Aoyuan Health, commercial property management accounted for half of the gross profit
Mainland property management stocks can now be described as successful in the market. There are more than 10 companies listed in Hong Kong. If you want to stand out from the crowd, you have to have different selling points. Aoyuan Healthy Life (03662), which was spun off from China Aoyuan (03883), stated that the future growth will focus on commercial property management and big health business, and the gross profit ratio of commercial property management in the next three years will be about 26 % increased to approximately 50%.
Xu Xiaodong, chief financial officer of Aoyuan Health Life, said that the operating profit margin of commercial property management is higher, and the price increase of management fees is less. He explained that the increase in commercial property management fees is different from that of residential projects. It is a commercial market behavior. As for housing and management fees, it is necessary to meet and vote by the owners’ committee. It is more difficult to increase the price by the majority of the number of people and the size of the households.
The company’s prospectus disclosed that in the first nine months of last year, the gross profit of Aoyuan’s healthy living business segment and general property management accounted for 25.9% and 74.1%, respectively, and the gross profit margin of the commercial segment was calculated from 2015 to 2017. It ranges from 4.5 to 16.3 percentage points. Xu Xiaodong said that it is hoped that in three years, the gross profit of the two will account for 50% of the total.
Big health business
Another growth focus is on the big health business. Lei Yiqun, president of the company’s operations, said that it is now possible to set up a pension and Chinese medicine outpatient service in the community and set up a medical beauty shop in its management mall. It is expected to explore a suitable business model in one to two years. Executive Director Tao Yu added that he hopes that the business will account for a portion of the revenue after three years.
Lei Yiqun said that the big health business can be significantly different from other property management companies, and some newly signed communities can charge higher management fees. “It is not difficult to charge 5% to 10% per square meter of management fees.” .
At present, the property managed by the company mainly relies on the parent company China Aoyuan. The proportion of developers from third-party properties is still low, accounting for about 5.3% of revenue. Many property management companies have achieved rapid expansion by mergers and acquisitions, Xu Xiaodong said. It will still increase the proportion of this part, but there are too many vicious mergers and acquisitions in the market. The company does not want to participate, and only acquires property management companies with higher profits.