The property sector of Vanke is finally going to be listed, which is far behind other real estate companies.
Recently, Wanwanyun Space Technology Services Co., Ltd. (hereinafter referred to as Wanwanyun) has completed its global offering and is expected to be listed on the main board of the Hong Kong Stock Exchange on September 29. The real estate four kings “Biheng Wanrong” will also be listed in the Hong Kong stock property management sector. poly.
As the second growth curve of Vanke, with the industry-leading property management scale, Wanke Cloud naturally has high expectations. Its cornerstone investors include star capital such as Temasek, UBS Asset Management, Hillhouse’s HHLR Fund and YHG Investment.
However, in the context of the disappearance of property stocks and the overall coldness of Hong Kong stock IPOs, the valuation of Wanwuyun has suffered a significant shrinkage. The poor choice of its listing time is also considered by many industry insiders to be a missed opportunity.
When the split-listing plan was announced at the end of last year, the industry expected that Wanke Cloud could obtain a valuation of more than HK$200 billion, which is equivalent to “rebuilding a Vanke”; Yu Liang, chairman of Vanke, believes that Vanke Property has the opportunity to reach a market value of 100 billion, which is equivalent to about half of it. A Vanke A; but now these two figures are relatively far away-according to the sale price range, its valuation will be between 55 billion Hong Kong dollars and 61.5 billion Hong Kong dollars.
Yu Liang once said that the listing of Wanwuyun “is not to sell piglets”, not to pursue a one-time high valuation. However, there is no company that doesn’t want to sell for a good price in an IPO. When the traditional property growth logic is no longer sought after by capital, Wanke Cloud tries to use technology to tell a new story of the property track—increasing investment in technology, constantly emphasizing its own technological attributes, and changing its name from Vanke Property in 2020 All things cloud.
However, from the perspective of income structure, the current income of Wanwu Cloud still mainly comes from traditional property services (including residential and commercial property services), accounting for more than 70% of its total income. Therefore, whether its technological attributes can be recognized by the capital market still needs to be verified later.
IPO missed opportunity?
After enduring the “loneliness” for several years, Wanwuyun chose to list in the trough period of the Hong Kong capital market.
Choosing to go public at this time is not the best time for everything cloud to face. Judging from the overall valuation of property stocks in the current capital market and the results of this IPO, Vanke has already paid a lot of opportunity cost.
For a long time in the past, property stocks have always been a favorite of Hong Kong stock investors. Due to the advantages of light assets, weak cycle, strong certainty, good cash flow, and little influence by policies, the capital market is particularly fond of property stocks, and the valuation given is far higher than that of property stocks.
According to data from the China Index Research Institute, by the end of 2020, the total market value of Hong Kong-listed property companies will reach HK$563.6 billion, with an average price-earnings ratio of 35 times, much higher than the average price-earnings ratio of Hong Kong stocks of 10.3 times.
Under the high valuation, the market value of many listed property companies has surpassed the listed assets of their real estate development business in stages. For example, Country Garden Service’s revenue in 2020 is less than 4% of Country Garden’s, but its market value in August last year once surpassed Country Garden. The corresponding price-earnings ratio is as high as 65 times PE (TTM).
But after the carnival, the property sector began to return in value. Affected by the downturn in the real estate industry (mainly due to the risk of related real estate companies) and the overall downturn in the Hong Kong stock market, the valuation and stock price of property stocks fell sharply, from “darling” to “outcast”.
According to data from the China Material Research Association, as of the end of August, the average PE (TTM) ratio of 59 listed material companies fell below 10 times for the first time, leaving only 8 times. China Resources Vientiane Life, which is the “ceiling” of the valuation of domestic property companies, has a dynamic price-to-earnings ratio of more than 100 times for a long time, but now it has dropped to more than 30 times.
Naturally, Wuxingyun, which chooses to go public at this time, cannot enjoy the high valuation it used to be. Judging from the current issuance pricing of All Things Cloud, the PE in 2022 is expected to be around 26 times. Hong Kong Ruixuan, Zhuhai Dafeng, and Hainan Yunsheng, the three companies that made a surprise investment one month before and after the submission of the form, also suffered a valuation inversion and were seriously “injured”.
In addition, it is not well recognized by retail investors. According to the statistics of Jieli Trading, the public offering of Wanwanyun only recorded a margin of 0.14 times, and the margin amount was HK$88.09 million, which was not fully subscribed.
It is worth mentioning that Wanke Cloud has been rumored to be listed many times before, but Vanke has always denied the news. Yu Liang has repeatedly stated in public that he “didn’t think about it” and “is afraid that the capital market will lead us badly”. However, after enduring the “loneliness” for several years, Wanwuyun chose to list in the trough period of the Hong Kong capital market.
Some analysts pointed out that this move may be to ease the company’s overall liquidity pressure. In the past two years, it has become an industry consensus that real estate chooses to split its property service sector and list it as a “blood transfusion”, and Vanke also has this intention.
The generous dividends before the listing can also be evidenced. According to the prospectus, in the past three years, Wanwuyun has achieved a net profit of 4.27 billion yuan, with a cumulative dividend of 4.1 billion yuan, and a dividend of 3.537 billion yuan in 2021 alone. But as of the end of 2021, there is 6.431 billion yuan of cash lying on the cloud account of everything, which does not seem to be bad. Behind this is the meaning of “blood transfusion” for the parent company.
Mainly “Technology Brand”
All Cloud’s AIoT and BPaaS solution services have the largest development scale, and their contribution to revenue is also the highest in the industry.
Yu Liang has said many times that Vanke Property will only consider listing if it is different from traditional property companies, has developed successfully and is recognized by the market. Now that the listing of all things cloud is imminent, does it mean that it is different from traditional property companies?
Compared with other property companies that focus on residential services, Wuxingyun does have something special. It has an extensive layout in multiple property subdivisions, and its scale in business management and urban services is much higher than that of other property companies. It is a generalist. On this basis, All Cloud has launched a unique “Butterfly City” strategy, trying to open up the boundaries of communities, business enterprises and urban services.
The so-called “Butterfly City” refers to building a high-concentration and high-efficiency service network with street-level investment, and building a service circle that can be reached within 20-30 minutes in an urban area with a radius of 3 kilometers. Communities, business enterprises and urban services in this service circle can use unified resources and infrastructure, and service providers can also dispatch production materials in a unified manner, effectively saving costs and improving efficiency.
Technology is an important support for the implementation of this “Butterfly City” strategy. Since 2015, All Cloud has continuously added technology. Through AIoT system and BPaaS solution capabilities, All Cloud can standardize and digitize traditional services to effectively improve efficiency. For example, the use of sensors and camera AI to identify vehicles occupying the road and overflowing garbage can greatly reduce the personnel requirements and workload of inspections.
Although technology is becoming more and more standard for leading property players, the AIoT and BPaaS solution services of All Cloud have the largest development scale and the highest contribution to revenue in the industry. The technological attributes of the cloud of all things are also reflected in this.
According to Vanke’s semi-annual report, in the first half of 2022, Wanke Cloud achieved an operating income of 14.35 billion yuan; of which, the community space residential consumption service income was 8.08 billion yuan, accounting for 56.3%, and the comprehensive service income of commercial enterprises and urban space was 5.11 billion yuan, accounting for 5.11 billion yuan. 35.6%; AIoT and BPaaS solution service revenue was 1.16 billion yuan, accounting for 8.1%.
Compared with the old-fashioned logic of achieving rapid scale growth through mergers and acquisitions, the “Butterfly City” and technology empowerment that open up the boundaries of communities, business enterprises and urban services undoubtedly have greater attractiveness and imagination for capital. reasons for technological attributes.
However, the “Butterfly City” of Wanwuyun is still in the pilot stage. According to Ding Xianfeng, chief scientist of Wanwanyun, “This year, Wanwanyun selected 14 areas in Shenzhen, Wuhan, Foshan, Zhongshan, Nanjing, Suzhou, Hangzhou and other places as the first pilots to build butterfly cities.” According to the plan, In the next 3 to 5 years, it will strive to implement hundreds of “Butterfly City” projects nationwide.
In this context, whether the “Diecheng” can run through the business model and achieve full replication still needs time to verify; and to what extent technology can improve efficiency, it also needs more convincing data and cases from Wanwuyun .
Is capital worth a “gamble”?
The butterfly city strategy and technology empowerment of all things cloud is a brand new development path, but it needs further verification by the market.
In the property industry, the valuation logic of “scale-driven growth” has become a bit outdated, and technology empowerment can provide new imagination for the industry.
But capital will also have its own judgment, and the market will not necessarily pay for its valuation with reference to “tech” companies. The valuation of about 26 times PE corresponding to the issuance price of everything cloud is not as high as the scope of “technology” enterprises.
On the one hand, as mentioned above, although the business of AIoT and BPaaS solutions is not low, the current revenue of All Cloud still mainly comes from traditional property services (including residential and commercial property services), accounting for more than 70% of the total revenue .
On the other hand, the technology sector of everything cloud has not yet been clearly driven and linked to performance.
The reduction of business operating costs and the improvement of efficiency can usually be used to measure the effectiveness and advanced degree of technology and technology.
However, according to the prospectus of everything cloud, from 2019 to the first three months of 2022, its gross profit margin is about 17.72%, 18.54%, 16.96%, 14.73% and 14.47% respectively. Among the top listed property companies, the gross profit margin of Wanwanyun is much lower than that of its peers.
Regarding the low gross profit margin of All Cloud, Zhu Baoquan, CEO of All Cloud, explained that 15% is a reasonable gross margin range. “Customer trust will bring stable cash flow and continuous renewal of contracts. Otherwise, no matter how high the gross profit is, it will only be rich on paper, and the cash that cannot be recovered and the owner will not renew the contract is the real risk of the company.”
From the point of view of business data, the technology-related business of All Cloud is developing very rapidly. Last year, its AIoT and BPaaS solution service revenue was 1.86 billion yuan, an increase of 99.5% year-on-year, and continued to increase by nearly 60% year-on-year in the first half of this year. These figures are enough to support Wuwuyun’s higher valuation than other property companies, and it is also worthy of some investors to “take a gamble” in the capital winter of Hong Kong stocks.
The butterfly city strategy and technology empowerment of all things cloud is a brand new development path, but it needs further verification by the market. By observing its financial data, we can also understand why Yu Liang has been cautious about its listing for a long time – only when the logic of technological transformation of property services really works, the capital market will give it enough attention and a premium, while Not to think of it as “yet another property company”.
write at the end
The data shows that the property management market in China, including residential, urban services, commercial buildings and public buildings, has a space of about 2.4 trillion yuan. As the largest property service company in China, the revenue of more than 20 billion yuan of Wanwuyun is a fraction. of zero. However, urban property is still in the exploratory stage of staking, and it is still necessary to exchange time for space, and property companies also need to find a new path for sustainable growth beyond scale.
In the later cycle of real estate development, the transformation from “buying a house” to “living” is the general trend, and the “golden age” of property management is gradually coming.
Country Garden founder Yang Guoqiang once said: “Property service is the future of Country Garden.” This sentence is also applicable to Vanke and Wanwanyun.
media coverage
Cast in the net
event tracking
- 2022-09-28Everything goes to the exam room at night
- 2022-09-19Wuwuyun officially launched its IPO roadshow, which will become the largest IPO of Hong Kong stocks this year
- 2022-09-16Everything Cloud will launch IPO on September 19
This article is reprinted from: https://readhub.cn/topic/8jGfvF0fcqW
This site is for inclusion only, and the copyright belongs to the original author.