Hong Kong Stocks Listing Superimposed On Commercial Operations, Desun Services Is Heading Towards "the Ocean of Stars"
CHENGDU,China,Dec. 31,2021 -- On December 17,Desun Services was officially listed on the Hong Kong stock market.
With Rapid Business Growth,Desun Services is "Transforming"
The successful listing of Desun Services demonstrates its continuous rapid growth in the past few years,the performance of Desun Services has always maintained a rapid growth. The prospectus shows that from 2018 to 2020 and 5M 2021,the revenue of Desun Services was RMB 63.964 million,RMB 69.116 million,RMB 127.922 million and RMB 89.159 million,respectively,representing a compound annual growth rate CAGR of approximately 41.4% between 2018 and 2020.
When it comes to profitability,from 2018 to 2020 and 5M 2021,the net profit of Desun Services was RMB 31.394 million,RMB 31.043 million,RMB 42.913 million and RMB 10.003 million.,representing a CAGR of approximately 16.9% between 2018 and 2020.
The soar in performance is credited to the rapid growth of GFA under Desun Services' management. From 2018 to 2020 and 5M 2021,the company's GFA under management were 533.5 thousand sq.m,792 thousand sq.m,3834.6 thousand sq.m,and 4154.2 thousand sq.m,respectively.
Among them,the non-residential GFA under Desun Services' management has experienced a viral rise. From 2018 to May 31,2021,the company's non-residential GFA under management has rocketed from 110.8 thousand sq.m to 2295.7 thousand sq.m.
With the continuous enhancement of Desun Services' service level in the non-residential field,the company has gradually expanded its service scope to the field of commercial operation services.
As far as Desun Services is concerned,the significance of developing commercial operation services is embodied in the following two aspects:
For one thing,Desun Services can promote its revenue growth by exporting its accumulated management experience to other property developers and owners.
For another thing,by providing such services as market research services,tenant sourcing services,and shopping streets management services to other property developers and owners,Desun Services can push forward the diversification of the company's income sources,thereby reducing the dependence of performance on the GFA under management and enhancing the stability of performance growth.
In retrospect,Desun Services' ability to expand business in the field of commercial operation services is not unrelated to its accumulated rich experience in the property management service industry.
In recent years,the property management industry has ushered in a wave of listings. In 2020 alone,a total of 18 property service companies have been successfully listed. Today,this nearly trillion-scale track has welcomed a high-quality listed company – Desun Real Estate Investment Services Group Co.,Ltd (Desun Services,02270.HK). On December 17,Desun Services was officially listed on the Hong Kong stock market.
Over the past three years,with the growth of contracted gross floor area (Contracted GFA),the performance of Desun Services has achieved a rapid growth. Meanwhile,the company is focusing on commercial operation services to achieve leveraged growth.
In terms of Desun Services,the advantage of achieving leveraged growth is also obvious. On the one hand,in the process of coordinated development with Chengdu Desun Property Co.,Ltd and its subsidiaries,joint ventures and associated companies (Desun Property Group),Desun Services has accumulatively acquired profound service capabilities for property value chain across the entire industry. The company can secure relevant income by providing commercial operation services across the industry chain for other property developers and owners.
On the other hand,relying on the strong support of Desun Property Group,Desun Services,through undertaking the development area of Desun Property Group and Mergers and Acquisitions (M&A) of high-quality property service providers,has further increased the GFA under management.
In the long run,Desun Services is achieving leveraged growth through its efforts in commercial operation services and expansion of property area under management,thus heading towards its "Ocean of Stars".
The Service Capability of the Whole Industrial Chain,the "Foundation" of Desun Services' Expansion
The successful expansion of Desun Services into the field of commercial operation services is attributed to years of development experience from the synergy between the company and Desun Property Group.
Through the long-term collaborative development with Desun Property Group,Desun Services has developed capabilities for full-chain commercial operation services. At present,the company has the ability to handle commercial operation services including multiple links such as planning,tenant sourcing,operation,sales. Specifically:
At the level of commercial project planning,Desun Services can provide services such as preliminary planning,business planning,and assistance in market expansion planning.
Among them,for general development projects,the service contents of Desun Services incorporate preliminary planning reports,including product positioning,planning recommendations,and financial calculations; for cultural tourism and commercial projects,the service content of Desun Services includes overall planning reports,consisting of land sorting,cultural positioning,product positioning,financial calculations,etc.
As for tenant sourcing for commercial projects,Desun Services respectively offers tenant sourcing management services,early-stage intervention and other services for its own commercial projects and expansion commercial projects. At the operational level of commercial projects,Desun Services respectively provides various services such as operational service management and preliminary intervention for its own commercial projects and expansion projects.
Finally,in terms of commercial project sales,Desun Services boasts sales teams with omni-channel sales capabilities,which can better serve bulk sales in addition to traditional second-hand housing sales.
It is worth noting that,while obtaining the full-chain business operation service capabilities,Desun Services has also established its own unique advantages in the construction of business product models. Different from other commercial operating companies,Desun Services pays closer attention to customer segmentation and precise positioning,focusing on creating scene-oriented,socialized,themed,and block-centered scenes.
For instance,the newly begun commercial projects of Desun Services are mainly neighborhood and regional businesses with a scale of less than 100 thousand sq.m,among which projects with a scale of 20 thousand – 50 thousand sq.m account for 35%,and those less than 100 thousand sq.m are up to 70%.
From the current point of view,Desun Services has established a series of successful cases. With "youth trendy play centers" as an example,the main target customer group of the Huahuo Community (meaning Flowery Times,Lively Atmosphere in Chinese) is Z-generation youths. Judging from product forms,the Huahuo Community mainly takes the form of themed block,with the block form of large and small shops plus squares as the carrier,fashion trends and niche socials as the core,and basic life services as supplements,so as to create themed commercial products featured with market cultural characteristics and a living atmosphere.
All in all,the advantages of rich experience in the field of property services and commercial operation services are becoming the confidence for Desun Services to continuously expand into the field of commercial operation services.
With Endogeny and Extension,Desun Services Ushers in a Period of Accelerated Expansion
For Desun services,the listing of Hong Kong stocks is a new start of its rapid development cycle.
With the improvement of comprehensive service capabilities,the racing track for Desun Services is also expanding at a high speed. Public information demonstrates that the Sichuan-Chongqing Region,which Desun Services is rooted in,is in a period of rapid development.
Since the "13th Five-Year Plan",the development of Chengdu-Chongqing Region has entered a fast lane. By 2019,the region's GDP growth has reached an average annual rate of over 8%. With the release of the "Outline for the Construction of the Chengdu-Chongqing Dual-City Economic Circle" (hereinafter referred to as the "Outline") this October,Chengdu-Chongqing city clusters will grow still maintain a rapid development trend in the future. In accordance with the guidelines of the "Outline",by 2035,the Chengdu-Chongqing Region will be developed into a dual-city economic circle with strong strength and distinctive characteristics,and Chongqing and Chengdu will enter the ranks of modern international cities.
The rapid economic development has paved a broad stage for the development of the property industry. During the past few years,the Sichuan-Chongqing Region property management service market has always secured considerable growth.
In line with Frost & Sullivan data,from 2015 to 2020,the total revenue of property management service companies in Sichuan-Chongqing Region increased from RMB 31.2 billion to RMB 55.1 billion,with the CAGR of 12.0%. In 2025,the total revenue of property management services in Sichuan-Chongqing Region is expected to reach RMB 92.4 billion,with a CAGR of 10.9% from 2020 to 2025.
Currently,the rapid development of the property management service market in Sichuan-Chongqing Region has promoted the performance of Desun Services. From the perspective of the future,extensional M&A will become a significant driving force for the company's performance growth.
The prospectus displays that Desun Services plans to use 60% of the raised funds for strategic investments and acquisitions to expand property management and commercial operations.
At present,property management service companies are generally affected by the decline in the sales area of real estate corporations,so their valuation levels have dropped drastically compared with a high point at the beginning of the year. For example,in contrast with this year's high value,the share prices of industry leaders such as Country Garden Services and Sunac Services have fallen by more than 35%. The depreciation in valuation of the entire property management service market also means a golden opportunity for industrial M&A for Desun Services.
Actually,Desun Services is also equipped with extensive experience in M&A. In August 2020,Desun Services acquiredZhongneng Group to enhance its business portfolio. In 2019,Zhongneng Group was still at a loss,but through integration of Desun Services,Zhongneng Group has achieved profitability in 2020,with its net profit margin increased to 11.5%.
In the long run,with the continuous expansion of the original business and the acceleration of the additional commercial operation services,Desun Services will welcome a new round of rapid development.
