Property services float draws solid support
money-glitz | 11 Mar 2019Avery Chen
Aoyuan Healthy Life, a property management arm of mainland real estate developer China Aoyuan (3883), has launched a Hong Kong initial public offering to raise up to HK$752.5 million.
The float has raised HK$640.5 million aftering after pricing in the lower half of the indicative price range of HK$3.48 to HK$4.3, according to Reuters IFR.
The Guangdong-based company offers services for residential and non-residential properties and commercial operational services for shopping malls, with a focus on mid to high-end properties and mixed-use developments.
It provided property management services to 61 properties in 25 cities across 11 provinces, municipalities and autonomous regions in the mainland involving a total gross floor area under management of about 10.4 million square meters as at September 30, 2018.
In 2017, Aoyuan Healthy Life introduced an online-to-offline platform to residents at some of the managed residential communities through its mobile application, which includes various functions such as residents authentication, visitor authorization, property management fee payment, queries and complaints filing, property listing and repair and maintenance service request.
It also provided commercial operational services to eight shopping malls in six cities in mainland, and is contracted to provide commercial operational services to 25 shopping malls.
The commercial operational services cover market positioning and business tenant sourcing services, commercial operation and management service, and other value-added services to property developers, or owners, including car park management.
It ranked second and third among commercial operational service providers in southern China and Guangdong province, respectively, according to a Savills report.
Most of Aoyuan Healthy Life's revenue is generated from its parent's projects. Properties of China Aoyuan and related parties accounted for about 94.7 percent of total revenue as of September 30, 2018. And it secured about 96 percent of China Aoyuan's pre-delivery property management engagements.
Aoyuan Healthy Life's revenue grew 58.5 percent year-on-year to 442.9 million yuan (HK$518.63 million) from January to September last year, but net profit slid by 0.93 percent to 59.05 million yuan.
Aoyuan's flotation follows five mainland real estate developers that have spun off their property management units in Hong Kong last year.
At least 10 mainland property management stocks are traded on the main board. Most of them have performed well. Shares of China Overseas Property (2669), a spin-off from China Overseas Land & Investment (0688), and Greentown Service (2869), hived off from Greentown China (3900), have almost doubled their IPO price.
Aoyuan Healthy Life has attracted Successful Lotus, wholly-owned by Peter Lee Ka-kit, vice chairman of Henderson Land Development (0012), as a cornerstone investor to subscribe to HK$40 million worth shares.
The company intends to use 62 percent of net proceeds from the float to pursue strategic acquisitions and investment opportunities to acquire or invest in other commercial operational service and property management service providers.
It plans to spend 12 percent of proceeds to develop and upgrade its online-to-offline platforms. About 6 percent will be for developing intelligent service systems and upgrading the internal IT system.
About 10 percent will be used to acquire or invest in companies that provide various services that are complementary to its property management services and commercial operational services. The other 10 percent will be used as working capital and general corporate purposes.
