Evergrande Property Services, the property management arm of China Evergrande (3333), will open retail books today to raise up to HK$15.8 billion and expects to list on the main board on December 2.
It is offering 1.62 billion shares at an indicative price range between HK$8.5 and HK$9.75. The minimum investment amount is HK$4,924 per board lot of 500 shares.
The company has appointed Huatai Financial Holdings (Hong Kong), UBS, ABC International, CCB International, CLSA and Haitong International as joint sponsors.
China Evergrande shareholders whose names appeared on the register of members of the company on November 18, can apply for one Evergrande Property Services share, for every integral multiple of 102 shares held.
China Evergrande holds a 71.94 percent stake in Evergrande Property Services as of September 29.
The IPO also came as the debt-laden developer terminated a restructuring plan with ShenZhen Special Economic Zone Real Estate & Properties, effectively ending its four-year bid to seek a backdoor listing in Shenzhen.
Evergrande Property Services served 1,354 projects, with a total gross floor area under management of about 254 million square meters as of June 30.
The property manager ranked third in 2019 among 244 Chinese property management companies in total revenue, total gross profit and total net profit in a ranking by China Index Academy.
Evergrande Property Services has secured 23 cornerstone investors to subscribe to shares worth about HK$7.2 billion. They include Chinese artificial intelligence startup SenseTime and China Gas (0384).
Revenue grew by 34.18 percent year-on-year to 5.9 billion yuan (HK$6.98 billion) in 2018, and further increased by 24.22 percent year-on-year to 7.33 billion yuan in 2019.
Revenue for the six months ended June 30, was 4.56 billion yuan, up by 31.68 percent from the same period last year.
Evergrande Property Services generated substantially all the revenue from property management services for properties developed by the Evergrande Group over the past three years.
Meanwhile, net profit more than doubled year-on-year to 239.08 million yuan in 2018, and further soared by 289.1 percent year-on-year to 930.23 million yuan last year.
The net profit increase last year was mainly attributable to cost controls, efforts to charge property management fees for parking spaces in 2019, and increased percentage of newly-delivered property management projects with relatively high property management fees. Before 2019, the company did not charge fees for parking spaces management services in general.
First-half net profit this year jumped by 181.91 percent year-on-year to 1.14 billion yuan.
Gross profit margin increased by 2.4 percentage points to 12.2 percent in 2018 and further grew by 11.7 percentage points to 23.9 percent last year.
Gross profit margin was 38.1 percent in the first half, up by 15.1 percentage points year-on-year, due to the deduction in, or exemption of, payment of social insurance contributions as a result of the regulatory supportive policies by the local governments in response to the coronavirus pandemic.
The proceeds will be used for acquisitions and investment, development of value-added services, upgrade of information system and equipment, employment and talent training, and operating capital.
The coronavirus outbreak has put property managers under the spotlight, due to increasing demand for epidemic prevention and control services, such as sanitization and restrictions on movement in and out of housing estates.