Hovel Services's Net Profit Achieved Significantly Growth of 600% in 1H2020

 

Hovel Services Group Co. Limited (Stock Code: 6093), announced its interim results for the 6 months ended 30 June 2020. Hovel Services's revenue for the Period rose by 32.5% year-on-year ("yoy") to RMB160.4 million. Gross profit for the Period increased by 43.6% yoy to RMB54.7 million while gross profit margin reached 34.1%, representing an yoy improvement of 2.6 percentage points. Profit and total comprehensive income for the Period significantly grew by 623.3% to RMB21.7 million. Net profit of the Period (Profit and total comprehensive income for the period attributable to equity shareholders of the Company) amounted to RMB21.0 million, representing an yoy increase of approximately 600%. Earnings per share attributable to equity shareholders of the Company amounted to RMB5.21 cents per share, representing an yoy increase of 421%.

 

The above results were mainly attributable to the expanded business scale, the contribution brought by the acquisition of 70% equity interest of Shanghai Tongjin Property Management Services Co. Ltd. (上海同進物業服務有限公司), and the lack of listing-related expenses during the Period.

 

Breakdown of revenue by business segments

• Revenue from property management services amounted to RMB120.7 million, representing an yoy increase of 45.6%, accounting for 75.2% of the Group's total revenue for the Period
• Revenue from community value-added services was RMB24.2 million, representing a yoy decrease of 9.0%, accounting for 15.1% of the Group's total revenue for the Period
• Revenue from valued-added services to non-property owners recorded a yoy growth of 33.6%, accounting for 9.7% of the Group's total revenue for the Period

 

During the Period, the Group achieved total contracted gross floor area ("GFA") of 14.6 million sq.m.,

representing an increase of 78.0% compared to the same period in 2019. This is a new era of the Group's expansion. The number of property management projects of the Group increased from 36 at the beginning of the year to 87. From year to date, the number of cities with the Group's service coverage increased from 11 at the beginning of the year to 21. As at 30 June 2020, 35.3% of the contracted GFA are attributable to third party property developers, representing a significant increase compared to the beginning of the year.

 

The Group's business coverage of geographical regions in China currently include Northern China, Northeastern China, Southwestern China, Southern China and Eastern China. The revenue generated from such regions accounted for 32.9%、5.6%、25.6%、9.9% and 26.0% of the Group's total revenue for the Period, respectively.

 

Property Management Services

Hovel Services provides a range of property management services to property owners and residents, as well as property developers, including, security, cleaning, greening, gardening services as well as repair and maintenance services. The Group's property management portfolio focuses on residential communities but also covers other types of properties such as commercial properties. During the Period, the Group generated the majority of its property management service revenue from managing residential properties and recorded RMB112.8 million, accounting for 93.5% of the Group's total revenue generated from property management services for the Period. In the

 

 

meanwhile, the revenue generated from managing non-residential properties for the Period was RMB7.8 million, accounting for 6.5% of the Group's total revenue generated from property management services for the Period.

 

Community Value-added Services

As an extension of the Group's property management services business, it provides community value-added services to property owners and residents for the property management projects under the Group's management. The Group's community value-added services help to address the lifestyle and daily needs of the property owners and residents, to enhance their customer experience, satisfaction and royalty, as well as to create a healthier and more convenient living community. The Group mainly provides three types of community value-added services, namely:  home-living services, leasing of car parking space, and leasing of common facilities.

 

Value-added Services to Non-property Owners

The Group is committed to expanding its value-added services to non-property owners and diversifying its sources of revenue. The Group offers comprehensive supporting services such as sales assistance services and management consultation services for the property development projects developed by property developers.

 

Merger and Acquisition During the Period

The Group has completed the acquisition of 70% equity interest of Shanghai Tongjin Property Management Services Co. Ltd. ("Shanghai Tongjin") and 60% equity interest of Shanghai Tongjia Property Management Services Co., Ltd. ("Shanghai Tongjia") during the Period. In which, Shanghai Tongjin's financial statements have been consolidated into the financial statements of the Group in 1H2020 and made a great contribution to the results performance of the Group during the Period.

 

After the acquisition of Shanghai Tongjin, total number of the Group's property management projects is increased to 61, the revenue-bearing GFA of properties under management is increased to 9.4 million sq.m..

 

With the completion of the acquisition of Shanghai Tongjin, the Group's coverage of geographical regions in China has extended from Northern China, Northeastern China, Southwestern China and Southern China to Eastern China. Leveraging the existing strength and experience of Shanghai Tongjin and Shanghai Tongjia in property management in the Yangtze River Delta region, it will enable the Group to exert greater synergies with the business of Shanghai Tongjin. The Group will be able to further enhance its market share and brand influence and fill the market gap in the region, expand the scope and size of its property management business and improve its business growth and profitability.

 

Future Prospect

Commitment in continual expansion of management scale is the core development strategy of the Group. Regarding the region of expansion, the Group relies on the cities where the existing management projects are located, with increased effort to expand into regions such as the Yangtze River Delta, the Pearl River Delta and Eastern China. Looking forward, the Group will continue to implement market expansion strategy as its core expansion strategy, together with joint venture

 

 

cooperation and merger and acquisition as supporting expansion strategies to expand its business scale and enhance the market position. From year to date, the Group established a number of joint ventures with local influential property developers, real estate agents and enterprises with industrial resources in Beijing, Shanghai, Shenzhen, Changsha and other regions. As the business of the joint ventures will gradually develop, the Group will obtain more industrial management project resources locally, such as residence, offices, industry parks and public buildings. This will establish a solid foundation for the continual growth of the business of the Group. In the future, the Group will continue to seek merger and acquisition business opportunities with high quality property management companies in order to further enhance the overall competitiveness of the Group.

 

About Hovel Services Group Co. Limited

Hovel Services is the leading property management services provider in the PRC. In 2020, the Group was ranked 40th among the China Top 100 Property Management Enterprises (中國物業服務百強企業) evaluated by the China Index Academy, an increase of 45 ranks from 85th in 2015, and has become one of the China Top 100 Property Management Enterprises with the fastest progress. The Company currently engages in the provision of property management services and value-added services to property owners, as well as value-added services to non-property owners. As at 30 June 2020, the Group achieved total contracted gross floor area of 14.6 million sq.m., representing an increase of 78.0% compared to the same period in 2019, demonstrating a new era of the Group's expansion. The number of property management projects of the Group increased from 36 at the beginning of the year to 87. From year to date, the number of cities with its service coverage increased from 11 at the beginning of the year to 21.