Shimao Services Acquires Hunan Jili Property, Further Strengthens Hospital Property Services Business Following Recent Cooperation with Kangqiao Property
Shimao Services Holdings Limited (“Shimao Services” or the “Company”; HKEX Stock Code: 873.HK) has recently completed two acquisitions. On December 3, it reached an equity partnership agreement with Suzhou Tianxiang Property Management Co., Ltd. (hereinafter referred to as “Suzhou Tianxiang Property Management”) and the latter has subsequently transferred 70% of its shares, representing 246 million yuan, to jointly develop the Suzhou market. On December 6, Shimao Services reached an equity partnership agreement with Hunan Jili Property Management Co., Ltd. (hereinafter referred to as “Hunan Jili Property”), in which Hunan Jili Property’s 70% equity will be transferred for 99.64 million yuan, enabling Shimao Services to further expand and cultivate its hospital property services business within the Hunan market.
As a real estate-related sector that has been greatly exploited in recent years, the property industry has entered a new integration stage in 2021. For property management companies with sufficient funding support from parent companies, mergers and acquisition activities have entered an active period with the scale of such transactions having hit a record high. While Shimao Services has further expanded its business scale through mergers and acquisitions, it has also seen gradual development in the direction of exploring regional markets, deepening business segments and building specialized capabilities.
Expanding Hunan Property Services Market and Strengthening Property Service Capabilities in Central and Western Regions
Shimao Services focuses on four core top-tier cities in Central and Western regions in Mainland China, and Hunan is one of the most important markets in these regions. Shimao Services’ cooperation with Hunan Jili Property, the market leader in the region, will effectively increase Shimao Services’ business scale and project allocation in Hunan and therefore the central and western regions. This will enhance the comprehensive capacity of a single market, and thus help to achieve market expansion and enhance value-added services.
In fact, since March this year, Shimao Services has begun to implement its centralization strategy and established five city-center companies in Hangzhou, Wuhan, Xi’an, Tianjin, and Fuzhou to promote the implementation of the company’s active development in each city. It is worth noting that two of Shimao Services’ five city-center companies (namely Wuhan and Xi ‘an) are in the central and western regions.
Moreover, on October 14 this year, Shimao Services’ second national headquarters was set up in Wenjiang District, Chengdu, with plans to invest 1 billion RMB to actively develop the urban service field. In addition to the current expansion of the Changsha market in Hunan Province, Shimao Services has gradually improved its multi-city and multi-business layout in the central and western regions, reflecting the company’s determination to further develop [its business in] the area.
Hunan Jili Property Management is a regional leader in the Hunan hospital property market. The company integrates the two core hospital systems of Xiangya and Provincial. It has a leading position in the Hunan hospital market and has managed or served many benchmark hospitals. The company has a solid reputation in Changsha. This cooperation with Hunan Jili Property Management will help Shimao Services to actively develop its business in the Hunan market while enhancing its professional capabilities in the field of hospital property services.
Redeploying the Hospital Growth Strategy to Enhance Professional Service Capabilities
Shimao Services is positioned as a leading integrated property management and community life services provider in China. Currently, Shimao Services has four business segments: integrated property management, diversified value-added services, urban services, and digital technology services. At the present stage, Shimao Services’ acquisitions are mainly aimed at integrated property management and urban services businesses. The expansion of scale and the improvement of professional service capabilities are equally important. The inclusion of other business sectors will not be ruled out in the future.
In terms of comprehensive property management, in addition to the residential business, Shimao Services has also comprehensively expanded into diversified business sub-segments such as university parks, industrial parks, public buildings, and hospitals. As of the end of June 2021, the proportion of the regions’ non-residential businesses that are managed by Shimao Services has climbed to 40.8%.
For example, in August 2020, Shimao Services cooperated with Zheda Sinew to enter the university and campus property services business, building on its college logistics services capabilities. In May 2021, the Zheda Sinew brand was refreshed, positioning it as a college and industry park services provider in the PRC and expanding its business coverage to include industrial parks and group meals, etc.
The partnership with Hunan Jili enables Shimao Services to strengthen its presence in the hospital segment as well as develop its professional capabilities in hospital property services, further to the cooperation with Kangqiao Property in November 2020.
The multiple mergers and acquisitions (M&As) that Shimao Services has completed in recent times demonstrate its commitment to adhering to the top-level logic of expanding scale and improving professional service capabilities via M&As. It also shows that Shimao Services is optimistic about the professional hospital-related segment and is thus deeply engaged in the industry’s development.
In addition, the partnership is conducive to increasing Shimao Services’ project density in the Hunan market by facilitating its market expansion. Hunan Jili Property has a high concentration of projects under management in the region, with most being located in Changsha city, as well as leading comprehensive capabilities, strong market expansion capabilities and well-established customer relationships. Therefore, by leveraging the cooperation, firstly, in terms of business synergy, Shimao Services can effectively increase its project density in Hunan and thus, enhance its overall strength in the region as well as reducing overall operational costs there. Secondly, it will help Shimao Services to expand its hospital property projects in Hunan province. Following the integration with Shimao Services, it will expand group meals, supermarkets and other hospital-related value-added services in the future.
According to data from the China Index Academy, there have been numerous mergers and acquisitions this year. In addition to traditional residential, commercial, and office property services, more and more property services companies have begun to appear in the schools, hospitals, airports, and urban services segments.
For property services companies such as Shimao Services, the keys to long-term and healthy development are seizing opportunities, improving professionalism, service quality and operational efficiency, and exploring new growth drivers.
About Shimao Services Holdings Limited (Stock code: 873)
Established in 2005, Shimao Services is China’s leading provider of integrated property management and community life services. It is also one of the important wings of Shimao Group’s “big aircraft” strategy. Shimao Services takes the “Smart Maker of Good Life” as its brand concept and implements the “iBlue Strategy”, focusing on the four core high-energy city clusters in the Yangtze River Delta Region, Central and Western China, Southern China and Bohai Economic Rim. As of June 2021, the company had more than 530 properties under management, 239 million square meters of contract area, covering residential, schools, government and public facilities, health care centers and hospitals, VIP lounges in waiting rooms, etc, and provided comprehensive property management, community life services and non-owner value-added services for nearly 3.2 million owners and users.
For more information, please visit Shimao Services’ website: https://www.shimaofuwu.com/
For further information, please contact:
Strategic Financial Relations Limited
Sharon Lau / Cherry Chen
Tel: (852) 2864 4852 / (852) 2114 4903
Email: sprg_shimao@sprg.com.hk
Fax: (852) 2527 1196
Topic: Press release summary
