Home » Knowing “things”丨”new engine” Longfor Zhichuang life’s differentiated way of playing jqknews – CAIJING.COM.CN

Knowing “things”丨”new engine” Longfor Zhichuang life’s differentiated way of playing jqknews – CAIJING.COM.CN

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Longfor Group finally decided to spin off the property for listing.

On the evening of January 7, Longfor Group announced that it proposed to spin off the shares of its subsidiary Longfor Zhichuang Life Co., Ltd. (hereinafter referred to as “Longfor Zhichuang Life”) and list it independently on the main board of the Stock Exchange. On the same day, the official website of Longfor Group announced the launch of the new brand “Longfor Smart Life”.

It is understood that Longfor Smart Life is not an upgraded version of “Longfor Smart Services”, nor is it a simple superposition of Longfor Smart Services and Longfor’s commercial operation services and brands. , the new brand that has grown out organically integrates the core capabilities of Longfor Group’s original smart services, business operations and other businesses, and will become an asset-light platform in the future.

And what new stories will this new platform tell?

Economies of scale are prominent

Once born, Longfor Zhichuang Life is the existence of the “Big Mac” in the property market.

According to the prospectus, as of December 28, 2021, Longfor Zhichuang Life has signed contracts and strategic cooperation with an area of ​​440 million square meters and an area under management of 250 million square meters. Among them, residential and non-commercial properties reached 213 million square meters, shopping centers 9 million square meters, office buildings and other commercial properties 15.2 million square meters.

In the 2021 China Property Service Enterprise Contract Scale List and the Managed Scale List released by Crane, Longfor Zhichuang Life ranked 7th and 9th respectively.

Benefiting from the huge scale advantage, Longfor Zhichuang Life has achieved high growth in revenue and profit. According to the prospectus, from 2019 to September 2021, the operating income of Longfor Zhichuang Life was 4.369 billion yuan, 6.468 billion yuan, and 7.771 billion yuan respectively; the net profit reached 681 million yuan, 931 million yuan, and 1.13 billion yuan respectively.

Since the second half of 2021, a wave of mergers and acquisitions in the property industry has emerged, and many property companies such as Country Garden Services, Shimao Services, C&D Property, Wanwanyun, and Longfor Zhichuang Life have continued to make great efforts in the merger and acquisition market. Taking Longfor as an example, in August 2021, Longfor completed the acquisition of 100% equity of Kailin Commercial Service; in September, Longfor once again completed the acquisition of Wharf’s property companies.

Regarding mergers and acquisitions, the management of Longfor Group stated at the semi-annual results conference in August 2021 that Longfor “will definitely continue to increase its acquisitions in the future”, but the criteria for selecting targets is not acquisitions for acquisitions, but more quality. As of the end of the third quarter of 2021, Longfor Zhichuang Life’s residential and non-commercial properties from independent third parties accounted for 59.8% of the GFA under management.

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Through the continuous expansion of the business, the operating income structure of Longfor Zhichuang Life has been optimized, and the strength in business operation management services has been continuously enhanced. The prospectus shows that during the reporting period, the contribution rate of Longfor Zhichuang living and other non-commercial property management services to income decreased from 89% to 77.4%, and the contribution rate of commercial operation and property management services to income increased from 11% to 77.4%. 22.6%.

According to the prospectus, as of the first three quarters of 2021, the gross profit margin of residential and other non-commercial property management services was 25.4%, and the gross profit margin of commercial operations and property management services was 35.3%. The increase in the contribution rate means that the overall gross profit level of the company will be further improved.

Leading service with technology

The property industry is moving forward at an unprecedented speed. But as the president of a TOP3 real estate company said, when real estate develops to a certain level, houses become a product for people to enjoy life, the role of property services will surpass the houses themselves, and the importance of services will become prominent. “The ultimate in service can generate value.”

Over 90% satisfaction for 12 consecutive years, this is the score that the owners submitted for Longfor Zhichuang Life. As a position that people frequently contact every day, property service directly affects the happiness of owners. There are not many property companies that can maintain high satisfaction levels for more than ten years. But for Longfor, this is not surprising.

In addition to the “smart and humanized” service, one of the secrets is to introduce the power of science and technology. Under the background of intelligent service, people’s living habits are undergoing great changes, such as contactless traffic experience, no dead angle monitoring under the smart eye system, self-monitoring of equipment, fast reporting on mobile terminals, and more diverse online Services, intelligent property services provide a new life experience.

Based on Longfor Group’s belief in technology and long-term investment supported by a strong R&D team, Longfor Zhichuang Life began to explore the smart engine in 2014. After several years of practice and improvement, it has now built a systematic scientific and technological support system. Connect “people-space-service” to form an end-to-end service closed loop to empower services.

For example, at the commercial operations level, eight digital tools already cover all aspects of shopping mall operations. These include “traffic online” that provides membership services, marketing activities and sales, “merchant online” that provides tenant services, tenant management empowerment and value-added services, and “asset online” that assists in asset management decisions.

In the community, Longfor Zhichuang Life is equipped with a smart access control system with various advanced technologies such as face recognition, mobile phone Bluetooth, smart visitors, video intercom, etc., so that owners can pass without contact. When relatives and friends visit, visitors only need to pass the owner. With the verification code sent, you can enter the gate of the community.

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The meticulous and comprehensive service has directly boosted the company’s recognition in the third-party market, and the proportion of independent third-party projects has continued to rise. According to the prospectus, from September 30, 2019 to September 30, 2021, independent third-party projects under management accounted for 43.9%, 47.4% and 58.5% of the total number of projects under management; the corresponding construction area under management accounted for 38.2% of the total construction area under management. %, 51.5% and 59.8%.

As of the end of the third quarter of 2021, the retention rate of corporate residential and non-commercial property management service contracts was as high as 92.9%; the retention rate of shopping mall property management service contracts reached 100% for two consecutive years in 2020 and 2021.

With its own service capabilities, Longfor Smart Life has become a key role in maintaining and promoting the close connection of different spaces, assets, products and services of Longfor Group, and is the link between Longfor Group and a large customer base.

Not only that, compared to the asset-heavy real estate industry, property has the characteristics of light assets, anti-cycle, anti-inflation, and stable cash flow, and is more favored by capital in the Hong Kong stock market. Generally speaking, the listing of property companies usually leads to the revaluation of related real estate companies. Zhongda Securities pointed out in the research report that with the expansion of the property company’s scale and profit growth, it will benefit the parent company’s valuation and market value in the long run.

Longfor Zhichuang Life under the “One Longfor” system will not only realize the capitalization of the property sector after the spin-off, but will also reversely boost the brand benefit and overall valuation of Longfor Group.

Stir up the business management pattern

The submission of the prospectus by Longfor Zhichuang Life not only means the debut of a “Big Mac”, but also means that after China Resources Vientiane Life, another high-quality trademark management target is about to enter the market.

In terms of commercial property management track, Longfor Zhichuang Life has included commercial operation management services for shopping malls, asset management and services in retail commercial spaces, and provides services for brands including Longfor “Tianjie” and “Xingyuehui”. Shopping malls and their wider customer base, including tenants, consumers and owners, provide commercial operations services and property management services.

As of September 30, 2021, Longfor Smart Life’s first- and second-tier commercial operation service projects accounted for more than 90%, ranking third among all shopping mall operation service providers in China.

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Compared with traditional residential properties, commercial properties are favored by the capital market due to their higher gross profit margins and strong rental income growth, and their corresponding valuations and price-earnings ratios are stronger. Among the listed real estate companies, China Resources Vientiane Life, which includes business management business, has the highest price-earnings ratio. According to wind data, as of January 11, the price-earnings ratio of China Resources Vientiane Life is as high as 55 times.

According to the 2021 semi-annual report of China Resources Vientiane Life, a leading commercial management company, its commercial operation service shopping malls and office buildings have a construction area of ​​about 8.4 million square meters, and its commercial operation and property management service segment revenue is 1.62 billion yuan.

Judging from the latitude of the number and area of ​​shopping malls managed, Longfor Zhichuang Life is already at the top level of the industry. The prospectus shows that from 2019 to the third quarter of 2021, the business management revenue of Longfor Zhichuang Life increased from 482 million yuan to 1.759 billion yuan, accounting for 22.6% of the total revenue.

As of December 28, 2021, Longfor Zhichuang Life is in charge of 60 opened shopping centers, with an area of ​​5.8 million square meters, serving as many as 13,000 tenants and businesses, and providing property management services for shopping centers. 9.3 million square meters.

Longfor Group stated that the spin-off will promote the further growth and business transformation of Longfor Zhichuang Life, and allow investors to evaluate and evaluate its performance and potential by improving operational and financial transparency, and will also establish new investments for Longfor Zhichuang Life. Investor base, as Longfor Smart Life will be able to attract new investors looking specifically for investment in business operations and property management services.

The field of business management is a vast blue ocean. According to a report from Ping An Securities, in the first half of 2021, 148 new shopping malls in China were opened, with a total size of 450 million square meters. According to the forecast of Ping An Securities, the sales of shopping malls in China will reach 9.6 trillion yuan in 2030, and the rent scale will reach 1.3 trillion yuan. As the management and operator of shopping centers, commercial management has broad market prospects. The entry of Longfor Zhichuang Life is bound to stir the spring water.

Not only relying on Longfor Group, Longfor Zhichuang Life is also exploring a new business path. With the help of the parent company’s business development capabilities, inward synergy and outward expansion are combined to form a business growth flywheel, which will also drive “One Longfor” The ecosystem is further developed and expanded.

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