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[Original] new crown Research pneumonia epidemic affecting real estate and real estate industry chai

Date: 2020-02-21
Views: 3

Author: Paradise Valley real estate funds team

Summary:

Event Review: New Year, broke out in a Wuhan, was named 2019-nCoV virus (novel coronavirus) caused by the rapid epidemic sweeping across China. Wuhan closed city, national mobilization, the Chinese people had a real sitting at home will be able to contribute to prevention of the Spring Festival. Government has taken a series of measures to curb the spread and proliferation of new crown pneumonia, things fermentation.

Under epidemic policy support: the main line in 2020 is counter-cyclical monetary policy and reduce costs, while interest rates and interest rate market-oriented reforms is the main starting point for cost reduction. 2020 February 3 to 4, the central bank carried out large open market operations and lower interest rates, liquidity put in a total of 1.7 trillion yuan, 7 and 14 days reverse repo bid rate was down 10bp to 2.40% and 2.55%, ensure sufficient market liquidity. Ministry of Finance since 2020, January 22 took a series of fiscal measures, including donations and grants revenue for tax relief, financial subsidies for patients, as well as for epidemic prevention and control of key enterprises re-discount loans. The process of the real estate industry due to its capital-intensive properties of monetary, fiscal and other financial policies are very sensitive, so the currency continues to strengthen in the current, counter-cyclical fiscal policy adjustment in the real estate finance-related policies will also be more focus on fine-tuning to maintain macroeconomic stability and Real Estate the balance between the market stable.

Epidemic impact on housing prices: based on neutral expectations for the development of novel coronavirus epidemic, as well as a number of macroeconomic policy, the implementation of trade policy, the industry predict return to work time, we analyzed the impact of housing prices received from three aspects: sales, we believe that real estate sales demand there will be some delay but will not disappear, there will be compensation for the late completion of the epidemic growth. During the epidemic affect housing prices need to focus on cash flow and capital return development is critical to its survival; 'line showings' To this end housing prices will lead to future sales model changes. Investment, housing prices decline in investment in the first quarter but a high probability opportunities, we believe that the presence of low-cost land bank investment opportunities and projects close M & A opportunities. Financing, housing prices increased pressure maturing debt, housing prices will be difficult part, but the risk is limited proportion of mainstream housing prices in the hardest hit Hubei.

Real estate industry chain impact: the impact on real estate during the epidemic on the downstream industry chain in varying degrees. Upstream cement, glass, pipes and the like also affect the short-term, post-disease to be controlled, the overall supply and demand balance region. For the middle reaches of the construction projects, earnings growth under pressure, but the medium is expected steady growth, especially in Wuhan 'Xiaotangshan' mode to show growth opportunities fabricated steel plate industry. Epidemic will stimulate downstream transaction service providers to accelerate integration and data iteration; at the same time, although this epidemic caused short-term increase in property company overhead costs, workload surge, but in the long run, the residents of the property to increase the company's dependence and a sense of belonging, effectiveness significantly.

Investment opportunities: 1, to seize short-term impact of this epidemic on the real estate industry, with high-quality leading enterprises to deepen cooperation on key areas to develop high-quality projects. 2, this epidemic will trigger more opportunities for real estate acquisitions and disposal of non-performing assets,, AMC partnered with leading enterprises established real estate buyout funds, real estate resources to accelerate the integration of industry, forming powerful combination of industry and capital. 3, this new crown pneumonia epidemic stimulate the real estate industry chain, part of the change in the industry, with the explosive growth space, Paradise Valley real estate team deep plowing upstream and downstream segments of the real estate industry chain, effective mining and upgrading project value of investment capacity, as will investment to bring more PE, the cornerstone of value investing. 4, Paradise Valley full play to its advantages in terms of real estate finance industry alliances, mergers and acquisitions of listed companies seeking industry, providing support given by refinancing services, sharing of resources to create value.

Fourth, the novel coronavirus pneumonia epidemic impact on the real estate industry chain:

Pan 4.1 integrated real estate industry chain structure

Real estate industry chain is broadly divided into three parts: an upstream land development, building materials, equipment, land development midstream including two developers, project planning and design and turnkey construction of the building, is downstream trading services, decoration, operations management and the corresponding support services. And as shown in the following diagram from the developer's point of view, is divided into front-end development, it is in the middle of construction, the back-end service three parts.

4.2 The current impact of the epidemic on the upstream industry chain important industry segments

4.2.1 epidemic building materials industry changes

Real estate project-based building materials and construction phase upstream of the main traditional building materials mainly steel, cement, post-installation phase mainly involves glass, fiberglass, drywall, etc., corresponding to listed companies in building materials, conch cement, Beijing New Building Materials, Weixing new wood, stone China, Oriental Yuhong such as the White Horse Unit is a mainstream configuration of the underlying security mechanism in 2019.

Due to the current building housing the provinces and cities nationwide Bureau clear below, the requirements to delay the resumption of work on construction sites, in some areas a clear return to work no earlier than the 16th lunar month, such as Hangzhou Yuhang district government made it clear that housing prices in the area no earlier than 2020 year 2 May 29 return to work. Therefore, the most obvious epidemic of the building materials industry, the most important impact is the delay between the industry can return to work the situation brought about by bringing supply and demand mismatch. But different kinds of building materials in 2020 after the epidemic trends will vary, consider the impact of the current epidemic of pneumonia to 3 months after the gradual recovery stage, so we expect the building materials industry, cement being the smallest impact, followed by the consumption of building materials glass is affected relatively large.

4.2.1.1 construction steel plate: inventory to meet demand

First look at the demand side, 'not fried living room' policy enjoys popular support, policy control are less likely to fully relax again; by 2019, housing prices in inventory accumulation, selling pressure, the influence to take shrink in 2020 because of the epidemic has brought workers back to the city and the site started delaying the delay problem, it started in 2020, investment growth high probability continued downward, resulting in further primary real estate construction steel demand is likely to be 4 - 5 months later after the epidemic will improve the impact of decreased significantly. However, due to the overall stock value week it is still in the higher position, even if steel prices started in the first quarter delay in the short term for the real estate industry is still satisfy the demand.

Second, look at the supply side, the epidemic affect Shanxi, Shaanxi, Inner Mongolia's coal mines resume production resumed, because of logistics and transportation problems thereby affecting coking coking coal inventory, resulting in coke production will decline or, if longer duration, then the black industry chain to bring production decreased conductivity. Therefore, the epidemic has affected to some degree of supply of raw materials for steel mills, steel and thus a greater impact on sales. At this stage the major steel mills have been gradually opened to limit production cuts, short-term supply-side production cuts will become reality.

Therefore, in terms of construction steel, short-term market fluctuations, but not about the fundamentals of supply and demand temporarily logic fundamentally, because delay would only delay the return to work and can not eliminate the demand for steel demand. At the same time for real estate companies, advance and communicate steel trading business to resume production, giving priority to transport capacity, is able to effectively reduce the short-term gap in the use of steel. While a higher share of large housing prices have started to get the advantage of priority delivery. Purchase cost of steel is expected due to 'grab strikes' may appear to rise slightly in the second quarter.

4.2.1.2 Building cement blocks: overall supply and demand balance

According to Bureau of Statistics data, in 2019 January-December cumulative production of 2.33 billion tons of cement nationwide, an increase of 6.9%; of which, in December single month 200 million tons, an increase of 6.1%, a decrease of 11.3% (MoM in December 18 reduction of 6.9%). At the same time, the annual total sales of cement from the country close to 100%, more balanced supply and demand; at the same time on the national cement stocks seen year on year growth data, cement and real estate industry due to new start rhythm is more overlap, the overall supply and demand is relatively routine. Press the case of normal start, as the Spring Festival approaching end of the cement supply will be cut operation, stocks, usually in March that year yields started climbing.

But the resumption of work by the impact of the epidemic will only postpone progress epidemic control material impact demand for cement in the first quarter of 2020, late effects of view. Meanwhile, a listed company in Hubei Huaxin Cement (Hubei income accounted for 35% of 2018, Hunan income accounted for 11%) will be delayed return to work in other areas of cement companies, so the greater impact of real estate projects for complex union Hubei region, especially the insufficient regional cement mixing station and inconvenience of transportation, short of supply and demand mismatch.

4.2.1.3 architectural glass plate: increased library tired

December 2019 National flat glass production 81.08 million weight cases, an increase of 7.1%; January-December cumulative production of 900 million nationwide flat glass 26.7 million weight cases, an increase of 6.6%, a record high annual flat glass production. Nearly three years of data from the inventory comparison glass business point of view, the 2019 year-end inventory details glass high.

Because of the uncertainty and the slowdown in housing prices start time of return to work after the holiday mobility, logistics and transport restrictions and a series of factors led to stagnant demand, the company will emerge glass super tired seasonal library, follow-up in the second quarter glass prices are expected to be decline, but real estate enterprises mainly doors and windows and curtain wall supplier obvious benefit, therefore, for the real estate industry to provide all kinds of glass deep-processing products, suppliers may be opportunities to reduce costs.

Change installation materials industry 4.2.2 epidemic

2019 January-December housing area cumulative increase of 2.6%, completed an area of growth from negative to positive, accounting for about 70% of the 3.0% increase of residential area is completed. Construction growth in 2019 accelerated into the obvious, from January to December YoY growth rate of 8.7%, while from January to December retail sales of construction and decoration materials rose 2.8%, but 0.2 percentage points lower than the previous value, and real estate finance chain pressure, and the C-terminal end of the boom B is less than the relevant mode.

Housing prices in 2020 affected by the epidemic, will slow the completion of the project, the latter most likely will be operating in time duration, which means that demand will delay but not disappear. The short term, is expected to have been installed into the building housing prices Jicai contract and return to work pioneered enterprise, through the supply chain quickly diverted to priority housing prices started to reach the requirements. Therefore, the ability of the B-side business segments supplier's point of view there are two main sections: waterproof materials and pipes.

4.2.2.1 waterproof materials sector: market concentration lift

Because housing prices continued to improve market share concentration, as well as for the strengthening of cost control resulting in accelerated Jicai, housing prices have increased barriers to entry materials industry the B-side of the installation; while superimposed environmental and quality standards to enhance other factors, not speed up exit compliance for small businesses, therefore, has increased dramatically in 2019, Oriental Yuhong waterproof materials company and other leading market share, also formed a strong Hengqiang situation.

From the point of view of waterproof material sales growth since the first quarter of 2018, the industry as a whole bottoming trend growth. In 2020, with the industry to further improve and enhance environmental quality standards of the real estate focus, will further accelerate the industry to enhance the concentration of waterproof material, but it should be noted that the enterprise sector accounts receivable risk.

From an investment point of view of a semi-market, real estate funds can actively participate in the small board and GEM listed companies set by the waterproof materials industry and other types of PIPE investments.

4.2.2.2 Pipeline materials sector: Keep slowdown state

Over the past two years by the delayed impact of the completion of real estate, home improvement cycle after slowing demand growth with pipes, plastic pipes since 2014, growth continued to be maintained at less than 10%. Home improvement plastic pipe demand growth, with the completion of the real estate cycle to render the marginal improvement, but by the impact of delayed completion in 2020, the national plastic pipe sales growth slowdown will remain the case, for now pipe industry as a whole turning point has not yet arrived.

Construction equipment industry 4.2.3 epidemic changes

Real estate construction phase of construction equipment is divided into equipment construction and installation of equipment, which are mainly pile driver construction equipment and excavators, installation of equipment, mainly elevator and fresh air systems.

4.2.3.1 mining equipment sector: demand continues to soften

Excavator demand mainly from two aspects, one needs to replace the old machine, and second, demand for new aircraft purchases. From the point of view of downstream applications scenarios, real estate, infrastructure, mining and the highest proportion, especially in real estate construction brings maximum flexibility. January to October 2019, excavator sales total of 196,200 units, up 14.40 percent, slightly exceeding early expectations, the main benefit of real estate started toughness, but in contrast to previous years sales point of view, 18 - 19 years of significant incremental reduced.

But in 2020 the growth rate under pressure, on the one hand is the replacement demand began to weaken, while the new March had started digging machine sales season will also be delayed. On the other hand by the epidemic and the factors affecting housing prices in cash flow, and operating real estate growth will face a decline in demand for the digging machine is unfavorable factors. If the new construction area of growth slowed overall domestic houses, the excavator industry demand will remain weak.

4.2.3.2 elevator equipment sector: less impact products

2019 January to October, domestic lift total output reached 955,000 units, up 14.40 percent, while the same period in 2018. The growth rate of only 4.7%. Contract demand point in time the elevator, about half a year in advance housing cap, so the elevator is real estate cycle of the product after new construction. The impact of the epidemic, the impact is relatively small elevator products, their performance in the following three aspects:

(1) Taking into account since the second half of 2017, domestic housing area growth continued to decline, while new construction area of continued high growth is expected in the next two years scissors between new construction and completion of the convergence, will lift demand in 2020 in maintaining the prosperity and benefit from the lifting of the order conversion rate.

(2) bring new housing construction real estate needs elevator, renovation of old infrastructure investment and recovery under this epidemic will also be conducive to demand the release of the elevator. Next three years, the demand for the transformation of the installation of nearly 1 million units per year. In addition to domestic gradually decommissioning the old elevator, the elevator domestic ownership has reached 6.27 million units, the replacement demand showed a rising trend year by year in the coming years.

(3) With the development of networking technology, intelligent elevator will also serve as a physical entrance to the building, and the Internet has become intelligent building data entry, enabling elevator media platform based on big data, interactive passengers, public places and indoor navigation mall information push and other functions.

From the perspective of real estate equity investment fund, the elevator industry and listed companies there are more opportunities for cooperation. On the one hand, the elevator industry can co-fund the company set up the real estate industry, to develop real estate projects in the region along with housing prices, not only to benefit from growth in contract orders, but also to share the investment value of the shares; on the other hand, the elevator industry companies currently market as a whole It was relatively stable, and covered board, small board and GEM, the SFC is currently refinancing under the new rules, can participate in a semi-market investment cooperation.

4.3 The current impact of the epidemic on the middle reaches of the industrial chain important industry segments

4.3.1 epidemic under construction industry changes

(1) earnings growth under pressure, medium-term steady growth is expected.

In the short term, the probability of a large outbreak bring some impact on the labor-intensive construction industry, the first quarter of 2020, real estate, infrastructure and manufacturing investment growth may be under pressure to bring construction and performance of enterprise revenue growth may slow, Short-term earnings expectations declined. After the impact of the epidemic, the company decided advantage of long-term supply-side factors still order delivery and financing ability, and therefore did not produce the epidemic nature of estimated impact on the construction industry,

(2) return to work in different degrees, the epidemic is still variable.

According to industry feedback based on listed companies, construction companies return to work after the holiday is expected to be generally better than planned postponement. On the one hand, for the prevention and control of epidemic in some areas may be limited resumption of construction companies and limit workers back to the city; on the other hand, construction companies for their social responsibility and pressure on the prevention and control of epidemic, more cautious and hesitant to return to work; in addition, workers It will be subject to certain restrictions on traffic rework objective.

Construction steel sector benefited under 4.3.2 epidemic

(1) fabricated steel Applications

The epidemic, the Vulcan Hill Wuhan, Raytheon Hill Hospital fabricated building construction highlights the advantages of short construction period, construction is expected to speed up the promotion of industrialization. Wuhan Vulcan Mountain, Raytheon Hill Hospital, with a total construction area were 34,000 and 75,000 square meters, can accommodate a total of 6000 beds. For fast, efficient construction, the two hospitals have adopted the way of light steel structure housing construction activities of the board, one of the prefabricated building application mode, the prefabricated construction methods with a high degree of ease of assembly, light weight facilitates transportation, noise insulation properties good, durability and other multiple advantages, can significantly shorten the construction period, improve construction quality.

Vulcan Hill Hospital where mainly Chinese construction steel components Science and Industry (formerly built in steel) production and processing, Raytheon Hill Hospital main production and processing of steel components by the China Metallurgical, Honglu. We believe that the Vulcan Hill, Raytheon mountain construction allows a greater degree of society as a whole saw a significant advantage fabricated building in a short period requirements, is its strong population wide publicity, is expected to facilitate assembly of the building in the future to speed up the promotion.

(2) Steel plate fabricated Prospects

Efforts to increase policy support:

'Prefabricated steel residential construction technology standards' in October 2019 formally implemented, supporting industries and more provincial policy way out; on the other hand, the end of the fourth quarter of 2019, the Ministry of Housing meeting pointed out that in 2019 the construction industry continued to deepen supply-side structural reforms , fabricated steel structure to carry out the pilot housing construction, promotion of new construction methods.

According to the China Construction Metal Structure Association data, 2016 steel application projects in commercial real estate, stadiums, factories projects accounting for up to 74.5%, accounting for only 4.1% of residential projects. Taking into account the residential house under construction accounted for 70%, steel residential very low permeability (Shandong, Sichuan, for example, as of the end of 2018 penetration rate <1%). But the Department of Housing and clearly separate residential construction in the pilot areas to promote the use of steel, Shandong, Hunan, Sichuan, Zhejiang has proposed pilot program and follow-up more areas is expected to launch a similar policy, Steel is expected to exceed the ceiling.

Residential real estate applications larger space:

We believe that the promotion of the pilot housing construction steel fabricated building more in line with the promotion of the mind, it can bring the advantages of prefabricated buildings. For steel fabricated building, which comprises using the construction process of steel as the main building structure, the building envelope materials, decoration, etc. can be produced by a shop-fabricated, the actual operation of the assembly can achieve very high (typically> 80%), construction normally not deliberately during operation to reach the assembly of the indicator, it is the 'most fitting' of the assembly building.

We expect that in 2020 after the end of the epidemic, with one hand, housing prices around the building housing the Bureau to promote policies fabricated building, it also needs to accelerate the design and construction of new projects, so as to achieve the goal of a quick sale. Therefore, the pilot housing construction steel steel applications open space, and enjoy the industry to grow dividends.

(3) Fabricated Steel Sector Investment

In the construction industry, the construction workers building materials testing, fabricated steel boom better than the industry itself. Among them, construction workers building materials industry in recent years to detect the size of more than 15% compound growth rate, as a leading company in the country CCIC Building Materials Group testing business integration platform, future performance will improve with market concentration. Secondly, along with labor costs and to enhance the upward trend in cement prices in 2020, the steel concrete structure relative cost advantage is gradually reduced.

Therefore, for the outstanding performance of listed steel companies, with the opportunity in 2020 to refinance the new regulations, real estate equity funds have cooperated PIPE investments. Meanwhile, the listed companies are expected to benefit from the future to enhance their production capacity and steel permeability, bring more value in return for the equity real estate investment funds.

4.4 The current impact of the epidemic on the downstream industry chain, an important industry segments

Transaction services industry under 4.4.1 epidemic changes

In the current outbreak lead to slower sales in the first quarter, second quarter, third quarter and hopes to sell fast money back, with a large data capacity extension off transaction service providers, will become the preferred partner of various future housing prices, also rely on various housing prices will become future sales channels.

Therefore, we believe, at the end of the outbreak, with a large data capacity and the extension off transaction capability transaction service providers, housing prices in the future will form a deeper influence, the future will have a better valuation of room for growth, real estate equity funds worth a potential subject of PE investments.

4.4.1.1 transaction service providers to accelerate the expansion of business scope

Since 2019, some cities Yishoufang intense market competition Yaohao, but second-hand housing market sentiment has become more intense. Chain key city of 18 second-hand housing transaction cycle are showing customers has been increasing trend, deal more difficult, with a look at the rising turnover ratio, the market entered a 'slow-paced era.'

In the slow-paced owners selling cycle stretched to Beijing market data, for example, chain of second-hand housing owners average turnover period of nearly 112 days, while the volume growth of Tianjin, Jinan, Wuhan, Nanjing and other cities, its transaction prices did not rise significantly . Under steady slow market, the buyer of the option will be bigger, stronger voice. Therefore, a large real estate brokerage platform as the Internet has a huge customer base the portrait data and open up trading service provider of online and offline, its earnings growth from traditional hand housing transactions extends to Yishoufang trading channel agent.

4.4.1.2 transaction service providers accelerate data iteration

(1) Trading data service providers the ability to continuously upgrade

Provide large data analysis on the real estate market in 2019 and the scope of freedom of services are significantly improved, in order to RealData for example, after the chain of home and shells to join the Big Data Transaction Services RealData upgrade to version 2.0 product, the scope of analysis can be selected as a custom coordinate 1-5 km near the point, the user can conduct a comprehensive analysis package, market and customer potential of the county, district, or a custom range. This provides a more powerful, easy to use, and more fit business scene decision support capability for the real estate development business.

On the one hand, by the richness of information Chibidaigou audience were rising, from the sale of the track to see with the final purchase, the analysis features of the user's age structure, family structure, customer base formation regions portrait from the final changes in the overall structure of the customer in advance to predict market demand changes in the body, to provide decision support for trading services platform.

On the other hand, can be given to the client terminal B, three institutional clients energized. One is to provide accurate, real-time data for data-enabled. Second, the researcher the ability to cure in product analysis energized. Third, enabling marketing, including positioning the upper and lower groups of tourists, stores broker channel network, precise matching and push.

(2) the transaction service providers to cooperate with the further development of housing prices

From the human to the rate and cost point of view, developers increasingly high degree of concentration in mature real estate market, professional and organized demand for new homes will be higher trading services. Therefore head for housing prices, due to the strong bargaining power of the brand, with a large selection of Internet real estate brokerage platform for cooperation without increasing costs while obtaining a strong ability to have underwritten the cost of sales and the extension off the ability of Internet real estate sales team, Days sales outstanding is further enhanced.

For this traditional trading service providers LaSalle Bank, a large Internet real estate brokerage platform that is a competitor, but also one of the causes of the decline in gross profit margin in 2019. It also Forced LaSalle Bank and other traditional trading services provider for change, the World Union to conduct cases, LaSalle Bank through 58, with the policy platform to sell and build new houses PMLS Union, committed to all aspects of real estate transactions in the business through.

Changes in the property industry operating under 4.4.2 epidemic

Property operations industry into the stock market and the incremental market, the incremental market and real estate investment and development, building construction are more closely related. After 2020, the new crown pneumonia outbreak, January 27 national health health committee held a 'community prevention' as the theme of the press conference, stressed the important role of community prevention. Our property management industry, the rapid response, China Property Management Association for the prevention and control of property management companies publish standardized operating guidelines,

The leading property management companies in the prevention and control plan, staff management, disease advocacy, access control, disinfection focus, focus on material support and other six dimensions, and demonstrates social play. The epidemic is expected to be relatively limited impact on the property management industry, long-term property management company to further highlight the 'last kilometer' service value, service stickiness and brand to promote the release of the brand value of the property management company, to create more value-added services to Overlay may.

4.4.2.1 In the short term have an impact on the cost of revenue

Other relatively higher degree of consumer-related industries, we believe that the epidemic for the property management industry is relatively limited impact, on the one hand relatively rigid property management income, and the economic fluctuations related to the epidemic is not high, on the other hand lead to the outbreak of the population flow reduction, home office, help to improve the service stickiness and word of mouth, to protect property fee collection rate. Short-term impact on the property management company's performance in the following four areas:

Epidemic prevention and control costs in the process of temporarily lifting (overtime pay, disinfection costs, material procurement, etc.);

In the duration of the epidemic will affect behavior causes expansion contract orders growth forced down;

Housing prices will delay the resumption of work are slowing development progress, which may affect the contract to convert the area in an area of the tube;

The case of field co-marketing and other non-owners of value-added services can not be fully carried out.

4.4.2.2 In the long term to accelerate the healthy development of the property industry

(1) turning vast ecological value-added services from four to defend a basic service:

First, this epidemic show a higher frequency of APP, owners of online group interaction will contribute to release the service stickiness and brand value of the brand of property management companies, owners and help improve customer satisfaction and perception of institutional clients degree (some owners even offered to donate the property management company supplies), and may be superimposed to create more value-added services. In particular, this epidemic, the property company strive to carry out O2O business, strengthen the response to the owners of non-standardized requirements by way of online + line, such as home economics, health, and other electricity providers, value-added services contribute to the future owners of the property will be further increase.

(2) Improve Efficiency, deepen personnel, the special division of scale:

Originally facing the property industry has been facing upward pressure on costs, 2013 - Property company continued to increase in 2017 in the management mechanism, service systems, intelligent home and improve staff efficiency, property hundred companies per capita in the area of the tube increased from 4921 square meters to 5913 square meters, more than 20%, per capita GDP increased from 92,000 to 140,000 yuan, an increase of over 52%.

And this epidemic, the property staff on duty during the Spring Festival to be less than usual, and therefore also test the degree of specialization in fewer personnel and Improve Efficiency, extent and property services in the business. Therefore, this epidemic will accelerate the expansion of the scale of specialization in the business of property services, promote normalization duty of each individual service, to promote property services business transformation platform to enterprises, individual business and reduce costs through economy of scale.

(3) enhance the market-oriented development capabilities to enhance the brand awareness:

During the epidemic, community property and done in each outbreak has become the talk of contrast, show a quality property in the process of prevention and control of service capabilities between the various owners to help enhance the owner's trust, brand reputation, to enhance the recognition of the market, providing support for its subsequent marketing. Late epidemic, significantly increasing brand awareness property management company, through its powerful ecological community service capabilities to get more confidence extension of the community, constitute a benign growth in the area of the base pipe, will be institutional investors, real estate funds give priority to cooperation in the underlying real estate investment company of the industrial chain.

(4) Capital market property sector outperformed other sectors:

During the epidemic, Hong Kong property management industry trend significantly better than other industries, in this outbreak, property stocks showed anti-cyclical and stability. We believe that, first, the Hong Kong market at the time of the advent of the epidemic, the risk of the release of more fully, the entire Hong Kong market's price-earnings ratio of about 9.5 times, at a 10-year low, lay the foundation for future growth in property stocks. Second, a growing number of listed property shares, gradually formed plate effect in Hong Kong, will increase attention sector, activity will increase.

4.4.2.3 excellent property management companies and investment cooperation

(1) Paradise Valley has cast Enterprise: Greentown Service (HK.02869)

July 2016 Paradise Valley real estate funds as the cornerstone of Greentown service Hong Kong IPO investors to HK $ 1.99 / share (equivalent to approximately RMB 1.71 yuan / share) held by Greentown services 117,024,000 shares, for a total investment of about 200 million yuan. As Greentown service an important strategic partner, Zhejiang Paradise Valley Real Estate Fund Management Co., Ltd. as the sole representatives of institutional investors are invited to attend the service in Greentown HKEx listing ceremony. The Greentown Global Offering services in IPO, institutional investors subscribed enthusiastically, showing that the market for the future development of services Greentown strong confidence.

Greentown service ranked No. 3 in 2019 the property scale middle finger hundred rankings, which manages the project has covered 137 Chinese cities, the national market share of 2.6%. Companies in major cities in the Yangtze River Delta market share ranked No. 1. The company projects targeting high-end, the average price of project management in major cities and property costs were higher than the market average of 38.1% / 50.3%.

2019 semi-annual report, 18.8% of the total revenue of the green city park service value-added services revenue, compared with 11.8 percent in 2013 to enhance; 2013--2018 Nian community value-added services revenue CAGR of 44.9%, much higher than the basic property services 22.0% increase speed. Benefit from the unit, the company's first half of 2019 the company annualized per unit area community value-added services revenue reached 7.8 yuan / square / year, unit gross profit up to 2.4 yuan / square / year, respectively, higher than other listed property company 111% and 33%.

Currently Greentown service development has entered a stage of steady growth relies on the extension of the implement and optimize multi-class value-added services, brand and service quality have constituted the core competitiveness of the company. In addition, we are more concerned about the green city services to create 'a happy life' system, increasing the number of people living Greentown living APP month, will become Greentown value-added services to optimize future service flashpoint performance development.

(2) Paradise Valley has cast Enterprise: Riverside Service (HK.03316)

March 2019 Paradise Valley real estate fund services work together Greentown, Riverside East Holdings common services to become Hong Kong IPO cornerstone investors. The participation in investment, Paradise Valley on the one hand is the value of a broad development space behind the property management and value-added services, on the other hand is convinced that Riverside service with its brand and service advantages, can continue to enhance its market position.

Riverside project to enhance the ability to quickly obtain the services of a stable support and marketing group at Riverside, Riverside service to achieve rapid development, 2015--2017 compound annual revenue growth rate of 48.3%, net profit compound growth rate of 123.8 percent growth for the Yangtze River Delta region leading high-end property services provider. The company projects targeting high-end, quality service and highly recognized, so the higher the average property management fees, and continued to rise in.

2015-2018 years, the company's total average property management fee increased from 3.39 yuan to 4.07 yuan per square meter per month; wherein the average residential property property management fees rose from 2.88 yuan to 3.92 yuan per square meter per month, the average property management fees higher than the industry average. Property services to Chinese hundred companies, for example, over the past four years, the average residential property property management fees are 2.24 yuan per square meter, 2.31 yuan per month, 2.30 yuan and 2.25 yuan.

Riverside current development services has entered its growth phase, 2020 February 17 issued positive profit alert, expected the year ended December 31, 2019, attributable to the equity holders of the company's consolidated net profit will be higher than in December 2018 31 Japan ended the year increased by more than 50%. Notice disclosure, consolidated net profit increase was mainly due to the Group's new projects in the number of tubes and pipes increased floor space, as well as owners and non-owners of value-added services value-added services revenues were up. We firmly believe that Riverside Service virtue of its brand, and service advantages, can continue to enhance its market position. Future, Paradise Valley will give full play to its advantages in terms of real estate finance industry alliance to create value for Riverside Community Services grafting service resources, sharing of resources.

Fifth, investment opportunities

Key areas of opportunity to develop high-quality projects

The new crown pneumonia epidemic as a sudden event, a significant effect on the real estate industry in the short term, the test of Housing prices in financial strength and ability to cope, but does not change the long-term trend of a steady return to a reasonable hub. With 'financial soundness, strong financial strength, rich abundant land bank, to the value of the high rate of' high-strength housing prices will continue to play a mainstay role, seize the opportunity in front of risk continue to expand market share. As a real estate private equity fund, we will seize the opportunity of this epidemic profound impact on the real estate industry, and actively with the strength of housing prices in key areas of the Yangtze River Delta, Pearl River Delta, Hainan, Sichuan, Chongqing, and free trade zones, etc., preferably high-quality real estate projects, by real estate equity fund jointly develop.

M & real estate development to accelerate the disposal of bad assets

Affected by the new crown pneumonia epidemic, from the get to, start, sales and other nodes after being forced to delay, a quarter of the original sales goal to have a greater impact, personnel and other costs are still spending, housing prices in the cash flow under pressure, in part capital chain tension where housing prices worse. In this case, will trigger more real estate acquisitions and disposal opportunities for non-performing assets, thus Paradise Valley real estate fund companies and leading enterprises, AMC fund companies to set up real estate mergers and acquisitions, to accelerate the integration of industry resources, real estate, form a powerful industry and capital joint.

Real estate industry chain industry segments PE, the cornerstone of investment opportunities outbreak

The new crown pneumonia epidemic also stimulate the real estate industry chain, part of the change in the industry, with explosive growth. Wuhan 'Vulcan Mountain,' 'Thor Mountain' hospital construction highlights fabricated building a short period advantage, building industrialization is expected to speed up the promotion; housing prices began to pay more attention to the promotion of online channels, online shopping and live with a look at technologies such as superposition and accelerate the online and offline sales channel integration and development platform; paradise Valley real estate team deep plowing upstream and downstream industry chain, real estate, have segments in construction, building materials, transaction services, property management and other effective mining and upgrading project value of investment capacity, will bring more investment PE, the cornerstone of value investing.

Outstanding real estate industry chain industry mergers and acquisitions of listed companies, set by the refinancing of cooperation

The new crown pneumonia outbreak, local governments are on the enterprise announced a series of economic policies. In the context of policies to encourage listed companies to accelerate the development, for jobs, real estate industry chain will further listed companies with outstanding management strength, integration of resources in the industrial chain, bigger and stronger. Paradise Valley real estate funds also continue to give full play to its advantages in terms of real estate finance industry alliance. Listed companies seeking to create value for industry mergers and acquisitions, to provide ancillary services set by the refinancing, sharing of resources.

Sixth, the risk warning

1, if the novel coronavirus pneumonia outbreak duration than expected, resulting in sales of housing prices continued to slump, industry financial pressures small room rate will bring the risk of funding strand breaks.

2, if further delayed start, the construction schedule is affected, then the chain segments of the industry sectors were negatively affected.

3, if buyers continue to demand the release of lower than expected, there is the future of housing prices further price cuts, price change in order to enhance demand, will lead to large-scale risk of impairment of housing prices, as well as upstream and downstream industry chain business performance is not up to expectations and should produce accounts receivable risk of impairment.


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