Source of this article: Times Finance Author: Chen Zexuan
Source: Picture Worm Creative
The property management industry has set off another wave of repurchases.
On May 10, Jinke Services and Wanwuyun successively disclosed share repurchase announcements. On the same day, Jinke Services spent nearly HK$483,000 to repurchase 52,000 shares, and Wanwuyun repurchased 100,000 shares with a total amount of HK$2.416 million.
This is a rare wave of intensive buybacks in the property management industry. Times Finance statistics found that in the 23 days from April 18 to May 10, Jinke Services carried out a total of 14 repurchases, with a total of 7.816 million Hong Kong dollars to repurchase nearly 868,000 shares, and Wanwuyun's recent repurchase times were as high as 20 times, concentrated in the 47 days from March 25 to May 10, with a total of 48.384 million Hong Kong dollars to repurchase about 2.583 million shares.
Property companies invariably rushed into the secondary market with real money in hand. In addition to Jinke Services and Wanwuyun, well-known property companies such as Yongsheng Services, China Overseas Property, Poly Property, Nandu Property, and Dexin Services have also recently repurchased or thrown out repurchase plans.
In the past year, property management companies have set off two rounds of intensive buybacks, which are behind a battle to defend stock prices and market capitalization.
Property companies set off a second round of buybacks
According to the statistics of Times Finance, since mid-March, a total of 6 property companies in Hong Kong and A cities (note: the main business includes residential property management) have repurchased their own company shares, including Dexin Services, Wanwuyun, China Overseas Property, Jinke Services, Yongsheng Services, and Nandu Property, while the board of directors of Poly Property recently announced the resolution of the general authorization to repurchase H shares that was not approved.
Small and high-frequency are the main characteristics of this round of repurchase wave. The property companies with the largest number of repurchases are Wanwuyun and Jinke Services.
Among them, Wanwuyun, as a leading company, conducted 20 buybacks from March 25 to May 10, with an average of one buyback every 2.35 days. The amount of each repurchase ranged from HK$1.022 million to HK$5.329 million, and a total of HK$48.384 million was spent to repurchase about 2.583 million shares.
The number of repurchases of Jinke services is second only to Wanwuyun. In the 23 days from April 18 to May 10, Jinke Services conducted a total of 14 buybacks, and 1 buyback in less than 2 days. The amount of each repurchase ranged from HK$70,000 to HK$995,000, and a total of HK$7.816 million was spent to repurchase nearly 868,000 shares.
China Overseas Property and Nandu Property are the new faces of this round of buybacks, and Poly Property is also the first time since its listing that it has thrown out a buyback resolution.
Prior to this, COPL gave the board of directors a general mandate to repurchase shares every year, but since its listing, it has never implemented relevant buybacks in the secondary market, and between March 27 and April 5, COPL carried out a total of three repurchases, spending a total of HK$12.362 million to repurchase 2.9 million shares, accounting for 0.0882% of the issued shares.
Nandu Property is the only property company in the A-share market to implement a buyback plan, and began its first repurchase on March 14. As of April 30, Nandu Property spent a total of 16.375 million yuan to repurchase 1.957 million shares of the company, accounting for 1.04% of the company's total share capital. According to the announcement of Nandu Property, the total amount of funds granted by the repurchase plan is not less than 20 million yuan and not more than 40 million yuan, and the number of shares to be repurchased is 1.403 million to 2.805 million shares.
The last wave of buybacks in the property management industry occurred in the second half of 2023, when property companies such as Wanwuyun, Country Garden Services, Jinke Services, Greentown Services, Yongsheng Services, and China SCE Commercial Management intensively repurchased their own company's shares in the secondary market, and many of them launched buybacks for the first time since listing.
According to CRIM, Jinke Services launched its first repurchase since its listing on June 12, 2023, with a total of 98 repurchases in 2023, with a total of HK$260 million to repurchase 28.826 million shares, setting a record for the longest repurchase in the capital market, while Greentown Services launched its first repurchase of the year on August 30, 2023, with a total of 71 repurchases throughout the year, with a total of HK$130 million to repurchase 44.344 million shares.
Start the battle to defend the stock price
Buybacks were rare in the property management industry before, but in the past year, why have property companies set off a wave of buybacks twice?
In October 2023, Wanwuyun pointed out in the announcement that the repurchase of shares under the current market conditions will demonstrate the company's full confidence in its own business development and prospects, and ultimately benefit the company and create value returns for shareholders, which is in line with the overall interests of the company and shareholders.
Most property companies are relatively vague when clarifying the purpose of the repurchase, and Country Garden Services is one of the few property companies that directly shows their attitude. In its announcement on 1 August 2023, Country Garden Services pointed out that the reason why the company plans to repurchase up to 340 million shares in the open market is that the company's "current buying and selling price level of the shares does not fully reflect the intrinsic value of the group".
According to Wind Financial Terminal, after a long period of decline, on August 1, 2023, the closing price of Country Garden Services was HK$8.40 per share, and the net assets per share of Country Garden Services at that time were nearly 11.36 yuan, and the stock price was far lower than the net assets.
Affected by the adjustment of the real estate industry, the share price of property stocks also entered a downward channel in the second half of 2021. After more than two years of downturn, compared with the peak of 2021, it is normal for property stocks to halve their stock prices at the end of 2023.
Since the beginning of this year, although the stock prices of most property companies have re-risen, the number of property companies whose stock prices have fallen compared to the end of 2023 is still relatively large, and even the stable China Overseas Property has not been spared. On May 10, COPL's closing price was HK$5.27 per share, compared to HK$5.86 per share on the last trading day of 2023 (December 29), a decrease of 10.1%. Due to the decline in the share price, the market capitalisation of COPL has also decreased from HK$19.261 billion at the end of 2023 to HK$17.322 billion.
It is in this context that property companies have once again started centralized repurchase. As the most powerful repurchase momentum of the property enterprise Wanwuyun, its management affirmed the effect of the repurchase at the annual general meeting of shareholders held on May 10, and the management said that "from the perspective of stock price performance, the company's active repurchase does play a certain role".
Times Finance statistics learned that since the repurchase was launched on December 11, 2023, as of May 10, 2024, Wanwuyun has carried out a total of 40 repurchases, spending a total of HK $130 million to repurchase 6.328 million shares, of which 5.582 million shares were cancelled on April 29.
On May 10, the closing price of Wanwuyun was HK$24.05 per share, which was only 3.4% lower than the closing price of HK$24.90 per share on the last trading day of 2023, showing a divergent trend compared with the share price of the parent company Vanke. Management said it plans to continue to buy back its own shares, given the role of buybacks.
A stock price defense war is being waged in the property management industry.