IPO | Jinmao Service will start offering shares now and is expected to go public on March 10

Futu News, February 25, this Friday$JINMAO SERVICES (00816.HK)$The announcement was announced that it will raise shares from February 25 to March 2. The company plans to issue approximately 101 million shares, including a public sale of 10.142 million shares and an international sale of 91.2695 million shares, with an issue price of HK$7.52-8.14 per share, and 500 shares per lot. It is expected to be listed on March 10.

Jinmao Services is a rapidly growing high-end property management and urban operation service provider in China, and its controlling shareholder$CHINA JINMAO (00817.HK)$ It is a top property developer in China.

The company operates three businesses, namely property management services, value-added services for non-owners, and value-added community services. It also provides urban operation services. Its scope covers its three major business lines. As of September 30, 2021, the total construction area under management of Jinmao Service is about 23.2 million square meters.

In terms of financial data, the company experienced rapid growth during the track record period. From 2018 to 2020, the company achieved revenue of RMB 575 million, RMB 788 million and RMB 944 million respectively, with a compound annual growth rate of 28.2%; recorded net profit of RMB 17.487 million, RMB 22.624 million and RMB 77.124 million during the same period, with a compound annual growth rate of 110.0%.

In the first nine months of 2021, the company recorded total revenue of 1,049 million yuan, an increase of 57.6% year on year; net profit for the same period was 109 million yuan, an increase of 105.1% year on year.

On the industry side, according to data from the China Index Research Institute, the property management service revenue of the top 100 property service companies has achieved steady growth through endogenous growth and external acquisitions. The average revenue from property management services of the top 100 property service companies increased from RMB 519.3 million in 2016 to RMB 914.4 million in 2020, with a compound annual growth rate of 15.2%.

The property management industry in China is highly competitive and fragmented. In 2020, the market share of the company's managed floor area and total revenue was about 0.07% and 0.15%, respectively. The company's business is deeply rooted in eastern and northern China. Based on the floor area under management in 2020, the company's market shares in eastern and northern China are about 0.09% and 0.11%, respectively.

In 2020, in terms of revenue per square meter, the company was among the top 100 property service companies headquartered in the Beijing-Tianjin-Hebei regionRanked fifth。 In the same year, based on the construction area under management for high-end property management service projects, the company was among the top 100 property service enterprises in BeijingRanked second。

In terms of Cornerstone investors, several Cornerstone investors agreed to subscribe for the number of shares to be subscribed at the sale price, totaling approximately HK$646 million, including Keltic, Kangli Elevator, Guangdong Keshun, Fuhui Capital and Qianhe Fund.

In terms of fund-raising purposes, the company's net proceeds were approximately HK$729 million (based on the median issue price, assuming that the over-allotment rights were not exercised). According to the prospectus, the company plans to use the net proceeds from the sale of shares for the following purposes: 55% will be used to selectively find strategic investment and acquisition opportunities for companies engaged in property management, urban operation services and/or community operations, and expand the company's business scale; 22% to upgrade the smart management service system and the development of the company's smart community and smart city solutions; 13% to further develop the company's value-added community services; and 10% for working capital and general corporate purposes.

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