
Country Garden Services Holdings Company Limited Was Listed on the Hong Kong Stock Exchange, Community Value-Added Services Become Future Focus of Property Service Companies
At 9: 30 a.m. on June 19, Country Garden Services (HK.6098) was quoted and listed on the main board of the Hong Kong Stock Exchange through way of introduction, kicking off its transactions and marking Country Garden’s property service sector’s formal admission to the international capital market. Country Garden Services’s opening price was recorded as HKD 10 per share, and the maximum total market value had reached HKD 25 billion, ranking first in the property service sector among Hong Kong stocks.
At the bell ringing ceremony for listing, Li Changjiang, executive director and general manager of Country Garden Services Holdings Company Limited, stated that through carve-out, Country Garden Services will successfully obtain an independent listing status and an independent fund-raising platform, which would assist in developing its businesses and improve its operational and financial performance. He added, “I believe that both the company and shareholders will benefit from this.”
In China, Country Garden Services is a leading residential property management service provider which ranks among the top three in the comprehensive strength of China’s top 100 property service companies. It is also a property service company with a wide range of domestic businesses. According to the latest disclosed data, as of April 30, 2018, the company’s total contract management area has expanded to about 365.4 million m2, covering more than 260 Chinese cities in 28 provinces, cities, and autonomous regions.
In addition to expanding businesses through endogenous growth, Country Garden Services has also expanded its external businesses vigorously. The total contract management area of the company’s property management services to independent third-party property developers has increased from 7.7 million m2 (at the end of 2015) to 46.8 million m2 (at the end of 2017), showing a compound annual growth rate of 147.4%.
Significant advantages in operation quality and efficiency help to win interest from capital markets
From Colourlife’s admission to the capital market in 2014, to the successful listing of Country Garden Services, eight companies have been listed on the main board of the Hong Kong Stock Exchange, one on the A-share market, and 62 on the new OTC market. This situation indicates that capital is entering the industry at an unprecedented speed. The Research Report on China’s Top 100 Property Service Companies in 2018 by China Index Academy pointed out that based on the capital market, property service companies are paying more attention to their high-quality development, strengthening technological innovation, effectively improving operation efficiency, and transforming service models. Through entering the capital market, companies further enhance brand benefits and attract high-end talents, thereby providing owners with superior services.
Country Garden Services has been committed to improving its service capability and level over recent years. Li Changjiang stated that the concept of Country Garden Services is the ‘123 principle’ (‘one center, two feelings, and three services’), that is, providing services centered on customers’ satisfaction, upholding the two feelings of regarding owners as relatives or friends, and practicing the whole process of running services, smile services, and professional services. Taking its listing as an opportunity, Country Garden Services further upgraded and evolved its service system with revolutionary top-level design innovation to broaden a vast development space.
From its recent operating data indicators in prospectus, Country Garden Services is indeed confident as its main businesses have sustained high-speed growth with outstanding profitability and ample cash reserves. According to disclosed data, the company’s operating revenue was RMB 1.67 billion yuan, RMB 2.36 billion yuan, and RMB 3.12 billion yuan respectively from 2015 to 2017, with the revenue growth rate in 2016 and 2017 reached 41% and 32% respectively. The company’s gross profits in the past three years was RMB 510 million yuan, RMB 800 million yuan, and RMB 1.036 billion yuan respectively, with year-on-year growth rates of 57% and 29.5% respectively. The company’s net profits from 2015 to 2017 was RMB 220 million yuan, RMB 350 million yuan, and RMB 440 million yuan respectively, with year-on-year growth rates of 59% and 26% respectively. Meanwhile, Country Garden Services’s profit margin netted 14% in 2017.
In the list of the ‘Top 10 Business Performance of China’s Top 100 Property Service Companies in 2018’ released earlier by the China Index Academy, Country Garden Services ranked first in the whole industry, ahead of other companies such as Vanke, Longfor Properties, and Greentown Group.
In the industry’s view, both the service area and unit price of the entire property service market will rise unilaterally in the next decade, with a rigid ascending trend of the market scale. Undoubtedly, the profit growth rate of leading property companies will exceed the revenue growth rate.
Value-added community services become the main battlefield for future property management development
According to the latest disclosed data from Country Garden Services, as of April 30, 2018, the company’s total contract management area has expanded to approximately 365.4 million m2. On June 1, 2018, in the list of ‘China’s Top 100 Property Service Companies in 2018’ jointly released by the China Index Academy and the China Real Estate Top10 Research, Country Garden Services ranked among the top three in the industry.
Due to the ideal performance of Country Gardens Services’s real estate businesses and the relatively large annual increment of community owners, both the market and customers attach significance to the future value of Country Garden Services. In the light of the newly released data of the ‘2018 Top 100 Property Service Companies Report’, the top 100 companies accounted for more than 30% of the industry-wide management service area in 2017, and the top 10 companies accounted for more than 11%. The average management area of the top 10 companies reached 216 million m2, while Country Garden Services’s management service area far exceeded the average level of the top 10 companies.
“Nowadays, there are millions of property owners living in communities served by Country Garden Services, most of which are mega suburban residential projects, with more emphasis on complete life supporting facilities and a higher degree of owners’ trust and dependency towards property companies. With increasing reliance, there are more opportunities for the company to provide value-added services.” Li Changjiang also mentioned that from 2015 to 2017 and up to now, the revenue increment generated by Country Garden Services has been increasing in a high speed.
“We insist that only with quality services can companies enjoy a brighter future. Public praise stems from quality services, which leads to more businesses.” said Li Changjiang, who believes derivative services and value-added services generated from quality services will be the main battlefield for property companies’ development. In his opinion, the 1.0 version of value-added services is to do a good job for property owners in cleaning, greening, and services, the 2.0 version of value-added services adds new contents such as house leasing and sales, community advertising, and community vehicles management, and the 3.0 version of value-added services links to finance and capital, in the forms of asset management and credit construction. These services involve all aspects of life, and the 3.0 version of value-added services will patently be the direction of Country Garden Services’s efforts.
The trillion-scale market of basic property services plus community value-added services is what attracts the capital market to the industry. The establishment of offline community retail scenarios as well as the construction of a series of vertical life services centered on owners’ demands have become the focus for many property service companies to tap the potentials of community-based operation and cultivate the community-based consumption markets. Based on community services, Country Garden Services has built a resource integration platform with a whole life industry chain to meet owners’ needs at various life stages and achieve sustained growth in revenues and profits via expanding value-added service business chain.
Market participants generally agree that capital markets have always favored companies with large scale, fast growth, and promising development prospects, such as Country Garden Services. The large scale signifies that companies tend to have stronger market competitiveness, faster speed of new business development, and greater future development potential.