Sino-Singapore Jingwei Client, October 23 (Xue Yufei) After two submissions, Jinhui Holdings, one of the top 40 real estate companies, recently passed the listing hearing of the Hong Kong Stock Exchange and is expected to be listed in Hong Kong on October 29 Listed.

Jinhui Holdings may become the third Chinese real estate stock to successfully achieve an IPO this year.

　　Due to the tightening of the A-share regulatory policy, Hong Kong has become the main destination for mainland real estate companies seeking to list.

However, the number of mainland real estate companies that received admission tickets for Hong Kong stocks this year was lower than in previous years. Many small and medium-sized real estate companies submitted prospectuses in a “submit-invalidate-submit” cycle. No more.

　　According to incomplete statistics from the Sino-Singapore Jingwei client, as of October 21, the prospectuses of five real estate companies including Wanchuang International, Helenberg Holdings, Orson Holdings, Perun Holdings, and China Cultural Tourism have expired. Datang Real Estate and Sanxun Holdings, Shangkun Holdings, Territory Holdings, Real Estate, and Xiangsheng Real Estate are still waiting in line for listing on the Hong Kong Stock Exchange.

The industry believes that there are only more than 70 days left before the bell in 2021, and the probability that the number of real estate companies going public in 2020 will be lower than in previous years.

The number of listings has decreased significantly

　　Jinhui's road to listing began a few years ago.

According to data, in 2013, Jinhui submitted a listing application to the Hong Kong Stock Exchange for the first time, but it was broken afterwards.

Then he moved to A shares and submitted an application to the Shanghai Stock Exchange in 2016, but was unsuccessful.

　　In early 2020, Jinhui Holdings withdrew its A-share listing application and submitted its prospectus on the Hong Kong Stock Exchange on March 25.

Six months later, the prospectus expired, and Jinhui Holdings submitted the form again on September 25.

Until recently, it passed the listing hearing of the Hong Kong Stock Exchange.

　　Among the top 40 real estate companies in China, only Jinhui and Xiangsheng remain unlisted.

With annual sales of tens of billions of yuan and revenue of more than 20 billion yuan, Jinhui Holdings' highest raised capital is expected to reach 3.1 billion Hong Kong dollars, becoming the largest real estate company in Hong Kong stock IPO after Zhengrong Real Estate went public in 2018 .

　　Not surprisingly, together with the previously listed Huijing Holdings and Dragonair Real Estate, three mainland real estate companies have achieved listings in Hong Kong this year.

Compared with the data of previous years, the number of Chinese property stocks with successful IPOs this year is obviously low.

According to statistics, a total of 7 mainland real estate companies listed in Hong Kong in 2018, namely Zhengrong Real Estate, Hongyang Real Estate, Dafa Real Estate, Midea Real Estate, Hengda Group, Wancheng Holdings, and Forson International (Note: Forson International is a backdoor Listed); In 2019, 6 domestic real estate companies registered in Hong Kong stocks, namely DXN China, Yincheng International, Zhongliang Holdings, Jingye Mingbang, Tianbao Group, and Sony Holdings.

　　In fact, there are not many real estate companies that have submitted prospectuses on the Hong Kong Stock Exchange, but most companies have made no new progress. The prospectus has fallen into a "submit-invalidate-submit" cycle, and some even after the prospectus has expired , There is no more.

Sichuan Real Estate Enterprise Territory Holdings submitted its first prospectus in April this year. As of October 9, there was no new progress and the prospectus entered a state of invalidation.

Three days later, Territory Holdings updated the prospectus.

Datang Real Estate submitted its prospectus twice in November 2019 and June 2020. Today, there is not much time until the expiration of its new version of the prospectus.

　　Anhui real estate company Wanchuang International uploaded or updated the prospectus four times, but all failed. In mid-December 2019, its prospectus was in a "rejected" state.

So far, Wanchuang International has not released the fifth edition of the information.

A securities analyst familiar with the Hong Kong Stock Exchange’s listing rules told the media that if a company’s listing application is rejected by the Hong Kong Stock Exchange, it is generally not allowed to submit another application within three years.

　　As early as November 2018, Orsun Holdings submitted a prospectus to the Hong Kong Stock Exchange, but the information later became invalid. Orsun was able to issue an updated version in May 2019.

As of November 2019, the prospectus expired again.

Like Wanchuang International, Orsun Holdings has no new moves and disappeared from the listing queue of the Hong Kong Stock Exchange.

　　According to incomplete statistics from the Sino-Singapore Jingwei Client, as of October 21, except for Jinhui Holdings passed the hearing, in recent years 11 real estate companies have submitted prospectuses on the Hong Kong Stock Exchange but have not yet been listed. Among them, Wanchuang International The prospectus of five real estate companies, Helenborg Holdings, Orshan Holdings, Pengrun Holdings, and China Cultural Tourism has expired. Datang Real Estate, Sunsun Holdings, Shangkun Holdings, Lingdi Holdings, Real Estate and Xiangsheng Real Estate are still valid.

　　Xie Yifeng, director of the China Urban Real Estate Research Institute, told the Sino-Singapore Jingwei client that although the threshold for listing in Hong Kong is not high, it pays more attention to the financial indicators of enterprises. The prospectus of real estate companies frequently fails, or the key financial data is not ideal and the data disclosure is not satisfactory. Defects related.

Scale, profit, and debt under pressure

　　Due to different regulatory systems and listing rules, it is easier to list in Hong Kong. For example, when listing on the Hong Kong Main Board, the Hong Kong Stock Exchange has set a variety of financial standards, and companies can choose one of three options: Less than 20 million Hong Kong dollars, the total net profit of the previous two years is not less than 30 million Hong Kong dollars, and the market value is not less than 500 million Hong Kong dollars; the market value/revenue test, the listed market value is not less than 4 billion Hong Kong dollars, and the income in the past year is not less than 5 100 million Hong Kong dollars; market value/revenue/cash flow test, the income in the past year is no less than 500 million Hong Kong dollars, the total cash flow in the past three years exceeds 100 million Hong Kong dollars, and the market value is no less than 2 billion Hong Kong dollars.

　　As almost all large real estate companies have gone public, with the exception of Jinhui and Xiangsheng, most of the developers currently queuing up their annual sales are at the bottom of China's top 100 real estate companies, even outside the top 100.

But even so, the above financial standards are not high for real estate companies.

For example, Dragon Real Estate, which was listed in July this year, has revenues from only 9 development projects in 4 cities. The revenue from property development and sales from 2017 to 2019 was RMB 434 million, RMB 1.66 billion and RMB 1.978 billion, respectively. It was 33 million yuan, 332 million yuan and 470 million yuan.

　　However, it should be noted that developers who are still small in scale have weak anti-risk capabilities and are prone to fluctuations in performance, and their future prospects are full of uncertainty.

From 2015 to 2018, Wanchuang International's revenue was 424 million yuan, 781 million yuan, 629 million yuan, and 1.303 billion yuan; net profits were 60 million yuan, 5 million yuan, 80 million yuan, and 240 million yuan respectively.

From the data point of view, the revenue growth rate of Wanchuang International is like riding a "roller coaster". In 2016, the revenue growth rate reached 84.2%, and the revenue in 2017 decreased by 19.46% year-on-year. In 2018, there was a sudden increase in revenue, with an increase of 110.67. %, there is a big difference in the data of fluctuations.

　　For another example, as of the end of January this year, Sunsun Holdings had a total land bank of 3,964,300 square meters, of which 89% were located in Anhui Province, which was too concentrated.

Shangkun Real Estate is highly dependent on the Yangtze River Delta Economic Zone, especially Shanghai. From 2017 to 2019, approximately 100.0%, 100.0%, and 60.8% of its property sales revenue came from property projects in Shanghai.

Shangkun Real Estate said in the prospectus: "We may not be able to successfully manage our growth and expansion into new cities and regions and new business areas."

　　According to disclosures, from 2016 to 2018, Heilenburg's profits were 2.898 billion yuan, 1.98 billion yuan, and 2.256 billion yuan, respectively. Sansun Holdings' profits were 55.99 million yuan, -3.875 million yuan and 44.99 million yuan.

It can be seen that while the scale of the two companies has expanded, their profits have fluctuated greatly, and they are not as good as two years ago.

Territory Holdings, which has submitted its form for the second time, has seen its net profit margin drop for three consecutive years. The net profit margins from 2017 to 2019 were 12.2%, 11.5%, and 8.9%, which were significantly lower than the industry average. The sustainability of earnings has attracted attention.

　　In terms of key indicators such as financing and liabilities, the data of small and medium-sized real estate companies is also not very optimistic.

From 2015 to 2017, Wanchuang International's gearing ratio continued to rise, reaching 608.5%, 716.80%, and 1218.0% respectively; from 2016 to 2018, Heilenburg's net gearing ratio was 69.4%, 83.4%, and 133.7%; 2017 In 2018, 2018, 2019 and as of the end of May 2020, the net debt to assets ratio of Territory Holdings was 60%, 110%, 140%, and 150%, respectively.

In addition, although the debt level of some real estate companies has declined in recent years, the debt ratio is still relatively high.

　　Yan Yuejin, research director of the Think Tank Center of the E-House Research Institute, pointed out to the Sino-Singapore Jingwei Client that this year's real estate companies’ listing in Hong Kong does have a slight tightening trend. On the one hand, it is related to the industry environment and corporate operations are affected by the epidemic. It has something to do with the small size and high debt of these real estate companies seeking to go public, which has led to a slow listing process.

　　Wang Xiaoqian, an analyst at Zhuge looking for real estate, believes that the relevant departments have recently monitored the financial indicators of real estate companies to limit the scale of their interest-bearing liabilities. Many real estate companies are actively listing to strengthen their financial strength.

At the same time, the capital market's listing conditions for real estate companies have become more stringent, especially for small and medium-sized real estate companies.

Xie Yifeng also said that Hong Kong's capital market has not been very optimistic about real estate companies, and the Hong Kong Stock Exchange also has a tendency to raise the threshold for listing review of real estate companies. In addition, the asset quality of small and medium-sized real estate companies is not high, making listing difficult.

　　Wang Xiaoqiang analyzed the Sino-Singapore Jingwei client that listing is a sufficient condition for corporate development, not a necessary condition. If small and medium real estate companies fail to achieve listing, their future financing capabilities will be relatively weak, but if their internal operating capabilities are better, companies can still survive.

It is undeniable that the concentration of the real estate industry is gradually increasing, and the pressure on small and medium-sized real estate companies to survive in the future will increase.

Property company listing is popular

　　As small and medium-sized enterprises struggled to explore the way to go public, real estate companies have split up their property service companies for listing, and the momentum is getting stronger and stronger.

Due to relatively large related transactions between property companies and parent company real estate companies, the Hong Kong Stock Exchange is still the main battlefield for mainland property companies to list.

　　　In the first three quarters of 2020, a prospectus has been submitted but not yet listed for trading.

Data source: Crane Property Management

　　Quite different from the listing of small and medium-sized real estate companies, the listing of property service companies is basically relatively smooth.

On June 24 and June 29 this year, Shimao Services, a property company of Shimao Group, and KWG Youhuo, a subsidiary of KWG Pacific, respectively issued their first prospectuses on the Hong Kong Stock Exchange. By October 11, both passed the hearing.

From issuing the prospectus to passing the hearing, the above two companies only took more than three months.

　　According to the statistics of Crane Property Management, as of the end of the third quarter of this year, there have been 30 listed property companies (including 3 A-share companies). This year, 6 property companies were successfully listed, and another 14 companies are waiting in line for submission of forms , It is expected that the fourth quarter will continue to increase, and the number of listed companies in the whole year may reach a new high.

Throughout 2020, the capital window period of the property management industry will continue to open, and the performance of property enterprises will maintain double-digit growth.

　　As the prospects of property companies are generally optimistic, coupled with the catalysis of the epidemic, the stock prices of listed property companies have performed strongly.

Everbright Securities selected 15 AH property listed companies based on the company's fundamentals and market performance (selection criteria: the market value of AH property companies on September 30 was greater than 5 billion yuan or 5 billion Hong Kong dollars) to form the Everbright Real Estate AH core property index.

From January to September this year, the index rose by 45.78%.

According to Crane Property Management, as of September 30 this year, most of the 30 listed property service companies have a P/E ratio of more than 20 times, which is generally higher than that of the real estate parent company.

　　Crane Property Management believes that the property service industry is still in a critical period of leapfrogging to a mature stage, the overall market and individual companies still have a large incremental space, high growth will continue, and the industry will undergo rapid fission in the next 2 to 5 years , The industry has entered a critical stage of scale growth and quality improvement.

　　Wang Xiaoqian pointed out that the main purpose of real estate companies to spin off property companies for listing is to increase financing channels and strengthen the group's financial strength.

The high valuation of the property company is due to the fact that the property company is a stock operation, with stable income and relatively low risk, and the financial indicators of the property companies under many real estate companies, such as Greentown Service, Country Garden Service, and Ya Life Service, have performed better.

However, from the current point of view, property companies mainly rely on the parent company of the real estate company to provide projects, and the threshold for entering other projects is still high. The probability of the birth of industry giants is low in the short term, and there is still room for industry concentration to increase.

　　Yan Yuejin said that compared with real estate companies, the Hong Kong capital market recognizes property companies operating in the stock market more, but we must be alert to various new problems, especially when the operating income of property companies is too narrow and related risks need to be guarded against.

(Zhongxin Jingwei APP)

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