CHENGDU, China, Dec. 24, 2021 /PRNewswire/ -- Desun Real Estate Investment Services Group Co.,
Ltd. (Desun Services) (02270.HK), formally debuted on the
Hong Kong stock market on
December 17.
In China, the history of the
property service industry can be traced back to the early 1980s,
and since then, the industry has grown rapidly. In 2007, the State
Council officially promulgated the Regulations on Property
Management, which provides the legal framework for regulating the
entire industry. Correspondingly, a more sophisticated legal
framework for the industry further fuels the rapid growth of
China's property service
industry.
Nowadays, the property service industry is stepping into the
second stage of development, which means the industry landscape is
rapidly evolving from a highly fragmented structure to a
concentrated one. This also presents unprecedented development
opportunities for property management service companies, one of
which is Desun Real Estate Investment Services Group Co., Ltd.
(Desun Services) (02270.HK), formally debuting at the Hong Kong stock market on December 17.
As a property management service company with a significant
presence in the Sichuan-Chongqing Region, Desun Services ranks
fifth in terms of commercial operational services market share in
Chengdu. According to the
prospectus, the company was awarded with several industry honors
such as Top 10 Property Service Companies in Chengdu, and Top 100 Property Service
Companies in China.
With the trend of accelerating concentration in the industry,
the growing of Desun Services has just begun.
The twin driving factors behind the high growth
From the perspective of the business performance, Desun Services
has experienced remarkable growth in the past few years. According
to the prospectus, from 2018 to 2020, the company achieved revenue
of RMB63.964 million, RMB69.116 million and RMB127.922 million, respectively, representing a
CAGR (compound annual growth rate) of 41.4%. During the same
period, the company's net profit grew from RMB31.394 million to RMB42.913 million, representing a CAGR of
16.9%.
The high growth in business performance is propelled by the twin
driving factors, namely, the company's property management services
and value-added services.
In terms of property management services, the relevant business
revenue of the Company doubled from RMB30.153 million to RMB61.435 million between 2018 and 2020.
Specifically, both the residential property management services and
non-residential property management services maintained notable
growth. The former grew from RMB11.303
million in 2018 to RMB27.794
million, while the latter increased from RMB18.850 million to RMB33.641 million.
Credit for it is owed to the increase in GFA (gross floor area)
under management. According to the prospectus, from 2018 to
May 31, 2021, the number of
properties under the management of Desun Services grew from 4 to
30, and the GFA under management increased from 533,500 square
meters to 4,154,200 square meters. Among them, the GFA under
management for residential properties grew from 422,700 square
meters to 1,858,500 square meters over the same period; the GFA
under management for non-residential properties rose from 110,800
square meters to 2,295,700 square meters.
Based on the prospectus, there are two main reasons for the
increase in the GFA under the management of Desun Services:
First, as the preferred property management service provider of
Desun Property Group (Chengdu Desun Property Co., Ltd and its
subsidiaries, joint ventures and associated companies), Desun
Services has been cooperating with Desun Property Group for many
years. Desun Property Group, as one of the top ten developers in
terms of sales revenue in Chengdu,
is able to provide considerable growth in the GFA under management
for Desun Services every year.
Second, as a property management service company with a
significant presence in the Sichuan-Chongqing Region, Desun
Services is also on its way to gain further growth through mergers
and acquisitions. Last year, Desun Services completed the
acquisition of Zhongneng Group. As at the end of last year, the GFA
under the management of Zhongneng Group for residential and
non-residential properties in six cities in Sichuan Province amounted to 2,461,800 square
meters, and the contracted GFA was 3,316,300 square meters.
Thanks to the synergistic benefits with Desun Group and the
positive M&A (mergers and acquisitions) activities, as at
May 31, 2021, the contracted GFA
served by Desun Services reached an impressive figure of 7,365,300
square meters. The excellent contracted GFA reserve will bolster
the Company's sustainable growth going forward.
In terms of value-added services, benefiting from the expansion
of the GFA under management, Desun Services has also delivered an
impressive result. Between 2018 and 2020, the Company's revenue
generated from value-added services increased from RMB33.811 million to RMB66.487 million.
In particular, the growth of value-added services for property
owners was outstanding. The relevant business revenue of the
Company grew from RMB4.852 million to
RMB10.721 million over the same
period. In the light of the fact that the demand for value-added
services in mid- to high-end property communities is greater than
that in ordinary property communities, there is still much room for
the Company's value-added services for property owners to increase
its share.
Whilst the continuous growth of the GFA under management
explains the immediate success of Desun Services, the presence of
the Sichuan-Chongqing Economic Circle is the core impetus behind
the data that boosts the company's long-term growth.
With evident geographical advantages, Desun Services embraces
epic growth opportunities
As the saying goes, one's success, of course, depends on
self-struggle, but one must also take into account the course of
history. This is true for people, as well as for companies. Behind
the high growth of the revenue of Desun Services, it is equally
inseparable from its favorable geographical advantages.
Since the 21st century, western China has experienced rapid economic
development, and the Cheng-Yu city cluster, located in the heart of
western China, has emerged as one
of the four major city clusters in China, alongside Beijing-Tianjin-Hebei
region, and Guangdong-Hong
Kong-Macao Greater Bay Area.
Since the "13th Five-Year Plan", the development of the
Chengdu-Chongqing region has steered into the fast
lane. By 2019, the annual average growth of the regional GDP (gross
domestic product) of the Chengdu-Chongqing region exceeded 8%. The total retail
sales of social consumer goods grew by more than 10% annually on
average. The urbanization rate of the resident population exceeded
60%. The railroad density reached 3.5 km per 100 square kilometers.
The passenger handling capacity of the airports surpassed 100
million passengers, and the proportions of the resident population
and the total regional economy in the whole country continued to
rise.
With the release of the <Outline of the Plan for the
Development of the Chengdu-Chongqing Economic Circle> (Outline)
in October this year, the Cheng-Yu city cluster will sustain its
rapid development momentum.
According to the Outline, by 2035, the Chengdu-Chongqing region will establish a twin-city
economic circle with strong strength and distinctive features, and
Chongqing and Chengdu will make their way into the ranks of
modern international metropolises. While greatly improving people's
quality of life, the Cheng-Yu Economic Circle will also
significantly enhance its capacity to support and drive the
high-quality development of the country, thus establishing itself
as an active growth pillar and robust power source with
international influence.
The rapid economic development has created a great arena for the
expansion of the property industry. In the past few years, the
property management service market in Sichuan-Chongqing Region has
always maintained considerable growth.
According to the prospectus, between 2015 and 2020, the total
revenue of property management service companies in
Sichuan-Chongqing Region increased from RMB31.2 billion to RMB55.1
billion, with a CAGR of 12.0%. By 2025, Total revenue for
property management services in Sichuan-Chongqing Region is
expected to reach RMB92.4 billion,
representing a CAGR of 10.9% from 2020 to 2025.
While the market size was increasing at a high speed, the market
concentration in Sichuan-Chongqing Region remained at a relatively
low level. Taking Chengdu as an
example, the market share of the top five property companies
providing commercial operational services, ranked by revenue in
2020, stood at 4.5%. Among them, the market share of Desun Services
ranked fifth.
In terms of development trend, the increase in concentration
will be the key logic for the future development of the property
management industry. Public information reveals that from 2015 to
2020, the market share of the TOP 100 Property Management
Enterprises in terms of the GFA under management increased from
about 20% to 30.8%. With the further increase of concentration in
the industry, Desun Services, focusing on the Sichuan-Chongqing
Region, undoubtedly possesses huge growth potential.
In parallel, Desun Services, a brand positioned as a mid- to
high-end property management services, will fully reap the benefits
of the rapid growth of the mid- to high-end property market in
Sichuan-Chongqing Region. In the past five years, the growth rate
of demand for mid- to high-end property management services in
Sichuan-Chongqing Region was higher than that for ordinary property
management services. According to the data, the CAGR of the mid- to
high-end residential property management services market in
Chengdu from 2015 to 2020 was
7.9%, which was higher than the CAGR of 4.7% of the total
residential GFA under management in the city.
In the future, the high growth rate of the mid- to high-end
property market will carry on. According to the prospectus, with
the further development of mid- to high-end residential properties
in Sichuan-Chongqing Region, the total GFA under management for the
mid- to high-end residential property management services market is
projected to reach 171.2 million square meters in 2025, with a CAGR
of 6.5% from 2020 to 2025.
Thanks to its leading position in Sichuan-Chongqing Region,
together with its mid- to high-end brand positioning, the company's
performance will continue to maintain high growth.
Commercial operational and value-added services, underrated
growth "engines"
In addition to geographical advantages, commercial operational
and value-added services also play an important role in the
subsequent performance growth of Desun Services.
Starting from the former that in recent years, with the
increasing number of shopping malls and commercial streets in
Chengdu, the commercial
operational services market in Chengdu is expanding exponentially. According
to the prospectus, the total GFA under management in commercial
operational services in Chengdu
increased from 7.3 million square meters to 16.1 million square
meters from 2015 to 2020, representing a CAGR of approximately
17.2%; the market is estimated to grow at a CAGR of approximately
14.9% from 2020 to 2025.
This is why Desun Services has started to develop its business
in this field. In 2020, Desun Services further extended its
business to commercial operational services.
Given the vast space in the commercial operational market in
Sichuan-Chongqing Region, the future performance of Desun Services
in commercial operational services is highly anticipated. The
expansion of service categories and service scenarios will also
further boost the growth rate and stability of the company's
overall business.
Apart from the commercial operational services, the value-added
services of Desun Services also merit key attention. In the current
property management industry, value-added services are still in the
early stage of development, and each property management service
company is seeking to monetize the private domain traffic of the
community in different forms. In 2020, the company's value-added
services for property owners generated revenue of RMB10.721 million, leaving plenty of room for
improvement.
As far as Desun Services is concerned, its previous synergy with
Desun Property Group has enabled it to provide a full cycle of
services from early property planning and development to sales
office services and post-delivery project operation. Such
experience can also facilitate the company to fully tap the
potential of value-added services down the road.
Over a long period of time, as the commercial operational and
value-added services thrive, the value of Desun Services will be
further released.
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SOURCE Desun Real Estate Investment Services Group Co., Ltd.