Red Star'S Real Estate Ambitions: Last Year, Sales Of 60 Billion Real Estate Into A Real "Main Business".

A few days ago, Guangdong Hongmin furniture Management Consulting Co., Ltd. under Hongxing Furniture Group, was granted a 11% stake in Jinke shares held by Rong Chong, with a price of 4 billion 700 million yuan. The move not only temporarily lifted the stock crisis of Jinke for many years, but also brought imagination to cooperation between the two sides.

Che Jianxing and Che Jianfang, the real controllers of Hongxing Furniture Group, are the founders of the famous household brand Hongxing Mei Kai long.

The twenty-first Century economic report survey found that as early as 2009, LITE-ON's "Red Star Empire" began to set foot in the real estate industry. Today, apart from equity investment in Jinke, "Red Star" is spanning many fields such as residential real estate development, commercial real estate, real estate brokers, refined decoration and so on. According to the statistics of Yi Ju Ke and Rui, the sales volume of Hongxing real estate reached 60 billion 100 million in 2019, ranking fifty-eighth. The "Red Star" commercial real estate brand Aegean Sea has been stationed in more than 80 cities nationwide.

In contrast, as an "old bank" home business, the business revenue reached 16 billion 469 million yuan last year. Although a 15.7% increase was achieved, the proportion of business was significantly less than that of real estate, and nearly half of them came from self operated shopping malls. Insiders have commented that "real estate is the real main business of red star."

As an invisible landlord, how big is the real estate of the red star? What is the logic of its investment in real estate?

Across many real estate areas

As the founder of the largest chain household operation brand in China, LITE-ON started its own home workshop in 1986. In 1996, after opening the chain store mode of home shopping mall, red star MC developed rapidly.

In June 2015, the Red Star Limited by Share Ltd group was listed in Hongkong. In January 2018, the company was listed on the Shanghai Stock Exchange. The company also became the first listed company to enter A+ H shares in the home industry.

Business information shows that the controlling shareholder of the company is the Red Star Group, which is LITE-ON's Admiral Company. However, under the Hongxing group, the business and assets of the listed companies account for only a small part. The largest business segment is the Shanghai Red Star Group, which is engaged in real estate business besides the listing system.

Official information shows that Hongxing real estate was established in 2009, and identified the development mode of BSH (development + sales + Holdings). In 2013, Hongxing real estate established commercial real estate brand Hongxing business, engaged in the development and operation of urban complex and shopping center. In 2018, red star business officially opened the "Aegean Sea group" as a new business management brand.

In recent years, relying on the resource advantages of running home stores and self built shopping malls, Hongxing real estate has gained a lot of commercial land and comprehensive land in various places, which has also promoted the development of its real estate business.

Official information shows that at present, the Aegean Sea shopping park has already laid more than 80 cities. In the list of commercial real estate brands evaluated by many agencies, Aegean Sea is ranked the top 20.

In terms of residential business, Hongxing real estate has built a star line of residential product line Hongxing Tian platinum. In recent years, Hongxing real estate has acquired a large number of residential land through separate or joint land acquisition. At present, Hongxing real estate has more than 50 cities in its residential business.

According to data from Yi Ju Ke and Rui, in 2015, Hongxing real estate ranked sixty-ninth in terms of sales volume of 14 billion 510 million yuan. By 2019, sales of Hongxing real estate reached 60 billion 110 million yuan, ranking fifty-eighth.

The interest of red star in the real estate business is also reflected in the real estate brokerage business. In August 2019, Hongxing Mei Kai Long holdings was established and announced in Shanghai that the sub brand "Mei Kai Long love home" was officially established in the real estate brokerage industry. According to introducing, red star Mei Kai Long has screened out 100 stores, and is expected to implement hundreds of stores within three months.

In addition, Hongxing Mei Kai Long invested in the commercial real estate O2O company in December 2016 to rent technology, holding 2.26%, but the company had withdrawn the investment in 2020.

Upstream layout

In the traditional chain operation of red star, the income from real estate management is also an important source of income.

The announcement shows that as of the end of 2019, the company had 87 self operated shopping malls, with a total operating area of 7 million 740 thousand square meters. There are also 250 shopping malls (commissioned management) and 12 home shopping malls managed through strategic cooperation. In the $16 billion 469 million revenue achieved by the company last year, the rental and management revenue of self operated shopping malls was 7 billion 799 million yuan, accounting for 47.4%.

Shanghai real estate sector to the twenty-first Century economic report said, "Red Star" as a traditional home shopping mall, itself has strong commercial real estate attributes. If it is accounted for by its business ratio, this is a real estate enterprise.

Yan Yuejin, a well-known real estate analyst, pointed out to the twenty-first Century economic report that as the downstream industry of real estate, competition in the home industry has become increasingly fierce in recent years, and profits have been diluted and performance is likely to fluctuate. In order to avoid risks and expand revenue sources, many companies began to extend their business to the upstream and downstream.

In recent years, the red star is also following the logic.

Since 2015, red star has invested in children's home O2O brand, such as cool house, smart parking brand, simple VR home decoration platform, etc.

In the upper reaches of the industry, the "bundling" between red star and the real estate industry is deepening. Since October 2014, red star has provided some products for the real estate project to explore the fine decoration business. In 2016, Hongxing Mei Kai Long intends to further expand its fine decoration business through cooperation with well-known real estate developers and hotels.

The above-mentioned cooperation with Jinke is also believed to be conducive to the in-depth cooperation between the two sides in the traditional housing business, as well as the related services such as life service, technology industry (Park) investment and operation, cultural and business travel, and other related industries.

Yan Yuejin said that taking into account the real estate and home industry synergy, this "bundle" is understandable. But it should be noted that after the bull market, the real estate market has entered the downstream channel, and the industry competition is becoming more and more intense. For enterprises that are not yet big in scale and lack core competitiveness, risks can not be ignored. In addition, the upstream and downstream industries of the real estate industry will inevitably be affected.

A previous report by Dagong international pointed out that Hongxing real estate has more land reserves located in cities below three lines and below, and the development cycle is longer. Due to the weak economic foundation, outflow of population and oversupply of real estate in some three or four line cities, if the company can not accurately enter the market positioning and grasp the pace of development, it will face certain risks.

At the end of 2019, the first Aegean Sea shopping park, Beijing Taiyanggong Aegean Sea shopping park, was announced to be closed in February 29, 2020. In early April of this year, after a series of equity changes, Kunming Guangfu Road Aegean Sea shopping park project was taken over by Jinke.

Yan Yuejin believes that the real estate business of Hongxing Mei Kai Long has a large scale, and the proportion of heavy assets is not small. Under the influence of the downfall of the industry and the overcrowding of the new crown pneumonia, the overall yield and cash flow are inevitably limited. Therefore, in addition to further enhancing the development and operation capabilities, Future Ltd's asset transfer is inevitable.

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