- Revenue and Profit Increased over 40%
- External Expansion Scale was Better than Expected
- GFA under Management Increased by 45.4%
Yincheng Life Service CO., Ltd. (Yincheng Life Service or the Company, together with its subsidiaries, the Group) (HKG:1922) announced its interim results for the six months ended 30 June 2021 (the Period).
Results performance has risen steadily with revenue and profit increasing over 40%
During the Period, the Group’s revenue increased by approximately 41.0% period-on-period from approximately RMB416.9 million to approximately RMB587.7 million. The revenue from the property management services reached RMB461.8 million, representing an increase of 37.3% period-on-period and accounting for 78.6% of total revenue. The revenue from community value-added services increased by 56.3% period-on-period to RMB125.7 million, accounting for 21.4% of total revenue.
As compared with the corresponding period in 2020, Profit for the Period increased by 47.2% period-on-period to RMB44.0 million and profits attributable to owners of the Company amounted to approximately RMB40.2 million, representing an increase of approximately 36.1% period-on-period. The net profit margin was 7.5%, up 0.3 percentage points period-on-period. The gross profit increased by 20.1% period-on-period to RMB97.8 million. Gross profit margin was approximately 16.6%.
Adopted a two-pronged strategy, further expanded the market presence
Yincheng Life Service is stabilising its inventory meanwhile actively expanding its contract volume, to ensure a stable and orderly development of its business. In terms of stabilising inventory, the renewal rate of the Group’s existing customers has maintained a high level of 92.9% for its quality services and good operational strength. The integrated collection rate of residential properties’ customers reached 64.9% (the proportion of the amount paid to the property management fees receivable for the year) during the Period. The Group is confident to maintain a collection rate of more than 90% and a prepayment rate of about 40% throughout the year, as it enters the peak period of collection during 2H2021. For expanding contract volume, the Group secured a net addition of 267 new residential properties projects during the Period through multiple channels, including direct engagement by customers, acquisition and winning public tenders.
Yincheng Life Service has been adhering to the strategy of further developing the market in Yangtze River Delta Megalopolis and bringing the advantage of its centralised regional development strategy into full play, and the Group has been expanding its business coverage with the strategy of “increasing the presence in Nanjing, expanding the market in the southern part of the Jiangsu Province and exploring the market in Huaihai district”. As of 30 June 2021, the Group’s contracted GFA and GFA under management were approximately 50.9 million sq.m. and approximately 49.0 million sq.m., representing a period-on-period increase of 36.5% and 45.4% respectively. The Group’s business covered 19 cities in China and managed 636 properties, including 385 residential properties and 251 non-residential properties, serving over 450,000households which covers over 1.4 million customers.
External expansion scale was better than expected and further enhanced the proportion of third-party
Leveraging its advantages in business model, quality services and reputation, as well as strong market expansion capabilities, the Group further consolidated its position as a regional leader in the industry. During the Period, GFA under management of the Group increased by approximately 10 million sq.m.. Among which, the proportion of GFA under management secured from third-party property developers further increased to a high level of 84.2% (1H2020: 81.8%). As an expert in the operation of Second-hand Projects, most of the Group’s new expansion projects have quickly converted from contracted projects to GFA under management a few months after engaged from property owners’ associations, and starts to contribute revenue within the year.
It is worth mentioning that Yincheng Life Service has stepped up its efforts in expanding its business in regions other than Nanjing since last year, and has achieved remarkable results. Currently, the Group’s GFA under management in regions other than Nanjing has exceeded 18 million sq.m., representing a significant period-on-period increase of 75.6%, and has further increased its proportion to the total GFA under management to 37.4% (1H2020: 31.0%), showing that the Group was able to replicate its success in Nanjing to other regions.
Intensive cultivation of competitive products in non-residential properties, achieving good results in subdivisions
Non-residential projects with higher gross profit margin have become the focus segment of the Group in recent years. As of 30 June 2021, non-residential GFA under management of the Group amounted to 10.6 million sq.m., representing a period-on-period increase of 52.1% to 251 projects, and the total annualized contract value amounted to approximately RMB470.0 million. During the Period, the contribution from non-residential properties recorded a revenue of approximately RMB218.8 million, almost reached 5:5 in comparison to the revenue contribution from residential properties, with a more outstanding growth rate of 41.3%
The Group’s non-residential projects cover 11 types of properties, and has intensively cultivated leading products such as hospitals, financial institutions, government facilities, and landmark buildings to build benchmark projects, striving to become an expert in these subdivisions and gain a considerable market share in the high-quality non-residential market. The Group successfully acquired Huiren HengAn last year, which secured new engagements from five hospital institutions during the Period, hence further consolidated the Group’s leading position in hospital property management market. The Group has also won the property management projects for various landmarks, such as the Nanjing City Wall and Jinling Museum, which will help to enhance the Group’s reputation and brand image. In February this year, the Group also established a joint venture company to tap into the property management market of large shopping malls and commercial streets, the Group expects to accumulate experience from these projects which can help acquire more customers of similar type in the future and expand source of revenue.
Diversified community value-added services have great growth potential
In terms of community value-added services, the main purpose of which is to maintain customer satisfaction, so the Group is determined to provide value-added services only where there is a strong demand, of which successful examples include fitness training, pick-up lockers, electric vehicle charging, home renovation, group catering and other services. During the first half of 2021, Yincheng Life Service launched live-in elderly care services in response to the favourable “property + elderly care” policy and the needs of property owners, and has become a pilot entity in Nanjing. At the same time, benefiting from the presence of its projects in Nanjing, the Group’s electric scooter battery swap services launched at the end of 2020 developed rapidly during the first half of the year. At present, the Group has built more than 270 smart battery swapping stations in Nanjing, with more than 2,700 registered active riders, which the Group believe this business can start generating considerable profit after one to two years of implementation period.
In recent years, as the social value and contribution of the property management industry have been highly recognised by the whole society, the property management industry is in a golden period of rapid growth and development, with its prospects being highly recognised. The Group is highly recognised in society for its significant growth in management scale, industry-leading service quality, excellent customer reputation and business development, and was ranked 18th among the top 100 property service enterprises in China in 2021 and topped the 2020 Nanjing Property Credit List.
XIE Chenguang, Chairman of Yincheng Life Service CO., Ltd., said: “Looking ahead to the second half of the year, we will strive to achieve the annual performance target in accordance with the established strategy. In terms of business development, the Group will continue to focus on market expansion and identify high-quality merger and acquisition targets that can bring along real synergies for expanding our business scale; we will strive to acquire more projects outside Nanjing and quickly develop economy of scale and brand impact in the local areas; incorporate more residential projects into our community value-added services to enhance the residents’ well-being, while different types of ‘Industry +’ services are sought to be offered to customers of non-residential projects in order to provide protection for non-residential customers, allowing them to realise greater business value. We believe that, by adhering to the concept of ‘reputation comes first, operation is the key’, establishing presence in Yangtze River Delta Megalopolis to give full play to the strategic advantages of regional centralisation, and adopting the multi-pronged management approach, the Group will be able to seize the favourable policy and market opportunities. As such, the Group can expand its scale, maintain long-term sustainable development, improve profitability and deliver greater returns to the shareholders of the Company.”
About Yincheng Life Service CO., Ltd.
Yincheng Life Service CO., Ltd is an established property management service provider in China, with over 20 years’ industry experience for the provision of diversified property management services and community value-added services. Through the high-quality property management services provided by the Company, Yincheng Life Service successfully translated into one of the leading property management service providers in Nanjing and Jiangsu Province, the PRC from a local property management service provider in Nanjing. The Company ranked the 18th among the top 100 property service enterprises in China in 2021.
The business scope of Yincheng Life Service covers a wide spectrum of properties, including residential properties and non-residential properties covering government facilities, financial institutions, property sales offices, hospitals, commercial complex, parks, highway service area, industrial parks, mixed-use properties, schools and office buildings. As at 30 June 2021, the Group provided property management services in 19 cities of the Yangtze River Delta, which has approximately 50.9 million sq.m. contracted GFA and GFA under management were approximately 49.0 million sq.m., and more than 636 properties under managed.
For more information about the Company: www.yinchenglife.hk
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