Shenzhen Dawan District Commercial Property Coco Park Operator Xingsheng Commercial Landing Port Exchange

Speaking of Xingsheng business, its shopping center, Shenzhen Futian Xinghe coco Park, is more well known.

In the morning of January 26, Xingsheng Commercial Management Co., Ltd. (hereinafter referred to as "Xingsheng commercial") officially landed on the Hong Kong stock exchange. This is also the first pure commercial operation service share listed on the Hong Kong Stock Exchange after many real estate companies split up and listed on the stock exchange in recent two years.

Since the launch of the global offering on January 14, with the fast-growing business needs of Star River Holdings Group and the brand endorsement of leading light assets operators in Dawan District, Xingsheng Commercial Hong Kong public offering has been oversubscribed by nearly 756 times. Investors' enthusiasm for Xingsheng business can be seen.

In this listing, assuming that the over allotment right has not been exercised, Xingsheng Commercial Management Co., Ltd. will offer 250 million shares worldwide at a price of HK $3.86 per share. At the same time, the company also has four cornerstone investors, including new world's pilgrim ever project company, China Merchants Group and Shenzhen Qichang investment, Shenzhen innovation investment group and Shuangcheng capital, which are affiliated to GLP group. The total subscription amount is about US $40.41 million (about HK $313 million), which is equivalent to 32.46% of the number of public shares (excluding the over allotment).

According to the prospectus, the company is expected to return its net profit to its parent company no less than 120 million yuan in 2020, with a year-on-year increase of more than 40%. After the test of the epidemic in 2020, it is obviously commendable that commercial property can achieve such growth.

As a leading commercial property operation service provider in Dawan District, Xingsheng commercial will also have the opportunity to continuously benefit from the overall favorable policies and regional development trend of the region. By the end of September 2020, the shopping centers and operating areas of Xingsheng commercial in Shenzhen and Dawan district are in the forefront of the industry.

China Thailand International pointed out in the research report that Dawan district is one of the economically developed areas in China, and the average per capita disposable income is higher than the national average level. The future economic development and population growth will provide stable growth for the commercial property operation service market of Dawan district.

The management of the company believes that as a leading commercial property operation service provider in Dawan District, the company benefits from the favorable policies of the region and has a national layout. Through widely recognized benchmarking projects and flexible operation mode, the company will realize scale expansion. Cities in the Yangtze River Delta, Guangdong, Hong Kong, Macao and other economically developed areas with high population consumption capacity will be the company's business expansion Main objectives.

The scarcity of commercial property in Hong Kong stock market

For the whole property industry, 2020 is the "big year" of listing. Compared with the previous year's sporadic single digit property companies IPO, a total of 17 property companies will appear in the capital market in 2020, but this also makes investors need to find the most valuable investment target among these companies - either the financial data is bright or it is scarce.

However, from the perspective of the whole property sector, there are 39 property companies listed on the Hong Kong stock exchange, and most of them are residential property management companies. Even if Baolong business, which has been popular among investors in recent two years, is often titled as "the first share listed in the light of commercial management", a large proportion of its revenue comes from residential property management services, and the proportion of this part of revenue is still increasing.

After the listing of Xingsheng commerce, it made up for the defects of the property sector. According to the prospectus, the main operations of Xingsheng business include urban shopping center "coco Park" (targeting urban consumers), regional shopping centers "coco city" and "ICO" (targeting consumers within five kilometers of the shopping center), and "coco", a community-based shopping center Garden "and" the third space "of high-end home decoration shopping center.

So far, Xingsheng commercial has provided services to 53 commercial property projects, covering 20 cities in China, with a total contract area of about 3.284 million square meters, of which 61.6% are developed or owned by independent third parties.

In the specific mode, Xingsheng business adopts three operation modes: entrusted management service mode, brand and management output service mode and whole rent service mode. Among them, the number of properties with entrusted management services increased from 4 at the end of 2017 to 17 by the end of September 2020, the contract management area also increased from 438000 square meters to 1117000 square meters, the number of properties with brand and management output services increased from 15 to 27, and the contract area increased from 1142000 square meters to 1839000 square meters.

As the most mature operation mode of Xingsheng commercial, entrusted management service provides more than 70% of Xingsheng's annual income by appointing a whole management team to manage the commercial property operation, with the gross profit rate of 49.5% in the first nine months of 2020.

Brand and management output service is the fastest growing plate of Xingsheng business in recent years, and it is also the plate with the highest gross profit rate. According to the data of the prospectus, the proportion of revenue contributed by this part of business has increased from 19.3% in 2017 to 23.9% at the end of September 2020. As of September 2020, the gross profit rate of this sector was as high as 74.2%, exceeding the average gross profit rate of A-share liquor industry.

Compared with other companies in the property sector, Xingsheng business is located in the Great Bay area of Guangdong, Hong Kong and Macao. By playing the synergy effect with the resource ecosystem of Star River Holdings, there is still a lot of imagination for the improvement of Xingsheng business in commercial properties.

As of the first nine months of 2020, the overall gross profit margin of Xingsheng business reached 55.2%, while the commercial property revenue accounted for a relatively high proportion of China Resources Vientiane life and Baolong commerce. By the end of June 2020, the gross profit rates of commercial property operation sector were 35.79% and 31.13% respectively.

China Index Research Institute believes that the continuous expansion of China's cities will drive the development of commercial property trial production, and the demand for commercial property operation services will continue to rise. In addition, the increase of domestic consumption and the evolution of consumption structure will continue to stimulate the development of retail industry and business model innovation, and the demand for commercial property operation services will also increase accordingly.

Zhongtai international pointed out that Xingsheng business can bring stable growth to its own performance by virtue of the synergy effect with Xinghe holdings and the development of Dawan district. The commercial property management industry can also benefit from the recovery of consumption under the control of the epidemic.

Under the influence of factors such as the development of China's overall commercial property management industry and the strong operation and management ability of Xingsheng commercial, and the scarcity of "the first share of pure commercial operation and service", it is no wonder that investors show extraordinary enthusiasm when applying for purchase.

Coco park mode will continue to output

While being warmly welcomed by the capital market, Xingsheng business has also been expanding its business scope by managing high-quality projects in order to continuously export the operation mode of coco park.

Shenzhen Futian Xinghe coco park is one of the well-known commercial landmarks created by Xingsheng commerce. It is well known to the younger generation of consumers and household consumers. Since its opening, the mall has been operating for 15 years.

Futian Xinghe coco park is located in the CBD business district of Futian, Shenzhen. It is the core area of the city's commercial vitality, and is also an area of fierce competition for commercial real estate. In this area, in addition to the shopping centers such as the Royal Court Square and the central city square, Liancheng Xintiandi has opened up all the shopping centers, and there are also new entrants such as PAFC mall and one avenue Zhuoyue center. In order to maintain the benchmark status in this area, the shopping centers need to constantly "evolve" to keep up with the needs of consumers.

Xingsheng commercial has positioned Futian Xinghe coco Park as a "park scene shopping center". Through self upgrading, on the one hand, it will increase the overall area of the project from 76000 square meters in the past to about 120000 square meters, on the other hand, it will increase the boutique retail and experience formats by introducing the first LEGO brand flagship store in South China.

Through refined operation, Xingsheng commercial constantly adjusts and upgrades the "connotation" of the shopping mall to meet the consumption needs of young people and keep close to the business trend.

Theme activities such as the "big grab Festival" original IP activities and the creation of "40 ° night coco Memorial night" are Xingsheng's innovation in personalized marketing, which makes operators change from simple brand content integrators to content creators, and enhance the stickiness with high-quality brands and consumers.

The strong operation ability also enables Xingsheng commerce to quickly get out of the influence of the epidemic in 2020, which is an extraordinary year. During the "big grab Festival" activity, the shopping center of Xingsheng commercial realized nearly 15000 new members and 38.2% month on month increase in member consumption through a variety of special member pet programs.

As can be seen from the data of the prospectus, by the end of September 2020, the net profit of Xingsheng commercial period was RMB 90 million, with a year-on-year increase of 32.4%. It is estimated that the net profit attributable to the parent company in 2020 will be no less than 120 million yuan, with an expected year-on-year growth of more than 40%. This means that in the fourth quarter of 2020, Xingsheng's commercial profit level will be further improved. After effectively coping with the adverse impact of last year's epidemic situation and making corresponding adjustments and layout, the company's performance will be further released.

The continuous maturity of Xingsheng's business operation mode is also reflected in its return on capital. According to the data of the prospectus, the return on assets of Xingsheng business has increased from 16.2% in 2017 to 21.1% and 25.4% year by year, reaching 34.8% by the end of September 2020.

According to the planning of Xingsheng commerce, based on the excellent operation of benchmark projects like Futian Xinghe coco Park and based on Dawan District, Xingsheng commerce will further give priority to the layout in the Yangtze River Delta and central China. By adapting the successful operation mode of Galaxy coco park to local conditions, we will create more flagship commercial products.

The management also pointed out that Xingsheng commercial will deeply cultivate and expand Dawan district. For example, it will expand in the cities with more developed economy and higher population consumption capacity in the Yangtze River Delta region. It will also use funds to acquire and invest in small and medium-sized commercial properties according to the company's development direction.

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