China Times (www.chinatimes.net.cn) reporter Li Kaixuan and Li Future reported from Beijing
Recently, Zhongnan Hi-Tech submitted a prospectus to the Hong Kong Stock Exchange to go to Hong Kong for an IPO. "Infiltrating the core and expanding the whole country" is the layout strategy and goal of Zhongnan Hi-Tech. It is reported that Zhongnan Hi-Tech is an industrial park development and operator, and has laid out 70 industrial park projects across the country.
It is worth noting that although the establishment time of Zhongnan Hi-Tech is relatively short, its development speed is very fast. The prospectus shows that the compound annual growth rate of the company's revenue from 2018 to 2020 exceeded 200%. In addition, the unit price of zhongnan hi-tech property sales is also low, about 3,000 yuan / square meter. However, while revenue has risen sharply, Zhongnan Hi-Tech's contract liabilities and bank borrowings have also increased significantly.
Start the IPO process
On the evening of May 12, Zhongnan Hi-Tech submitted a prospectus to the Hong Kong Stock Exchange. According to the prospectus, Zhongnan Hi-Tech is an industrial park development and operator with advanced manufacturing industry as the core, providing comprehensive services integrating industrial research and planning, park development, industrial resource introduction and industrial park comprehensive operation services.
If it can be successfully listed, Zhongnan Hi-Tech will become a rare industrial park development and operation target in the Hong Kong stock market.
According to the prospectus, as of the end of February 2021, Zhongnan Hi-Tech has acquired 70 industrial park projects, including about 2.8 million square meters of completed floor area, about 4.1 million square meters of planned floor area under development and about 4 million square meters of estimated floor area held for future development.
Zhongnan Hi-Tech is regarded as a "young general" in the field of industrial parks, which was founded in 2015 and has developed rapidly in recent years. By the end of 2020, Zhongnan Hi-Tech ranked first in the number of cities covered by the number of projects it has acquired in the development and operator of China's manufacturing industrial parks, and ranks second in the country in terms of total construction area.
More than 90% of the revenue comes from the sale of industrial park properties
Overall, Zhongnan Hi-Tech has entered a "high-speed" development channel since its establishment. According to the prospectus, from 2018 to 2020, the revenue of Zhongnan Hi-Tech was 460 million yuan, 1.98 billion yuan and 4.61 billion yuan, respectively. According to this value, the compound annual growth rate of Zhongnan Hi-Tech's revenue is as high as 216.3%. In addition to the "amazing" compound annual growth rate of revenue, the gross profit of Zhongnan Hi-Tech was 157 million yuan, 666 million yuan and 1.29 billion yuan in the corresponding reporting period, respectively, with a compound annual growth rate of 186.8%.
As mentioned above, Zhongnan Hi-Tech is an industrial park developer and operator, providing comprehensive services including research planning. However, after reviewing the prospectus of Zhongnan Hi-Tech, the reporter of China Times found that most of Zhongnan Hi-Tech's income comes from the development and sales of industrial park properties, and still has not avoided the "old way" of industrial park development. However, the reporter also noted that Zhongnan Hi-Tech is also slowly transforming, and the first asset-light benchmarking project, Su Gaoxin Zhongnan Hi-Tech Zhixin Valley, has also landed.
In 2020, the revenue from the development and sale of property in the industrial park accounted for 99.3% of the Group's total revenue. The remaining 0.7% of the revenue comes from providing integrated operation services and construction services for the industrial park.
Specifically, from 2018 to 2020, the revenue of the property development and sales of the industrial park with the highest proportion of revenue was 458 million yuan, 1.945 billion yuan and 4.583 billion yuan, respectively. The revenue brought to the group by the comprehensive operation service of the industrial park only increased to 26.254 million yuan in 2020. As for construction services, from the prospectus, construction services are a new business area developed by Zhongnan Hi-Tech in recent years, and this part of its revenue was only consolidated in 2019. In 2020, the income of this part was 3.812 million yuan.
The sales unit price is about 3000 yuan / square meter
Overall, the operation mode of Zhongnan Hi-Tech is asset-heavy operation, and after obtaining the land, the industrial park is built, developed and operated. In this model, the cost of the enterprise comes from land, construction and operation, and the income mainly comes from the sale of property or rental income.
According to the prospectus, from 2018 to 2020, the sales unit price of Zhongnan Hi-Tech Industrial Park is about 2972 yuan / square meter, 3163 yuan / square meter and 3181 yuan / square meter, respectively. Compared with the national commercial housing sales unit price, which is almost more than 10,000 yuan, this value is already at a low level.
However, in addition to the low unit price of sales, the cost of acquiring land by Zhongnan Hi-Tech is also not high. From 2018 to 2020, the land cost of Zhongnan Hi-Tech is 384 yuan / square meter, 344 yuan / square meter and 376 yuan / square meter. Among them, land costs accounted for 12.9%, 10.9% and 11.8% of the average sales price in the same period.
Zhongnan Hi-Tech, which has a low price, low cost and high income, faces large-scale liabilities. According to the prospectus, as of the end of 2020, the total outstanding bank and other borrowings of Zhongnan Hi-Tech was 2.314 billion yuan. Among them, 582 million yuan needs to be repaid within 1 year, and 1.731 billion yuan needs to be repaid after 1 year.
In terms of overall debt, from 2018 to 2020, Zhongnan Hi-Tech's contract liabilities were 1.186 billion yuan, 2.256 billion yuan and 4.143 billion yuan, respectively, and the total amount of bank and other borrowings gradually increased from 168 million yuan in 2018 to 2.314 billion yuan in 2020 with the increase of revenue. The substantial increase in liabilities also means that the scale of enterprise business is expanding, while the risk is also increasing, and the company's solvency will also be tested.