(Text/Zhang Zhifeng Editor/Ma Yuanyuan) Since the listing of property management companies was blocked in the second half of the year, mergers and acquisitions have gradually intensified and become the mainstream way of staking land in the industry.
On October 29, Fangyuan Life Services, a "mosquito-type" property company with a total market value of HK$220 million, announced that it intends to acquire a 51% stake in Guangdong Juncheng Property Service Co., Ltd. for a consideration of 5.1 million. Upon completion of the acquisition, Guangdong Yuncheng Property Services will become an indirect non-wholly-owned subsidiary of Fangyuan Life Services and will be recorded in the Group's financial statements.
It is understood that the current business of Guangdong Yuncheng Property Service covers high-end residential, shopping plaza, office buildings, schools and other formats, and the business distribution includes but is not limited to residential and public construction projects in Yunfu City and Deqing County, Zhaoqing City.
In fact, Fangyuan Life Service, a property company under the Chaoshan housing enterprise Fangyuan Group, which has always been quite low-key, has frequently initiated mergers and acquisitions in cash in recent days, spending a total of about 70 million yuan, which has attracted a lot of attention in the industry.
The name change is a horn of expansion
According to public information, Fangyuan Life Services belongs to Fangyuan Group, which is a subsidiary of the top 100 real estate enterprises, was established in 1996, listed on the GEM section of the Hong Kong Stock Exchange in November 2017, and successfully transferred to the main board on May 28, 2020. Its business is mainly distributed in Guangzhou, other parts of the Greater Bay Area, covering four major sectors: real estate agency services, property management services, value-added services and community value-added services.
Due to the relatively small scale of housing enterprises, the small number of cities they cover and the fact that they never publicly disclose key information such as the area of the property under management, Fangyuan Life Services has received limited attention since its listing. The boss is Fang Ming, a Chaoshan businessman, and rarely speaks out in front of the media.
The last time the enterprise received attention from the industry was in June this year, and the abbreviation of the enterprise was renamed from the past "Fangyuan Housing Service" to "Fangyuan Life Service".
An informed source close to Fangyuan Group revealed to the Observer Network that it is not difficult to judge from the name that at the beginning of the establishment of Fangyuan Housing Service, it was mainly engaged in real estate sales agents, serving major brand developers and second-hand housing transactions. However, with the gradual improvement of the sales team of the large-scale housing enterprises and the rise of large intermediary companies such as shells, the development scale of Fangyuan Real Estate itself is not large, and it is difficult to rely on the agency sales business alone.
The above-mentioned person said that at a time when the property management industry has gradually been sought after by major housing enterprises in recent years, Fang Ming began to form his own property management team based on the past agent sales staff, and gradually shifted the focus of the business of Fangyuan housing services. In the middle of this year, the official name was changed to "Fangyuan Life Service", which is actually the clarion call of the company officially blowing the competition on the property track, and even betting on the future of the entire real estate group.
And indeed it is. According to the financial report, in the first half of 2021, the company achieved operating income of 264 million yuan, an increase of 105.08% year-on-year, and the net profit attributable to the parent company was 11.09 million yuan, an increase of 309.23% year-on-year. Among them, the income related to the property agency is basically the same.
In contrast, in the past three years from 2018 to 2020, corporate revenue has been almost stagnant, 229 million yuan, 256 million yuan and 277 million yuan, respectively, and the proportion of real estate agency service income is as high as more than 98%, and property-related income is almost negligible.
Mergers and acquisitions began in 4 months
Observer Network learned that since the name change, in addition to the merger and acquisition of Guangdong Yuncheng property, Fangyuan Life Service has undergone a number of mergers and acquisitions, although the individual scale is not large, but the overall intention to expand through corporate mergers has been very obvious.
Just a few days ago, Fangyuan Life Service announced on October 25 that it has completed the acquisition of 51% of the equity of Changsha Jiyanghong Property Management Co., Ltd. and intends to acquire 60% of the equity of Guangdong Yikang Property Service Co., Ltd.
According to the information, JiyangHong Property has signed a contract to provide property management services for 17 residential and commercial projects in Liuyang City, Changsha City, Hunan Province, with a project area of more than 1.3 million square meters.
According to the company's previous disclosure information, the consideration of Fangyuan Life Service's acquisition of 51% of the equity of JiyangHong Property was 24.745 million yuan in cash.
Another acquired Guangdong Yikang Property, headquartered in Dongguan, has a three-tier property management qualification, with six branches in Dongguan, Guangzhou, Meizhou and Huazhou, and a wholly-owned subsidiary in Meizhou.
As at the date of the announcement, the Company has signed a contract to provide property management services for approximately 20 residential and commercial projects in Dongguan and Meizhou, Guangdong Province, with an area under management of approximately 1.3 million square meters. Fangyuan Life Services acquired its 60% stake in the company for RMB34.3988 million in cash.
On July 15, Fangyuan Life Services also spent 4.5 million yuan from the actual controller Fang Ming to acquire all the shares of Guangzhou Fangheng Information Technology Co., Ltd.
The company said that it hopes to improve operational efficiency and cost control benefits through this acquisition, and provide customers with high-quality smart community services.
On September 3, Fangyuan Life Service also bought a 51% stake in Huizhou Zhongkai High-tech Zone Golden Leopard Security Service Co., Ltd. from another property company, and the acquisition consideration and the target company's area under management were not disclosed.
According to this calculation, in the past 4 months, Fangyuan Life Service has completed 5 mergers and acquisitions, with a total cost of about 70 million yuan. This is not a small amount for a company with a total market capitalization of only HK$220 million.
However, even if Fangyuan's willingness to expand in the property management industry is very strong, it is still not optimistic about the industry in the era of "big fish eating big fish".
Some insiders pointed out to the observer network analysis that for mosquito-type goods companies such as Fangyuan Life Service, once the parent company cannot give it strong support, the scale growth will be very difficult. Moreover, the existing scale of enterprises almost all come from a number of small mergers and acquisitions, their own management and operation capabilities have yet to be improved, and profitability is easy to deteriorate rapidly, so their sustainable growth ability may face greater uncertainty.
This article is an exclusive manuscript of the Observer Network and may not be reproduced without authorization.