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Original title: The threshold for listing in Hong Kong will be raised, and in June, material enterprises will get together and deliver the list to seize the “last window” | Property listing series reports
The popularity of real estate companies in the spin-off of the property sector continues to rise. According to statistics from the Opinion Index Institute, as of June 20, 4 real estate companies have newly landed on the Hong Kong Stock Exchange. There are 23 real estate service companies waiting to be listed, and the number has exceeded the total number of listed real estate companies in 2020. Industry insiders pointed out that due to the imminent increase in the threshold for listing in Hong Kong, property companies are seizing the time to seize the final listing window. However, for the “getting together” listings, the industry competition will be even more intense this time.
23 real estate companies queued up for listing
On the evening of June 21, the Hong Kong Stock Exchange disclosed that Landsea Life Services Co., Ltd. (hereinafter referred to as “Landsea Green Life”) had passed the hearing of the prospectus, and its total construction area under management was 17.3 million square meters, totaling 123 The item is in the management of the property. On the same day, a message on the SFC website showed thatLushang Development(600223.SH) intends to spin-off the property sector Lushang Life Services to list in Hong Kong, and the China Securities Regulatory Commission has received the materials.
In the past week (June 14-June 18), four property service companies in the Hong Kong stock market have concentrated their submissions. Except for Great Wall Property Group Co., Ltd. (hereinafter referred to as “Great Wall Property”), the remaining three are real estate companies. spin off.
On June 16, Yuexiu Services launched a global offering of shares, which will be priced on June 21 and listed on June 28, becoming the 46th property stock to land on the Hong Kong capital market. Based on the offer price ranging from HK$4.88/share to HK$6.52/share, it is estimated that the total amount of funds raised for the IPO will be approximately HK$1.804 billion to HK$2.41 billion; on June 17, Yujia Life Service Group Co., Ltd. ( Hereinafter referred to as “Yujia Life Service”), the second form was submitted to the Hong Kong Stock Exchange for listing on the main board of the Hong Kong Stock Exchange; on June 18, DXN Services Group Co., Ltd. (hereinafter referred to as “DXN Services”) also passed the Hong Kong Stock Exchange hearing .
“China Times” reporter saw that in June, before the end of the month, several real estate companies announced the spin-off of their property sectors and listed them in Hong Kong, or they have passed the hearing. For example, Lego Real Estate announced on June 9 that it proposed to spin off its property management company Lego Healthy Life Co., Ltd. to be listed on the Hong Kong Stock Exchange; on the evening of June 6, Zhongjun Commercial Management, the property company of Zhongjun Group, announced the submission of listing information The hearing has been passed; Zhongliang Baiyue Zhijia and Sunshine Zhibo Service also submitted a prospectus to the Hong Kong Stock Exchange in early June.
In fact, throughout 2021, the enthusiasm for real estate companies to spin off properties for listing has never “cooled down.” Many research institutions have recognized that following the IPO boom of property companies in 2020, 2021 may be the year of the peak of the IPO of property companies. At the “2021 China Real Estate and Property Listed Companies Evaluation Results Release Conference” held recently, Yang Xi, deputy secretary-general of the China Property Management Association and general manager of the China Material Research Association, predicted that by the end of 2021, listed property companies in the Chinese property industry market There will be 70; the report of the Zhongzhi Research Institute also shows that by the end of 2021, the total number of listed companies in the property sector is expected to reach 70, an increase of over 150% from the 24 at the end of 2019.
According to statistics from the Viewpoint Index Institute, as of June 20, there have been 4 new property companies listed on the Hong Kong Stock Exchange. There are 23 property service companies waiting to be listed, and the number has exceeded the total number of listed property companies in 2020. , And among these, most of the real estate companies are spun off by the real estate companies.
It is worth mentioning that while unlisted real estate companies are vying to attack the IPO, listed real estate companies have stepped up their scale expansion. Some large-scale mergers and acquisitions in the property industry at the beginning of the year have also made progress. For example, Country Garden Services announced plans to acquire Blu-ray Garbo services in March this year. On the evening of June 17, the two parties jointly issued an announcement stating that both the Blu-ray Shareholders’ Meeting and the Blu-ray H-Share Class Shareholders’ Meeting had voted to pass the resolution on the delisting of Blu-ray Garbo’s H shares, and Country Garden’s offer to acquire 87.4% of Blu-ray Garbo’s shares was effectively accepted. The latter is expected to be delisted on August 10.
The differentiation of the property management industry further intensifies
For several years, why has the upsurge of real estate companies splitting and listing properties still hasn’t died down? Crane Property Management Research Director Tang Xiaochen explained to a reporter from China Times that generally speaking, the spin-off and listing of property companies has been prepared for a long time, at least a year or so. Currently, most companies submitting forms started last year or even earlier. Preparations, therefore, this year’s companies will “blow out”. On the other hand, the increase in listing thresholds has put pressure on a large number of small and medium-sized enterprises, and they will sprint through the list and seize the final window to become a common mentality.
According to public information, the Hong Kong Stock Exchange raised the annual profit threshold for listing on the Main Board by 60% in the newly published “Information Document” on May 20, 2021, and required that the profit attributable to shareholders in the last financial year should not be less than 3,500. Ten thousand Hong Kong dollars, and the three-year cumulative profit is no less than 80 million Hong Kong dollars. The standard will take effect on January 1, 2022. This also means that this year is the last window period for many small property companies to go public.
“The rising popularity of property listings is indeed related to the Hong Kong Stock Exchange’s raising the threshold for listing on the main board.” Tang Zhuo, executive director of the Jiahe Family Property Service Research Institute, also has a similar view.
The high valuation factors of the property sector in Hong Kong stocks are undoubtedly a deeper reason. According to statistics from the China Index Property Research Institute, on June 22, the average market value of 41 property listed companies in Hong Kong stocks was 22.874 billion Hong Kong dollars. As of the close of the day, a total of 15 property service companies had a total market value of more than 10 billion Hong Kong dollars. From the perspective of the price-earnings ratio, 41 Hong Kong stocks were listed. The average price-earnings ratio of listed property companies is 32.4 times, which fully reflects the high recognition of property service companies in the capital market.
From the perspective of real estate companies, under the “three red lines”, financing for real estate companies has become particularly difficult, and capital supervision has become more stringent. The spin-off of the property listing of the asset-light business model has become one of the ways for real estate companies to improve their finances.
Regarding the new round of enthusiasm for real estate companies to spin off properties and go public, Zhang Yan, CEO of E-House Enterprise Group and CEO of Crane, said bluntly, “The parent company is not strong enough and the ability to expand abroad is insufficient. Under the new Hong Kong stock IPO regulations, there may be 20%. It is difficult for the real estate companies to reach the threshold for listing.” Even if it can go public, the competition between the real estate companies will intensify. The differentiation of the industry and the accelerated concentration and integration of resources towards large-scale real estate companies are the norm.
The reporter of “China Times” saw that according to the above-mentioned statistics of the Zhongzhi Property Research Institute, as of June 22, Country Garden Services was the company with the largest market value of listed property service companies in Hong Kong, with a total market value of HK$249.28 billion. China Resources Vientiane Life and Evergrande The properties ranked second and third, with a total market value of 109.56 billion Hong Kong dollars and 96.11 billion Hong Kong dollars respectively. Among the 41 property companies listed on Hong Kong stocks, the property company with the lowest total market capitalization (Blessing Life Service) has a market capitalization of only HK$599 million.
“As industry valuation returns, differentiation is also increasing. Newly listed property companies with better operating conditions and in line with growth expectations, especially growth companies, will have a better chance of gaining capital’s favor.” In the interview, Tang Zhuoxiang A reporter from China Times said that with the increase in the number of listed real estate companies, property stocks are no longer “scarce” and the fundamentals of industry operations have also been seen. The average industry valuation is currently returning to the state, but some high-quality real estate companies, such as Riverside Services Companies represented by Hehong Services enjoy higher valuations in the capital market among companies of the same size.
It is recognized by industry insiders that for those companies that choose to go public in Hong Kong at this time, they will face more competition. Whether they can achieve breakthroughs in scale and form strong competitiveness remains to be verified by the market.
Regarding the issue of “the spin-off of property companies highly dependent on the parent company” that many people have discussed, Tang Xiaochen told the reporter of China Times that he does not need to be overly concerned: “The reliance on the parent company has advantages and disadvantages. If the affiliated real estate company is strong, it can provide Real estate companies bring better expectations. Of course, if related real estate companies have limited strength or show a trend of recession, there will be a high probability that negative effects will be transmitted to the real estate companies.”
Tang Xiaochen suggested that to reduce the dependence of the parent company, it is necessary to increase investment and expansion, cultivate its own unique advantages, in order to increase competitiveness in the stock market. At the same time, it can also seek market share in incremental markets, such as non-residential, urban services and other incremental areas where the market structure is still unstable. “In order to improve the long-term development capability of a material enterprise, it is necessary to make changes in the brand, business, and organization. It is very important to use quality to make a brand in the early stage of rapid development of the industry. In addition, it is necessary to carefully think about its own business strategy and conduct organizational and business development. Match.” Tang Xiaochen pointed out.
And Tang Zhuo emphasized that companies should also pay attention to post-investment management while expanding their scale, so as to avoid the phenomenon of declining service quality and gross profit margin as the scale and service ecosystem expand. Companies need to build their own moat by improving service quality, scale advantages, standardized operations, providing differentiated services, and building a service ecosystem, and both development and quality must be grasped.
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