The property management industry is another gold mining pool in the post-real estate market. The asset-light mode, stable cash flow and anti-cyclical attributes make the property management field draw much attention from the market.

Under the listing trend of property management industry in 2021,Sundy Service (09608-HK) has successfully landed on the Hong Kong Stock Exchange recently, thus adding a new member to the property management sector of Hong Kong stocks.

There are three factors contributing to the steady and sustainable growth of property management enterprises: the ability of external expansion, the ability of value-added services and the growth of the real estate project scale of the parent company. In the background of the industry pattern is increasingly differentiated, the future growth has become a property management enterprises can be favored by investors the key. So, how about the future growth of the Song capital service?

Deep ploughing in the Yangtze River Delta with multiple business forms, strong profitability

Sundy Service is a property management company spun off by the top 100 real estate enterprise Songdu Co., Ltd. (600077-SH). The diversified business forms have been deeply developed in the Yangtze River Delta region, which is the reason for the strong profitability of Sundy Service in the past few years.

The service portfolio of Sundy Service is rich, which well caters to the changing customer needs. In the business structure, in addition to property management services, Songdu also provides non-owner value-added services, community value-added services, hotel business and long-term rental apartment business. The types of services include residential property, non-residential property, consulting, sales assistance, decoration, hotel operation and other services.

Centered on Zhejiang Province, Sundy Service is engaged in property management and hotel operation in the Yangtze River Delta region. Seen from the layout, Sundy Service has completed the main strategic layout in the key areas of the Yangtze River Delta, around the national important planning areas and the surrounding urban circle, so it has a strong industrial and population inflow foundation, has a strong competitiveness in the regional market, growth potential is great.

The advantage of the diversified business portfolio in the developed areas is to bring a wider range of service types for corporate customers, as well as broaden the source of income for enterprises, and create more possibilities. Since 2017, the property management service business of Sundy Service has developed steadily, and the income from non-owner value-added service and community value-added service has increased rapidly. The hotel business has also brought profits to the company since 2019.

Therefore, the overall profitability of Sundy Service is good. From 2017 to 2019, the company's revenue increased from 83.96 million yuan (RMB, the same below) to 222 million yuan in 2019, with a compound annual growth rate of 62.78%. The net profit increased from 13.965 million yuan to 35.236 million yuan, with a compound annual growth rate of 58.84%, showing a high growth rate.

Future development points

The future development of Sundy Service mainly depends on the external expansion ability and its value-added services, which is also the company's advantage in the industry competition.

In the past few years, we have been actively expanding our third party projects to enhance our competitiveness. According to the prospectus, from 2017 to 2019, the company's property income from independent third party real estate development increased more than six-fold; In the first half of 2020, the revenue of this sector was 17.999 million yuan, also a sharp increase of 6.3 times compared with the same period last year.

With the rapid growth of third-party project income, the dependence of Sundy Service on affiliated companies has gradually weakened. In the first half of 2020, the proportion of property revenue from independent third-party real estate development reached 30.3%.

The company also has a strong growth momentum in the community value-added services and non-owner value-added services sector from third-party projects. It has achieved remarkable results in increasing bidding and encouraging employees to add third-party customers.

In addition, Sundy Service value-added business development effect is good, to improve the profit of the gold content to bring positive impact. In 2019, the company's revenue from value-added services accounted for more than 47.7%, among which the revenue from community value-added services amounted to 54.587,000 yuan, accounting for 24.5% of the total revenue, ranking the top three compared with the data of listed property enterprises in 2019.

The strong ability of external expansion and value-added service will also drive the future growth of Songdu's business of serving the old community. Sundy Service is actively serving the property of old residential areas. With the expansion strategy of "future community" as the core, it plans to participate in the "Pilot Work Plan for the Construction of Future Community in Zhejiang Province", and to create the concept of "future community" by improving the living environment of old residential areas.

Since July 2020, under the "Future Community" strategy, the company has started to manage an old residential complex in Hangzhou, which has been profitable. This is precisely because of the high value-added services and the profitability of the external expansion ability of Sundy Service, so it is able to obtain growth points through the reconstruction of old residential areas.

(Reprinted from Hong Kong Stock Decode)