrast, Lingyue Service, DXN Service, Rongxin Service and Kangqiaoyue Life are still the “old three”, the model is not new, and the size of the above-mentioned four companies is limited. The tube industry has naturally fallen behind.
The senior college students believe that the stock price performance of a company on the first day of listing is affected by multiple factors such as pricing levels and market performance. Therefore, “the stock price performance on the first day does not explain any problems, and it must be viewed in the long-term.”
But the uneven valuation is obvious. According to data from Dongcai Choice, as of July 16, Zhongjun Commercial Management had a P/E ratio of 45.4 times, the highest valuation among property companies listed in 2021.
Drawing: Wu Dian
It is closely followed by Xingsheng Commercial, which went public on January 26, with a P/E ratio of 36.23. Landsea Green, Leading Services and DXN Services were 16.38 times, 15.14 times, and 26.5 times respectively, which were lower than the industry average of 28.24.
From the perspective of capital market performance, companies with high valuations also have similarities. They usually have larger scales or innovative business models, represented by Country Garden Services, China Resources Vientiane Life, and Sunac Services.
It is undeniable that commercial properties are obviously more favored by capital, and this is clearly reflected in a recent greenfield sale.
On July 5, Greenland disclosed that the company would transfer its Lvmin property to Fantasia for a price of 1.26 billion yuan. In terms of target net profit, the PE of Fantasia’s acquisition of Lumin Property has reached 530 times. Behind this high valuation transaction is Greenland’s high-quality commercial properties.
The last chance
Under the general trend of more and more differentiation and the return of valuation to rationality, why do property companies still rush to seize the capital market?
In this regard, Zhuge Fangfang Data Research Center told reporters that “the current property management companies are getting listed together because the listing threshold of the Hong Kong Stock Exchange is about to increase, and the property enterprises hope to seize the final listing opportunity.”
At the end of 2020, the market reported that the Hong Kong Stock Exchange would raise the profit standard. On May 21, 2021, the Hong Kong Stock Exchange announced a consultation summary on the profit requirements for listing on the Main Board, and decided to increase the Main Board profit requirements for listing applicants by 60% from January 1, 2022, and require shareholders in the last financial year The attributable profit is not less than 35 million Hong Kong dollars, and the three-year cumulative profit is not less than 80 million Hong Kong dollars.
This is not the first time the Hong Kong Stock Exchange has adjusted its listing rules. As early as 2019, the Hong Kong Stock Exchange revised the “Listing Rules” regulations on backdoor listings and other requirements, which significantly tightened the criteria for determining backdoor listings.
The Crane Research Center believes that for mainland companies, compared with IPOs, the overall cycle of backdoor listings is longer, and there are uncertainties in transactions.
The increase in the profitability standard of the main board listing means that the threshold for the main board IPO is also increasing at the same time. “Small companies that are not large enough and whose profits are not stable enough will be directly blocked from the capital gate.” Crane Research Center said.
According to the new regulations, among the property companies currently queuing up, ZhongAn Smart Life, Xiang Life Service and Mingyu Commercial Service have all failed to meet the requirements. For these companies, there is not much time left for them, and a cruel reality lies ahead: If the hearing cannot be passed before the end of the year, the re-submission of the form after January 1, 2022 will be subject to new regulations.
In addition to the stimulus of the new regulations, the industry’s own attributes have also been the driving force for property management companies to get together and go public in recent years. The senior college student told reporters that the property industry has the characteristics of sufficient cash flow, low risk, and light assets. “This is also the main reason why it is favored by capital.”
In the past three years, the number of newly listed property companies in Hong Kong stocks has doubled. From 6 in 2018 to 9 in 2019, the number of property companies listed in 2020 will reach 18.
Getting listed together means that scarcity is no longer. After experiencing high valuations, the property sector began to pull back in the second half of 2020, and valuations gradually returned to rationality. At that time, many listed property companies have experienced break-ups, such as Shimao Service, Hejing Youhuo, First Service, Ocean Service, Evergrande Property and so on.
However, this has not weakened the determination of property companies to go to the capital market. Many reasons such as backfeeding real estate companies, the Hong Kong Stock Exchange’s upward profit threshold, and their own development needs have further catalyzed the speed of listing of property companies.
According to the Hong Kong Stock Exchange, since June, 11 property companies have submitted prospectuses to sprint for IPO, and the second half of the year may continue to usher in the peak of listing of property companies.
Sina statement: This news is reprinted from Sina’s cooperative media. Sina.com posted this article for the purpose of conveying more information and does not mean that it agrees with its views or confirms its description. Article content is for reference only and does not constitute investment advice. Investors operate accordingly at their own risk.
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