Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>The IPO for <a href="https://www.smartkarma.com/entities/sunac-services-holdings" target="_blank" data-smartkarma-citation="entities:29239:1" rel="noopener">Sunac Services Holdings (1516 HK)</a> ("SSH"), the latest property management service company to seek listing, is open for applications. The Offer Price is expected to be announced on the 18 November, with the commencement of trading in the shares on the 19 November.</p>
</div>
<div>
<p>SSH is the spin-off of <a href="https://www.smartkarma.com/entities/sunac-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:240:1" rel="noopener">Sunac China Holdings (1918 HK)</a>, who will own 72% in SSH after the IPO, down from 100% prior to a recent capitalisation.</p>
</div>
<div>
<p>As with <a href="https://www.smartkarma.com/entities/kwg-living-group" target="_blank" data-smartkarma-citation="entities:29231:1" rel="noopener">KWG Living Group (3913 HK)</a>, and <a href="https://www.smartkarma.com/entities/shimao-services-holdings-limited" target="_blank" data-smartkarma-citation="entities:29199:1" rel="noopener">Shimao Services Holdings (873 HK)</a>, SSH's punchy implied PER is, to some degree, supported by its strong growth (and absolute size), although on a FY20E (LTM) metric, SSH's valuation is only surpassed by <a href="https://www.smartkarma.com/entities/ever-sunshine-lifestyle-services-group-limited" target="_blank" data-smartkarma-citation="entities:28932:1" rel="noopener">Ever Sunshine Lifestyle Services (1995 HK)</a>.</p>
</div>
<div>
<p>Sunac China, on the other hand, is expensive when de-consolidating out the implied market cap of SSH.</p>
</div>
<div>
<p>More below the fold. </p>
</div>


The IPO for Sunac Services Holdings (1516 HK) ("SSH"), the latest property management service company to seek listing, is open for applications. The Offer Price is expected to be announced on the 18 November, with the commencement of trading in the shares on the 19 November.


SSH is the spin-off of Sunac China Holdings (1918 HK), who will own 72% in SSH after the IPO, down from 100% prior to a recent capitalisation.


As with KWG Living Group (3913 HK), and Shimao Services Holdings (873 HK), SSH's punchy implied PER is, to some degree, supported by its strong growth (and absolute size), although on a FY20E (LTM) metric, SSH's valuation is only surpassed by Ever Sunshine Lifestyle Services (1995 HK).


Sunac China, on the other hand, is expensive when de-consolidating out the implied market cap of SSH.


More below the fold. 


Sunac Services (1516 HK): Lofty Metrics In A Congested Space

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Jinke Smart Services / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/jinke-smart-services" target="_blank" data-smartkarma-citation="entities:29214:1" rel="noopener">Jinke Smart Services (9666 HK)</a> is a Chinese property management company which is a subsidiary of <a href="https://www.smartkarma.com/entities/jinke-property-group-co-ltd" target="_blank" data-smartkarma-citation="entities:13291:1" rel="noopener">Jinke Property Group (000656 CH)</a>. At the proposed IPO price range of HK$41.80-47.60 per share, Jinke will have a market cap of HK$26,455.7-30,126.6 million ($3.4-3.9 billion). At the mid-point of the IPO price range, Jinke will raise net proceeds of HK$5,738.1 million ($740 million). Ten cornerstone investors will subscribe for HK$2,673.7 million ($345 million) worth of the offer shares. The cornerstone investors include Taikang Life, Hillhouse Capital, Snow Lake Capital, CICC Capital, UBS Asset Management and Marshall Wace. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/jinke-smart-services-ipo-initiation-street-smart" target="_blank" rel="noopener">our initiation note</a>, we highlighted that on a fundamental view, we believe that Jinke is attractive. However, we also noted that the poor post-IPO performance of recent property management IPOs despite good fundamentals was likely due to investors unwilling to pay a growth premium compared to an ever-expanding selection of listed peers. Our valuation analysis suggests that Jinke is fully valued at the proposed IPO price range and we would be inclined to give the IPO a pass on valuation grounds. </p></div></div></div>

Jinke Smart Services (9666 HK) is a Chinese property management company which is a subsidiary of Jinke Property Group (000656 CH). At the proposed IPO price range of HK$41.80-47.60 per share, Jinke will have a market cap of HK$26,455.7-30,126.6 million ($3.4-3.9 billion). At the mid-point of the IPO price range, Jinke will raise net proceeds of HK$5,738.1 million ($740 million). Ten cornerstone investors will subscribe for HK$2,673.7 million ($345 million) worth of the offer shares. The cornerstone investors include Taikang Life, Hillhouse Capital, Snow Lake Capital, CICC Capital, UBS Asset Management and Marshall Wace. In our initiation note, we highlighted that on a fundamental view, we believe that Jinke is attractive. However, we also noted that the poor post-IPO performance of recent property management IPOs despite good fundamentals was likely due to investors unwilling to pay a growth premium compared to an ever-expanding selection of listed peers. Our valuation analysis suggests that Jinke is fully valued at the proposed IPO price range and we would be inclined to give the IPO a pass on valuation grounds. 

Jinke Smart Services IPO: Valuation Insights

Jinke Property Group / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/jinke-smart-services" target="_blank" data-smartkarma-citation="entities:29214:1" rel="noopener">Jinke Smart Services (9666 HK)</a> is a Chinese property management company which is a subsidiary of <a href="https://www.smartkarma.com/entities/jinke-property-group-co-ltd" target="_blank" data-smartkarma-citation="entities:13291:1" rel="noopener">Jinke Property Group (000656 CH)</a>. From 2015 to 2020, Jinke was ranked first among the Top 100 property management companies as measured by overall strengths in the Southwestern China Region, according to China Index Academy. Jinke has launched a Hong Kong IPO to raise net proceeds of HK$5,738.1 million ($740 million) at the mid-point of the IPO price range. </p><div class="content-highlight"><p>Property developers continue to spin-off their property management arms due to tight credit conditions. However, sentiment on property management IPOs seems to have turned as recent IPOs of <a href="https://www.smartkarma.com/entities/kwg-living-group" target="_blank" data-smartkarma-citation="entities:29231:1" rel="noopener">KWG Living Group (3913 HK)</a> and <a href="https://www.smartkarma.com/entities/shimao-services-holdings-limited" target="_blank" data-smartkarma-citation="entities:29199:1" rel="noopener">Shimao Services Holdings (873 HK)</a> are trading 20% and 5% below their IPO prices, respectively. The poor post-IPO performance despite good fundamentals was likely due to investors unwilling to pay a growth premium compared to an ever-expanding selection of listed peers. Overall, on a fundamental view, we believe that Jinke is attractive.</p></div>

Jinke Smart Services (9666 HK) is a Chinese property management company which is a subsidiary of Jinke Property Group (000656 CH). From 2015 to 2020, Jinke was ranked first among the Top 100 property management companies as measured by overall strengths in the Southwestern China Region, according to China Index Academy. Jinke has launched a Hong Kong IPO to raise net proceeds of HK$5,738.1 million ($740 million) at the mid-point of the IPO price range. Property developers continue to spin-off their property management arms due to tight credit conditions. However, sentiment on property management IPOs seems to have turned as recent IPOs of KWG Living Group (3913 HK) and Shimao Services Holdings (873 HK) are trading 20% and 5% below their IPO prices, respectively. The poor post-IPO performance despite good fundamentals was likely due to investors unwilling to pay a growth premium compared to an ever-expanding selection of listed peers. Overall, on a fundamental view, we believe that Jinke is attractive.

Jinke Smart Services IPO Initiation: Street Smart

Sunac Services Holdings / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/sunac-services-holdings" target="_blank" data-smartkarma-citation="entities:29239:1" rel="noopener">Sunac Services Holdings (1820476D HK)</a> is a Chinese property management company. Sunac is the fastest-growing large-scale property management service provider in China, according to China Index Academy. Sunac is pre-marketing an IPO to raise $1 billion, according to press reports.</p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/sunac-services-ipo-initiation-next-in-line" target="_blank" rel="noopener">our initiation note</a>, we stated that Sunac’s fundamentals over the track record period are attractive. The PHIP discloses the 1H20 results which include New Century (consolidated from 8 May), along with a few data points on the post-period trading. The PHIP data points support our view that Sunac is a well-run property management company. </p></div>

Sunac Services Holdings (1820476D HK) is a Chinese property management company. Sunac is the fastest-growing large-scale property management service provider in China, according to China Index Academy. Sunac is pre-marketing an IPO to raise $1 billion, according to press reports.In our initiation note, we stated that Sunac’s fundamentals over the track record period are attractive. The PHIP discloses the 1H20 results which include New Century (consolidated from 8 May), along with a few data points on the post-period trading. The PHIP data points support our view that Sunac is a well-run property management company. 

Shimao Services Holdings Limited / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/shimao-services-holdings-limited" target="_blank" data-smartkarma-citation="entities:29199:1" rel="noopener">Shimao Services Holdings (873 HK)</a> is a Chinese property management company which is a subsidiary of <a href="https://www.smartkarma.com/entities/shimao-property-holdings-limited" target="_blank" data-smartkarma-citation="entities:8375:1" rel="noopener">Shimao Property Holdings (813 HK)</a> and backed by Sequoia China and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>. At the proposed IPO price range of HK$14.80-17.20 per share, Shimao will have a market cap of HK$34,823.5-40,470.6 million ($4.5-5.2 billion). At the mid-point of the IPO price range, Shimao will raise net proceeds of HK$5,449.9 million ($703 million). Unlike most of the property management IPOs, Shimao's IPO has no cornerstone support. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/shimao-services-ipo-initiation-at-your-service" target="_blank" rel="noopener">our initiation note</a>, we highlighted that Shimao’s fundamentals over the track record period are attractive. Our valuation analysis suggests that the valuation implied by the IPO price range is reasonable for the growth. </p></div></div></div>

Shimao Services Holdings (873 HK) is a Chinese property management company which is a subsidiary of Shimao Property Holdings (813 HK) and backed by Sequoia China and Tencent Holdings (700 HK). At the proposed IPO price range of HK$14.80-17.20 per share, Shimao will have a market cap of HK$34,823.5-40,470.6 million ($4.5-5.2 billion). At the mid-point of the IPO price range, Shimao will raise net proceeds of HK$5,449.9 million ($703 million). Unlike most of the property management IPOs, Shimao's IPO has no cornerstone support. In our initiation note, we highlighted that Shimao’s fundamentals over the track record period are attractive. Our valuation analysis suggests that the valuation implied by the IPO price range is reasonable for the growth. 

China

Central China New Life Limited engages in provision of property management services and related value-added services. The Company offers property management and related value-added services, lifestyle services, commercial property management and consultation services, and more. Central China New Life mainly conducts its businesses in China market.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Central China New Life (9983 HK)

Sunac Services (1516 HK): Lofty Metrics In A Congested Space

SSH is not cheap, regardless of its top four market cap status. The recent share price performance of recent listings - and the sector as a whole -...

David Blennerhassett

Jinke Smart Services IPO: Valuation Insights

Our valuation analysis suggests that Jinke is fully valued at the proposed IPO price range and we would be inclined to give the IPO a pass on...

Arun George

Jinke Smart Services IPO Initiation: Street Smart

Jinke has launched a Hong Kong IPO to raise net proceeds of HK$5,738.1 million ($740 million) at the mid-point of the IPO price range. On a...

Arun George

Sunac Services IPO: PHIP Data Points

The PHIP discloses the 1H20 results which include New Century, along with a few post-period data points. The PHIP data points support our view that...

Arun George

Shimao Services IPO: Valuation Insights

At the proposed IPO price range of HK$14.80-17.20 per share, Shimao will have a market cap of $4.5-5.2 billion. Our valuation analysis suggests...

Arun George

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)