Quality-first, Business-perspective Strategy, Urbem (HK) Limited

Steven Chen

Quality-first, Business-perspective Strategy

Thematic (Sector/Industry)

<ul>
<li>Regulatory uncertainty, rapid technological disruption, and frequent change in consumer behavior often make businesses less predictable in China;</li>
<li>However, we manage to find some silver lining in some categories when it comes to this highly unpredictable market.</li>
</ul>


Regulatory uncertainty, rapid technological disruption, and frequent change in consumer behavior often make businesses less predictable in China;
However, we manage to find some silver lining in some categories when it comes to this highly unpredictable market.


Seeking the Predictable in the Unpredictable Chinese Market

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

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. 

KWG Living Group / Equity Capital Markets

<div><p><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> is a property management service provider in China. KWG accounted for 0.09% of the total GFA under management in the China property management market in 2019, according to JLL. At the proposed IPO price range of HK$7.00-8.13 per share, KWG will have a market cap of HK$14,124.7-16,404.8 million ($1.8-2.1 billion). At the mid-point of the IPO price range, KWG will raise net proceeds of HK$2,755.5 million ($356 million). </p></div><div><p>Eight cornerstone investors will subscribe for 32.09% of the offer shares at the mid-point of the IPO price range. The cornerstone investors are Hillhouse Capital, Orchid China, Harvest Fund Management, Snow Lake Capital, Valliance Asset Management, <a href="https://www.smartkarma.com/entities/china-lesso-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11598:1" rel="noopener">China Lesso Group Holdings (2128 HK)</a>, OP Capital and Aspex Management. </p></div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/kwg-living-group-ipo-initiation-urban-living" target="_blank" rel="noopener">our initiation note</a>, we highlighted that KWG’s fundamentals over the track record period are attractive. Overall, we think that the valuation implied by the IPO price range is reasonable for KWG's growth potential. </p></div>

KWG Living Group (3913 HK) is a property management service provider in China. KWG accounted for 0.09% of the total GFA under management in the China property management market in 2019, according to JLL. At the proposed IPO price range of HK$7.00-8.13 per share, KWG will have a market cap of HK$14,124.7-16,404.8 million ($1.8-2.1 billion). At the mid-point of the IPO price range, KWG will raise net proceeds of HK$2,755.5 million ($356 million). Eight cornerstone investors will subscribe for 32.09% of the offer shares at the mid-point of the IPO price range. The cornerstone investors are Hillhouse Capital, Orchid China, Harvest Fund Management, Snow Lake Capital, Valliance Asset Management, China Lesso Group Holdings (2128 HK), OP Capital and Aspex Management. In our initiation note, we highlighted that KWG’s fundamentals over the track record period are attractive. Overall, we think that the valuation implied by the IPO price range is reasonable for KWG's growth potential. 

China

S-Enjoy Service Group Co., Limited provides property management services. The Company offers building maintenance and security, bill payment, and other related services. S-Enjoy Service Group serves customers in China.

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S-Enjoy Service Group Co Ltd (1755 HK)

Seeking the Predictable in the Unpredictable Chinese Market

Predicability may lower investment risk, but is there any among businesses in the highly unpredictable Chinese market? These are a few characters...

Steven Chen

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

KWG Living Group IPO: Valuation Insights

At the mid-point of the IPO price range, KWG will raise net proceeds of $356 million. Overall, we think that the valuation implied by the IPO price...

Arun George

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