Zhitong Finance App learned that Suxin Good Life Service Co., Ltd. submitted a prospectus to the Hong Kong Stock Exchange on August 30 to be listed on the main board, and the sole sponsor is BOCOM International. Among the top 100 property service enterprises in China selected by the China Finger Academy, Suxin Better Life has been listed for six consecutive years, ranking 48th in 2021.
Rooted in the Yangtze River Delta region, the two major businesses provide solid fundamentals
Headquartered in Suzhou, Suxin Good Life focuses on the development of the Yangtze River Delta region. Mainly because the Yangtze River Delta region is one of the most populous and economically prosperous regions in China. Among the cities in the Yangtze River Delta region, Suzhou ranks second in terms of urban population and GDP. In the whole country, Suzhou ranks sixth in terms of gross domestic product.
The company also plans to continue to expand its business operations through acquisitions or investments in the surrounding areas of Shanghai, Nantong, Wuxi, Changzhou, etc. The current business model of Suxin Better Life is divided into four parts, namely urban services, commercial property management services, residential property management services, and property leasing.
It can be seen from the company's performance that as of the first half of this year, the total income of Suxin Good Life increased by 10.21% year-on-year. The main source of income is urban services, as well as commercial property management services. As of the first half of this year, Suxin Good Life brought 75.523 million yuan and 102 million yuan respectively. Together, they account for 80.4% of the company's total revenue.
According to Frost & Sullivan's report, the company ranks first in the Suzhou property management service market and the Suzhou city service market in terms of total revenue and urban service income.
In terms of urban services, it mainly includes municipal infrastructure services, public construction project management services, and the operation of garbage collection centers. As of the first half of this year, Suxin Better Life has provided municipal infrastructure services for 8 projects. In addition, the construction area of public construction projects under management reached 1.1 million square meters. In addition, the company has established two garbage collection centers in Suzhou, one of which is put into operation, which can handle 400 tons of domestic garbage per day, and 50 tons of large-scale garbage.
The revenue of garbage collection centers has become a major source of growth for urban services. This first-half year revenue is close to catching up with this full-year revenue last year. In addition, it is expected that in the first half of 2022, the new garbage collection center will be put into operation, plus there is a trial operation in the early stage. At that time, the three garbage collection centers can process 1200 tons of domestic garbage per day, bringing more revenue to the company.
Property management services include commercial and residential property management services. They all provide basic property management services, as well as value-added services. As of the first half of this year, Suxin Better Life provided basic commercial property management services to 38 properties, with a total GFA under management of 2.4 million square meters. In addition, there are 22 residences offering basic residential property management services, with a total GFA under management of 3.2 million square meters.
GFA under management of commercial properties increased to 2.1 million square metres in 2019, mainly due to the Company's new industrial park. This also reflects from the side that with the accumulation of experience and the improvement of service quality, more customers are willing to cooperate with the company. The decline in GFA under management of residential properties was mainly due to the company abandoning some projects with lower gross margins in order to plan for long-term strategic goals. Revenue was further increased by retaining items with high gross margins.
Property leasing is a business with a small proportion of income, and its main purpose is to enrich income and make its own income more diversified. Coupled with its higher gross margin, the gross margin in the first half of this year reached 86.4%, which also helped the business become a stable and sustained source of revenue. In addition, even during the epidemic last year, income has not been affected too much.
At the beginning, it was mentioned that Suxin Good Life ranked first in Suzhou's urban services and property management service market, what are the development prospects of these two markets?
Policies drive market development, and the future prospects are good
In recent years, due to the accelerated development of infrastructure construction, the demand for urban services has also been continuously improving, and from 2015 to 2020, the compound annual growth rate of Suzhou's total urban service revenue is 9.1%. It is expected to be 6.8% in 2020-2025.
In 2020, the government issued the "Safety Standards for The Cleanliness and Orderly Appearance of Cities (Trial)". Through the guidance, supervision and evaluation of urban appearance management, urban management is more refined. This helps to expand the scope of urban services and drive the development of the entire market. Let Su Xin a better life can develop more types of services and enrich the source of income for its own urban services, such as garbage collection centers that bring revenue growth.
In addition, public areas are generally regarded as integrated property management projects. Therefore, the integrated management and operation of public areas, governance services covering communities, operation and maintenance of designated public construction projects, and enterprise and asset services require higher capability requirements. The continuous development of urban operations and services will make providers like Suxin Better Life, which have the ability to integrate multiple urban services, become more competitive in the market.
As for the development prospects of the property management services market. In the Yangtze River Delta region, where Suxin Better Life is located, the compound annual growth rate of the total GFA under management from 2015 to 2020 is 5%. It is expected to reach 7.47 billion square meters in 2025, with a COMPOUND ANNUAL GROWTH rate of 3.6% from 2020 to 2025.
Various policies are also actively promoting market development. In 2019, the State Council issued the "Outline of the Planning for the Regional Integration Exhibition in the Yangtze River Delta", encouraging the construction of cross-regional cooperation industrial parks in the Yangtze River Delta region and mentioning Suzhou. This will help drive the economic development of the Yangtze River Delta region, increase the demand for property management services, and bring more opportunities for property management companies such as Suxin Good Life.
In addition, the 13th Five-Year Plan proposes to accelerate the development of urban agglomerations, thereby driving the economy of megacities in the Yangtze River Delta. The accelerated economic development and the large number of rural people entering the developed areas will also increase the population of the Yangtze River Delta region. In 2020, compared with 2015, the urban population of the Yangtze River Delta region increased from 111 million to 1.2 people. Population growth is bound to increase the demand for housing and property, further increasing the demand for property management services.
Economic growth and the influx of more people will increase the demand for commercial and residential properties, more and more properties will be developed, and the corresponding demand for property management services will continue to grow. Not limited to Suzhou, the new and beautiful life of Su, which focuses on the entire Yangtze River Delta region, will also continue to move forward with the momentum.