In 2020, the sudden outbreak of the epidemic did not slow down the development of the property management industry. On the contrary, property service companies are struggling on the front line of the fight against the epidemic, and the entire industry has attracted much attention from the society. In summary in 2020, it is not difficult to find that property service companies continue to increase their efforts in scale expansion, focus on effective growth of scale, actively explore new revenue growth points for multiple operations, deepen the use of high-tech means to optimize management and services, and compete in the golden track of property management; at the same time, the property capital market was unprecedentedly hot this year, listed property service companies were given higher valuations, and capital value was constantly reshaped.
Scale
At the current stage of industry development, is still the kingly way for property service companies to expand scale. On the one hand, scale is the direct source of basic property services and an important basis for the extension of value-added services; on the other hand, the capital market has high recognition and higher valuation for large-scale enterprises.
Figure: The relationship between the market value of enterprises listed in Hong Kong and the area under management
Note: A few companies did not disclose the area under management in mid-2020, and were not listed in the figure
From the relationship between the market value and management scale of most enterprises listed in Hong Kong, it can be seen that companies with high market value of often have a larger scale . In addition, in 2019, the managed area of the top 100 property companies accounted for about 10% of the total managed area in the country, far lower than the sales area of the top 10 real estate development companies accounted for about 30% of the national sales area in the same year. still has a lot of room for growth . Therefore, the top priority of enterprise development is to expand the management map selectively and with quality on the basis of providing good services.
2. Different expansion methods have their own advantages, and finding the right method is very important
2020, the "land-grabbing" expansion in the industry was extremely fierce. With the wave of corporate listing, there were more than 70 effective mergers and acquisitions cases this year. Mergers and acquisitions have become the most direct and efficient means to expand scale. Compared with last year, the acquired companies showed the characteristics of diversified business types, and is more located in related fields such as sanitation, environmental cleaning services, medical beauty services, and insurance business. For example, Country Garden Service acquires Cheng Zongheng, Haixia Energy Technology, Hefu Huihuang, etc., and extends the service chain and creates business growth points by acquiring professional companies in other business fields.
Table: Case of mergers and acquisitions of some property service companies in 2020
In addition, property service companies improve service standardization, specialization, enhance brand influence and market competitiveness, and actively participate in market bidding . Although the third-party external expansion accounts for a small proportion, it is a reflection of the real competitiveness of companies. It can not only reduce its dependence on brother development companies, but also does not require high expenditures like mergers and acquisitions. It is an important expansion method for long-term development. In 2020, according to incomplete statistics, Xinli Property won nearly 100 projects in 2020, and Jianye New Life and Xinchengyue Service won more than 60 and 40 projects respectively.
Table: The winning bids for market expansion of some property service companies in 2020 (compiled by public information)
However, in terms of the current development status of the industry, the support of brother development companies is still the basic force for scale expansion . As of June 30, 2020, more than half of the managed area of many companies such as Country Garden Services and Blu-ray Jiabao Services came from brother development companies.
Figure: In the mid-2020, some listed companies in Hong Kong have been in charge of projects from brother companies.
sumerizes the above mainstream scale expansion methods, and different means have their own advantages. The biggest advantage of mergers and acquisitions is that they can quickly expand their scale, which is also conducive to enriching management formats and entering new cities, but it requires a large amount of funds, which is easy to cause management problems caused by improper integration; third-party expansion does not require capital expenditure, which is a proof of the strength and brand of the enterprise, but the growth rate is slow and the expansion is difficult; the support of related parties is strongly certain about the scale growth of the enterprise, which is also conducive to the development of diversified businesses with the help of the group's resources, but the development depends on the real estate group and the market competitiveness is weak.Therefore, enterprises should choose a development path that suits them and achieve high-quality growth in scale.
Table: Comparative analysis of different scale expansion methods
In addition, in 2020, more and more companies began to involve in the urban service field , and urban service is expected to become a new scale growth flywheel . Since 2020, Vanke Property , Country Garden Service, Sunac Service, Investment and Jiyu and others have vigorously expanded urban services. Vanke Property released the first brand in the industry that is positioned as a city service - "Everything Cloud City". It has currently implemented 12 urban service projects and plans to expand "hundred cities" in the next three years. In the future, property service companies will further deepen their efforts in all aspects of urban governance and provide local governments with a complete set of urban service solutions.
3. Focus on key areas and increase the investment in cities to deepen their cultivation
2020, property service companies focus on key cities, deepen their cultivation and deepen their cultivation and achieve in-depth development. For larger enterprises, the local market share has been high, and we have begun to focus on other regions to deepen . In mid-2020, the year-on-year growth rate of Ya Life Service's managed area in the Yangtze River Delta region was as high as 98.93%, accounting for about 37.2% of the total managed area, an increase of 18.5 percentage points from the mid-2019. The regional enterprises with smaller scale of are still mainly engaged in the local market to increase regional density . For example, Binjiang Service is mainly deeply rooted in Zhejiang Province. In mid-2020, the managed area located in Zhejiang Province accounted for 98.7% of the total managed area, with a year-on-year growth rate of 28.8%.
Table: Regional deepening of different property service enterprises
Value-added service section
. Multiple operations have become an important driving engine for performance, and community value-added services have grown resilience
2020, property service enterprises further made efforts in various business fields, and the multiple operating income and gross profit have achieved rapid growth, becoming a new driving force to support the accelerated development of enterprises.
In terms of revenue composition, the proportion of diversified operating income of enterprises such as Country Garden Services and Times Neighborhood increased by 8.5 and 4.4 percentage points year-on-year respectively, and the proportion of diversified operating income of Xinchengyue Services exceeded 50%.
Figure: The proportion of multiple operating income for some property service companies in the mid-2019-2020
From the perspective of profit composition, multiple operating businesses contribute significantly to the creation of corporate profits. The gross profit of enterprises such as Greentown Service, Ya Life Service, Shimao Service, and Yongsheng Life Service accounted for more than 50%, which has become the main source of profit contribution.
Figure: The proportion of gross profit of multiple business in the mid-2020
2020, in the process of expanding multiple business operations, property service companies have been exploring community value-added services to a new strategic height and have qualitative improvements compared with non-owner value-added services. In mid-2020, the proportion of community value-added service revenue of enterprises such as Country Garden Services, Evergrande Property, Poly Property, and Ya Life Services has steadily increased.
Table: Changes in the proportion of revenue of community value-added services and non-owner value-added services in some enterprises from mid-2019 to mid-2020
2. Based on life services, actively explore diversified business layout
2020, community value-added services mainly revolve around two directions. On the one hand, we are conducting horizontal shops. Affected by the epidemic, enterprises are actively expanding health, insurance, insect control and other businesses. On the other hand, we will deepen vertically and strengthen layout in relatively mature businesses such as community life services and asset management services.
From the layout of community value-added business of listed companies, it focuses on life services, space operations and asset management businesses. In mid-2020, the revenue of business such as Country Garden Services, Greentown Services, Ya Life Services, Times Neighborhood, etc., grew rapidly, with year-on-year growth of more than 100%.
Figure: Year-on-year growth of community value-added services in some property service enterprises in 2020
. Cross-border cooperation, complementary resources, tapping the potential of community value-added services
Some enterprises actively explore more diversified value-added business combinations, extending to diversified business types such as community education, elderly care services, insurance finance, and medical care, covering the full-scene services of the owners throughout their life cycle. However, considering that there are scale effects and professional barriers in the process of expanding value-added service categories and creating advantages in segmented fields, enterprises have selected targeted cooperation with outstanding enterprises in other industries, and achieved resource complementarity through cross-border cooperation, so that diverse and high-quality services can accurately reach the majority of users and produce superposition effects.
Table: Strategic cooperation cases for community value-added services and third-party enterprises in 2020
Capital chapter
2020, property service companies rode the wind and waves in the capital market, with a total of 18 companies listed throughout the year. As of now, a total of 38 property service companies have successfully logged in to Hong Kong stock , and 4 companies have listed on the A-share market.
Figure: Listing status of property service companies in Hong Kong and A-shares since 2014
2020, a total of 17 property service companies successfully listed on the Hong Kong stock market; in the second half of the year, a total of 14 property service companies were listed, accounting for 82% of the total number of listed companies in the whole year. A-shares ushered in the fourth listed property service company - Tefa Service is also the first listed property service company after the GEM registration system.
Figure: The situation of property service companies listed on the Hong Kong stock market in 2020
. New stock subscriptions are booming, and are widely favored by cornerstone investors
Since 2020, newly listed property service companies have achieved excellent oversubscription performance, becoming the "darling" of the capital market for a while. Among them, Jianye New Life, Hongyang Service, Zhengrong Service, etc. all received oversubscriptions of more than 100 times.
Table: The situation of newly listed companies receiving oversubscriptions of more than 100 times in 2020
cornerstone investors also gave property service companies more investment endorsement, which is conducive to attracting the attention of more investors and increasing investors' investment confidence.
Table: In 2020, some property service companies introduced some cornerstone investors
2. The capital performance of listed companies is outstanding, but the differentiation momentum has become obvious
2020, the capital market of the property management industry showed a trend of competition, and most corporate values are popular in the market. As of the end of 2020, there were 4 companies with a market value of more than HK$50 billion, 4 companies with a market value of HK$30 billion to HK$50 billion, and 7 companies with a market value of HK$10 billion to HK$30 billion. More than 20 companies saw their stock price rise throughout the year. Among them, the most impressive performance was Yongsheng Life Service. The stock price rose by 223.6% at the end of 2020 compared with the beginning of the year, and Yincheng Life Service, which followed closely behind, increased by 202.1%.
Figure: Some listed property service companies rose by 38 times compared with the beginning of the year at the end of 2020
(Note: The stock price of newly listed companies at the end of the year increased compared with the first day of listing)
price-earnings ratio has also hit new highs. As of December 31, 2020, among all 38 property service companies listed, the average price-earnings ratio was 38 times, almost the same as the average valuation of technology companies (35 times). During the same period, the average price-earnings ratio of the Hang Seng Index was only 10.8 times; reflecting the market's good expectations for property service companies.
Figure: Top 20 companies listed on Hong Kong stocks in 2020
. The annual IPO financing amount exceeded HK$50 billion
2020, a total of 18 property service companies completed IPOs, with a cumulative net fundraising of more than HK$56 billion, far higher than in 2018 and 2019, with a cumulative net fundraising of HK$10.877 billion and HK$5.547 billion.
Figure: Top 10 IPO financing amount of newly listed property service companies in 2020
Since April 2020, Hong Kong-listed property service companies have successively launched share issuance for refinancing, and the market response is good.Financing is mainly used for investment, mergers and acquisitions and general working capital, indicating that industry integration is accelerating.
Table: Stock allocation financing situation of some listed property service companies in 2020
companies ride the wind and waves in the capital market, their value continues to increase, leaders have made outstanding contributions, and a group of new presidents have emerged.
Property Services listed companies have outstanding value contributions to the top ten presidents
Note: Companies listed on the Hong Kong stock market for more than one year are sorted based on the market value at the close of 2020.12.31.
Top ten new presidents of property services listed companies
Note: In 2020, the new listed company in Hong Kong stock market held its current position for more than one year, sorted based on the market value at the close of 2020.12.31.
Technology
. The dual support of the epidemic and capital will promote the deepening of scientific and technological applications
After the outbreak of the new crown epidemic, "technology" epidemic prevention has become an effective means for property companies to prevent and control the epidemic. On the one hand, "technology" has transformed the related work that traditionally needs to be completed by manpower to be completed by machines and equipment, improving work efficiency and alleviating insufficient labor costs; on the other hand, the use of technological equipment can effectively reduce contact between people and effectively protect the health of every owner.
The combination of property service companies and "artificial intelligence" is more reflected in " application layer ". It mainly includes three aspects, namely community epidemic intelligent platform, service robot, and intelligent equipment facilities . Among them, the community intelligent platform provides owners with an effective information database to meet the needs of owners for epidemic consultation, online consultation and community culture; service robots act as a medium for "contactless" services, further improving user privacy and security; intelligent equipment and facilities further strengthen owners' entry and exit management and body temperature detection, forming a tangible barrier for the community.
Figure: Some property service companies’ artificial intelligence application cases under the epidemic expression
2020, the property management industry continues to be favored by capital. A total of 18 property service companies were listed on the Hong Kong Stock Exchange throughout the year, and 1 company was listed on the A-share GEM. Both the number of listed companies and the amount of corporate financing were set at a record high. From the main uses of funds raised by listed companies, improving the level of intelligence and building a smart community have become an important direction for many companies in the future.
Table: Some listed property service companies are invested in technology investment
In addition to newly listed property service companies in 2020, listed property service companies also pay attention to scientific and technological research and development, and have increased technology investment year by year. Ruya Life Service invested about 14.6 million yuan to develop a one-stop service platform, so that enterprises can achieve digital management, professional service, standardized process and mechanized operation.
Table: Investment in science and technology development funds since some listed companies in Hong Kong
Note: Incomplete statistics
2. "Technology" helps basic services to "reduce costs and increase efficiency" and improve profitability
With the rise of emerging technologies such as mobile Internet technology, property service companies have actively introduced intelligent technology equipment to realize basic service automation, improve management efficiency and service quality, and effectively suppress the rise of rigid costs.
2019, the per capita management area of the top 100 enterprises and the per capita output value of both increased significantly compared with 2018. Among them, the per capita managed area increased from 6990.94 square meters to 8182.33 square meters, with a growth rate of 22%, and the per capita output value increased from 151,500 yuan to 198,900 yuan, with a growth rate of 31%.
Figure: Per capita managed area and per capita output value of the top 100 enterprises from 2018 to 2019
2020, Times Neighborhood's net profit per square meter increased from 1.38 yuan in 2019 to 1.74 yuan, an increase of 26.4%. Yongsheng Life's net profit per square meter increased from 1.85 yuan to 2.59 yuan, an increase of up to 40.31%.
Figure: Net profit per square meter of some listed companies in the mid-2019-2020
On the other hand, the value of new technologies is not only reflected in basic property services, but still has great achievements in various business fields. Property service companies focus closely on the needs of owners, and by building owner-side APPs, they introduce local excellent life service providers, and efficiently "connect" rich value-added services with owners through online development, forming user consumption portraits, and forming a more accurate, efficient and convenient life service ecosystem.
Outlook
Figure: The cumulative sales area of national commercial housing from 2000 to 2020
000-2020 market potential in the property management industry. First, from the existing stock market, the cumulative sales area of commercial housing in the country from 2000 to 2020 is expected to reach 20.93 billion square meters, of which the residential area is about 18.44 billion square meters; secondly, during the 14th Five-Year Plan period, it is expected that the sales area of commercial housing in my country will be
2021, as for 's expansion of , enterprises should still choose cities with large land transaction areas and active trading markets. Cities such as Wuhan, Xi'an, Qingdao, Chongqing, and Hangzhou are among the top 20 cities in the past three years.
Table: 2018-2020 residential land transaction planned building area (10,000 square meters) TOP20 urban
From the perspective of expansion range , it focuses on non-residential business formats such as commercial office, public construction, and urban service . First, there are no leading enterprises in the non-residential segmented business formats, and the degree of market competition is relatively low; secondly, non-residential business formats, especially commercial and office formats, the property fees level is significantly higher than that of residential formats, which can effectively improve operating performance; thirdly, with the development of the economy, the improvement of consumption levels, and the promotion of policies (such as deregulation, regulation and service), coupled with the rise of urban service concepts, the non-residential field has broad space.
2. Make full use of the advantages of "people + field" to build a trust-based value-added service
Community value-added service has higher profitability and contributes significantly to corporate profit growth. As of June 30, 2020, the average gross profit margin of community value-added services among the top 10 operating income of listed companies on Hong Kong stocks was 47.5%, the average gross profit margin of basic property services was 22.8%, and the average gross profit margin of community value-added services was 24.7 percentage points higher than that of basic property services. Therefore, if an enterprise wants to develop for a long time in the future, it must rely on value-added services from the owners.
Figure: Top 10 business income in the mid-term of 2020 Enterprise basic property services and community value-added services gross profit margin
Property service companies in the future should seize the advantages of "people + field" and provide more considerate and trustworthy services. Services built on the trust of owners and services that are truly considerate for owners are services that can be truly valuable and can be carried out in the long run.
Therefore, when enterprises enter a new value-added business field, they should consider the following issues. First, whether the business revolves around the owner's pain points; second, whether the business itself is the owner's rigid expenditure; third, what are the core advantages in the business development; fourth, consider the cost-effectiveness achieved by the business; fifth, whether newly opened businesses can have synergies with existing businesses.
. Listed property service companies are expected to exceed 70
The Hong Kong main board market will still be the first choice for property service companies to go public in the future. They have obvious advantages in terms of valuation, scheduling or brand influence. , but it is worth noting that the increase in the profit threshold for listing in Hong Kong is a high probability event. 2021 will be a period of concentrated outbreak of the capital market and it is also the best window period for listing.It is expected that by the end of 2021, there will be more than 70 listed property service companies.
A-share registration system reform has relaxed the restrictions on related transactions to a certain extent, opening the door for more potential companies. It is expected that some companies will still choose to list on A-shares in the future.
4. Technology evolution direction: How to implement in combination with application scenarios
analyze the current technological product evolution route. We expect that in the future, more technology implementation will mainly be implemented in the following aspects, and then empower property service companies:
First, further strengthen artificial substitution. human-driven property services are difficult to cover all business scope with high efficiency and high standards. Therefore, the focus of technology empowerment is mainly two aspects: one is to improve service quality and precision, and turn passive into initiative; the other is to improve service efficiency, reduce dependence on manpower, and thus reduce labor costs.
Secondly, provide community value-added services to improve the living experience of owners. With the progress of society, people's lifestyles have changed, and they pay more attention to quality life and living experience, and will have strong demands on consumption, finance, housekeeping, home furnishing, health care, education, social networking and other aspects. Therefore, one of the directions of technological product research and development will be to continuously meet the needs of gradually upgraded owners; at the same time, through this process, it will also create more imaginative value space for property service companies, thereby feeding back investment in smart community construction, forming a virtuous cycle, and promoting the sustainable development of smart communities.
Finally, improve the effectiveness of community governance and consolidate the foundation of grassroots governance. Improvement of community governance will inevitably require improving the efficiency of grassroots governance, especially in the emergency management of public safety and public health emergencies, and establish an operating mechanism that combines rapid response, precise governance, and "peace and war".
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