Desun Services Embarks on the Path of Differentiated Development and its Shares Reached Intraday Highest of over 8% increase on its Stock Market Debut

CHENGDU,China,Dec. 18,2021 -- On December 17,2021,Desun Real Estate Investment Services Group Co.,Ltd. (Desun Services) (02270.HK) rang the opening bell and made its debut at the Hong Kong Stock Exchange (HKEX). The share price opened higher by 4.5% on the first day of listing,and jumped as high as over 8% during the trading session,with an intraday trading volume of nearly HK$17 million.

As disclosed in the Prospectus,as at May 31,the GFA (gross floor area) under management was approximately 4.2 million square meters,among which,the total GFA of residential properties under management was approximately 1.9 million square meters,accounting for 44.7% of the GFA under management,while the total GFA of non-residential properties under management was approximately 2.3 million square meters,accounting for 55.3% of the GFA under management.

From 2018 to 2020,the GFA under management of Desun Services grew from approximately 0.5 million square meters to approximately 3.8 million square meters,representing a CAGR (compound annual growth rate) of approximately 175.7%; the contracted GFA grew from approximately 1.3 million square meters to approximately 6.8 million square meters,representing a CAGR of approximately 128.7%.

In terms of business performance,for FY2018,FY2019,FY2020 and 5M2021,the company recorded revenue of RMB63.964 million,RMB69.116 million,RMB127.922 million and RMB89.159 million,respectively,representing a CAGR of approximately 41.4% between 2018 and 2020. During the same period,the net profit was RMB31.394 million,RMB31.043 million,RMB42.913 million and RMB10.003 million,representing a CAGR of approximately 16.9% between 2018 and 2020.

From the perspective of absolute figures,when compared to the top property management service companies with revenues exceeding RMB10 billion and the GFA under management amounting to over 100 million square meters,Desun Services is not eye-catching in terms of revenue and GFA under management. Nevertheless,the company has achieved steady growth by virtue of its advantages in embarking on the path of differentiated development.

Desun Services' pursuit of differentiated development is manifested mostly in two dimensions:

First,the company is headquartered in the Cheng-Yu city cluster-the economic development driver of PRC southwest region. For one thing,the Cheng-Yu city cluster is an economic zone vigorously developed by the government,and the economic boom of the economic zone can spur the company's rapid business expansion; for another,the focus on Sichuan-Chongqing Region allows Desun Services to steer clear of the highly competitive cities around the Yangtze River Delta and the top-tier coastal regions,and to firmly seize the opportunities for differentiated development.

Second,the company's business is able to serve a variety of scenarios,and its diversified revenue structure has contributed to more stable performance. The company is dedicated to serving a wide range of property customers,covering residential properties,shopping street and other commercial properties,industrial parks and office buildings,among others. According to the data,the revenue generated from property management services accounted for 47.1%,49.5%,48% and 51.6%,while the revenue generated from value-added services accounted for 52.9%,50.5%,52% and 48.4%,respectively.

At this point,it is particularly crucial for Desun Services to follow a differentiated development path. Since last year,policies such as "Enhanced Supervision of Pre-sale Deposit","the Three Red Lines" and "Two Centralizations" have been enacted in succession,putting pressure on sales of real estate developers in general. A few top real estate enterprises have even suffered from capital chain rupture. In the long run,against the background of no speculation in housing,the rationale for the sustained high growth of real estate developers is hardly justified.

This has also led to a fundamental change in the logic of growth for the entire property management industry. In the past few years,the rapid expansion of real estate development companies has resulted in a steady stream of management resources and revenue for property management companies. But at present,as developers gradually slow down their business growth,property development begins to decouple from property management,and the property management industry becomes increasingly independent.

In the context of the logical change in the long-term growth of the entire property management industry,Desun Services' pursuit of the differentiated development path is perhaps the best guarantee to deliver robust growth in its performance.