Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: Tokyo Dome, ESR/Sabana, NTT Docomo, Evergrande, LG Corp, China Resources

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

China Resources Mixc Lifestyle / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/china-resources-mixc-lifestyle-services" target="_blank" data-smartkarma-citation="entities:29285:1" rel="noopener">China Resources Mixc Lifestyle Services (1209 HK)</a>/CR Mixc is a Chinese property management and commercial operational service provider. CR Mixc was the fifth-largest Chinese property management companies as measured by property management service revenue in 2019, according to Frost &amp; Sullivan. The controlling shareholder is <a href="https://www.smartkarma.com/entities/china-resources-land-ltd" target="_blank" data-smartkarma-citation="entities:418:1" rel="noopener">China Resources Land (1109 HK)</a>. </p></div><div><p>At the proposed IPO price range of HK$18.60-22.30 per share, CR Mixc will have a market cap of HK$40,920-49,060 million ($5.3-6.3 billion). At the mid-point of the IPO price range, the total proceeds are HK$11,004.7 million ($1.4 billion). </p></div><div><p>Seven cornerstone investors will subscribe for $650 million worth of the offer shares (44.8% of the offer shares at the IPO mid-point). The cornerstone investors are GIC, Hillhouse Capital, <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>,  Cephei Capital, Matthews Funds, China Structural Reform Fund and GLP. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/china-resources-mixc-lifestyle-ipo-initiation-the-paradox-of-plenty" target="_blank" data-smartkarma-citation="insights:45244" rel="noopener">China Resources Mixc Lifestyle IPO Initiation: The Paradox of Plenty</a>, we stated that CR Mixc’s fundamentals are mixed, in our view. We label this insight bearish as our valuation analysis suggests that we would participate at most at the low-end of the IPO price range. </p></div></div></div>

China Resources Mixc Lifestyle Services (1209 HK)/CR Mixc is a Chinese property management and commercial operational service provider. CR Mixc was the fifth-largest Chinese property management companies as measured by property management service revenue in 2019, according to Frost &amp; Sullivan. The controlling shareholder is China Resources Land (1109 HK). At the proposed IPO price range of HK$18.60-22.30 per share, CR Mixc will have a market cap of HK$40,920-49,060 million ($5.3-6.3 billion). At the mid-point of the IPO price range, the total proceeds are HK$11,004.7 million ($1.4 billion). Seven cornerstone investors will subscribe for $650 million worth of the offer shares (44.8% of the offer shares at the IPO mid-point). The cornerstone investors are GIC, Hillhouse Capital, Ping An Insurance (H) (2318 HK),  Cephei Capital, Matthews Funds, China Structural Reform Fund and GLP. In China Resources Mixc Lifestyle IPO Initiation: The Paradox of Plenty, we stated that CR Mixc’s fundamentals are mixed, in our view. We label this insight bearish as our valuation analysis suggests that we would participate at most at the low-end of the IPO price range. 

China Resources Mixc Lifestyle IPO: Valuation Insights

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<p><a href="https://www.smartkarma.com/entities/china-resources-mixc-lifestyle-services" target="_blank" data-smartkarma-citation="entities:29285:1" rel="noopener">China Resources Mixc Lifestyle Services (1209 HK)</a> ("CRM") is the latest property management service company to seek a listing. The Offer Price is expected to be announced on the 8 December, with the commencement of trading in the shares on the 9 December.</p>
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<p>CRM is the spin-off of <a href="https://www.smartkarma.com/entities/china-resources-land-ltd" target="_blank" data-smartkarma-citation="entities:418:1" rel="noopener">China Resources Land (1109 HK)</a>, which will own 75% in CRM after the IPO, down from 100% currently, before over-allotment.</p>
<p>CRM intends to raise HK$11.2bn (US$1.4bn) if using HK$20.45/share, the mid-point of the indicative Offer Price range.</p>
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<p>Even at the bottom end of its IPO range, CRM's FY20(L) PER surpasses all peers. It also has below-average revenue growth and gross margins. </p>
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<p>For CR Land, it is trading marginally above its P/B premium to peers from a historical standpoint, and its implied stub P/B is an outlier compared to other parents of property management spin-offs. </p>
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<p>More below the fold. </p>
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China Resources Mixc Lifestyle Services (1209 HK) ("CRM") is the latest property management service company to seek a listing. The Offer Price is expected to be announced on the 8 December, with the commencement of trading in the shares on the 9 December.


CRM is the spin-off of China Resources Land (1109 HK), which will own 75% in CRM after the IPO, down from 100% currently, before over-allotment.
CRM intends to raise HK$11.2bn (US$1.4bn) if using HK$20.45/share, the mid-point of the indicative Offer Price range.


Even at the bottom end of its IPO range, CRM's FY20(L) PER surpasses all peers. It also has below-average revenue growth and gross margins. 


For CR Land, it is trading marginally above its P/B premium to peers from a historical standpoint, and its implied stub P/B is an outlier compared to other parents of property management spin-offs. 


More below the fold. 


China Resources Mixc (1209 HK): This Is An Avoid

<p><a href="https://www.smartkarma.com/entities/china-resources-mixc-lifestyle-services" target="_blank" data-smartkarma-citation="entities:29285:1" rel="noopener">China Resources Mixc Lifestyle Services (CRML HK)</a>/CR Mixc is a Chinese property management and commercial operational service provider. CR Mixc was the fifth-largest Chinese property management companies as measured by property management service revenue in 2019, according to Frost &amp; Sullivan. The controlling shareholder is <a href="https://www.smartkarma.com/entities/china-resources-land-ltd" target="_blank" data-smartkarma-citation="entities:418:1" rel="noopener">China Resources Land (1109 HK)</a>. CR Mixc is joining the ever-expanding list of property management IPOs by seeking to raise $1 billion, according to press reports.  </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 has turned cautious. In such an environment, an IPO hopeful needs to offer a combination of stellar fundamentals and/or attractive valuation to grab attention. Unfortunately, CR Mixc’s fundamentals are mixed, in our view. Consequently, we label this insight bearish pending the IPO price range announcement. </p></div>

China Resources Mixc Lifestyle Services (CRML HK)/CR Mixc is a Chinese property management and commercial operational service provider. CR Mixc was the fifth-largest Chinese property management companies as measured by property management service revenue in 2019, according to Frost &amp; Sullivan. The controlling shareholder is China Resources Land (1109 HK). CR Mixc is joining the ever-expanding list of property management IPOs by seeking to raise $1 billion, according to press reports.  Property developers continue to spin-off their property management arms due to tight credit conditions. However, sentiment on property management IPOs has turned cautious. In such an environment, an IPO hopeful needs to offer a combination of stellar fundamentals and/or attractive valuation to grab attention. Unfortunately, CR Mixc’s fundamentals are mixed, in our view. Consequently, we label this insight bearish pending the IPO price range announcement. 

China Resources Mixc Lifestyle IPO Initiation: The Paradox of Plenty

Equity Research in HK and Mainland China

Li Tang

Thematic (Sector/Industry)

<p>For China regulator, the challenge is to keep the economic ship steady while avoiding creating asset market bubble such as real estate sector. Pan Gongsheng, deputy governor at the PBOC, said last week the central bank would focus on improving the macro-prudential monitoring, evaluating, and alerting systems in key areas including real estate financing.</p>
<p>We believe PBOC liquidity policy object towards real estate is adjusting from a reasonably hands-off approach in H1 to allow the property to support growth to mixed goals: curbing financial risks (developer debt/fast-rising land prices) and still allowing a property to support growth (given macro risks).</p>
<p>There are signs of a more stringent real estate financial regime in Q4 as regulators are seeking more transparency from property developers, calling for more details about current debts, to rein in borrowing costs and quell broader financial impacts.</p>

For China regulator, the challenge is to keep the economic ship steady while avoiding creating asset market bubble such as real estate sector. Pan Gongsheng, deputy governor at the PBOC, said last week the central bank would focus on improving the macro-prudential monitoring, evaluating, and alerting systems in key areas including real estate financing.
We believe PBOC liquidity policy object towards real estate is adjusting from a reasonably hands-off approach in H1 to allow the property to support growth to mixed goals: curbing financial risks (developer debt/fast-rising land prices) and still allowing a property to support growth (given macro risks).
There are signs of a more stringent real estate financial regime in Q4 as regulators are seeking more transparency from property developers, calling for more details about current debts, to rein in borrowing costs and quell broader financial impacts.

China Developer Bond Issuance Still Grow Despite Tightening

Hong Kong

China Resources Land Limited, through its subsidiaries, develops and invests in properties.  The Company also provides corporate financing and electrical engineering services.

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China Resources Land (1109 HK)

Last Week in Event SPACE: Tokyo Dome, ESR/Sabana, NTT Docomo, Evergrande, LG Corp, China Resources

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

China Resources Mixc Lifestyle IPO: Valuation Insights

At the mid-point of the IPO price range, CR Mixc will raise net proceeds of $1.4 billion. We label this insight bearish as we would participate at...

Arun George

China Resources Mixc (1209 HK): This Is An Avoid

I'm also not a buyer of CRM. It is not cheap, even more expensive than some recent property management IPO's I have written about, ones I found...

David Blennerhassett

China Resources Mixc Lifestyle IPO Initiation: The Paradox of Plenty

A property management IPO needs to offer a combination of stellar fundamentals and/or attractive valuation to grab attention in a cautious market....

Arun George

China Developer Bond Issuance Still Grow Despite Tightening

The new real estate financial rules have not yet had an impact on developers,China Developer bond issuance still grow despite tightening rule.

Li Tang

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