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65% of the funds raised by Evergrande Property’s IPO in Hong Kong will be used for mergers and acquisitions
Author: Sun Mengfan
On November 22, Evergrande Property announced an IPO price of 8.5-9.75 Hong Kong dollars per share. The IPO hours are from 23 to 26 November. It is expected to be listed on the Hong Kong Stock Exchange on December 2, stock code 06666.
It is reported that the base issuance scale of the IPO is about 1.62 billion shares. Hong Kong’s public offering and international placement accounted for 10% and 90% of the issuance scale, respectively. In addition to the basic issue, there is a standard 15% over-allotment right. Based on this calculation, Evergrande Property’s stock price is expected to rise from HK $ 13.783 billion to HK $ 15.81 billion.
Prior to the official listing, 23 key investors confirmed their participation in this offering in advance. Calculated at the end of the price range, leading investors will subscribe a total of approximately 790 million shares, equal to 48.7% of the total issue.
From the disclosure of the prospectus in late September to the passing of the hearing, Evergrande Real Estate quickly advanced the pace of the listing. Behind the “lightning fast” meeting is Evergrande Group’s eager desire to reduce debt. Data shows that at the end of 2019, the group’s debt-to-asset ratio, net debt ratio and cash-bearing debt coverage ratio excluding prepayments were 85.3%, 199.3% and 51.7, respectively. %.
“Under the three red lines, regardless of whether the company’s property management sector has matured, some companies are keen to promote the spin-off and listing of property management companies. Capital integration through financing of capital will significantly improve the level of corporate leverage, in particular the asset-liability ratio AND net debt ratio. ” CITIC securitiesAppearance thinks.
In addition to helping the group reduce its debt, Evergrande Property has also expressed strong ambitions for expansion. According to the data, as of June 30, 2020, Evergrande property layout covers more than 280 cities in China, with 1354 contracted and serviced projects, a contracted management area of 513 million square meters and 254 million square meters of area. managed.
In 2017, 2018, 2019 and as of June 30, 2020, Evergrande property revenues were 4.399 billion yuan, 5.903 billion yuan, 7.332 billion yuan and 4.563 billion yuan, respectively, and net profits were respectively. 106 million yuan and 239 million yuan. , 930 million yuan and 1.147 billion yuan, the compound annual growth rate of net profit over the past three years is 195.5%.
Evergrande Properties’ gross profit margin has increased over the past three years. In 2017, 2018, 2019 and the six months ending June 30, 2019 and 2020, Evergrande Properties’ gross profit margin was 9.8%, 12.2% and 23.9, respectively. %, 23.0% and 38.1%.
The increase in gross profit margin is mainly due to the increase in the percentage of projects with relatively high property management fees, and Evergrande Property has increased its efforts to collect parking property management fees starting in 2019. at the same time, the overall profit margin is improved by reducing the cost of labor from year to year, simplifying the decision-making process and adopting methods of technological empowerment for project control.
At the same time, Evergrande’s real estate community’s value-added service revenue percentage increased from 5.7% in 2017 to 11.1% in the first half of 2020. The first half of this year’s revenue is close. to last year, with a gross profit of 65%.
Since 2019 Evergrande Property has started to focus on external expansion and merger and acquisition markets. In June this year was formally established development team of investment. From June to September, the mergers and acquisitions of 5 regional independent third-party real estate companies were completed. The total managed area is approximately 7.72 million square meters.
“As a subsidiary of Evergrande Group, Evergrande Real Estate operates independently. In the past, it has focused more on managing existing projects.” Hu Liang, general manager of Evergrande Real Estate, said that after the company goes public, it will increase third-party outreach efforts and raise funds. About 65% of the funds will be used for mergers and acquisitions.
Hu Liang also said that the real estate company controls the private domain traffic of tens of millions or more owners, which is a very valuable asset at this stage. Through asset-light operations, it is possible to achieve the improvement of the value-added services of real estate companies and a win-win situation for all owners to live more comfortably.
How to make this resource? Hu Liang explained that Evergrande Real Estate has conducted business and cooperation discussions with many Internet companies and strategic investors in various aspects, and strives to open the chain of private domain traffic from the Internet to the last mile of the community, including jobs house renovation and the rental and sale of housing. , Education and training, community media, community new retail and other value-added services.
Massive information, accurate interpretation, all in Sina Finance APP
Responsible editor: Qi Qiqi
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