TIMES NEIGHBORHOOD (9928 HK) Acquired Southwest’s leading company to expand coverage December 29, 2020 227

PSR Recommendation: BUY Status: Maintained
Target Price: HKDHKD14.91

Investment Summary
On December 14, 2020, the company announced that it intends to acquire 49% of Chengdu Holytech Technology Co., Ltd.’s equity. After the completion of the acquisition, Holytech will become an associated company of the company and be recorded as an investment project of the company. The target acquiring company wholly owns Chengdu Holytech Property Co., Ltd., which provides property management services including residential properties, commercial properties and other types of properties, which include government office buildings, tourist attractions, etc. At the same time, Holytech also provides urban public services, including city appearance and order ancillary management services of Pengzhou City, Sichuan Province of the PRC, etc. The total consideration is approximately RMB 297 million, corresponding to approximately 14x P/E for the company in 2019.
Target company
Chengdu Holytech Property Co., Ltd. was established in 2007 and initially provided property management services for Chengdu Zhixin Industrial Group Co., Limited (Chengdu Zhixin Industrial Group Co., Ltd.). Holytech has been deeply involved in southwestern China and is a leading local enterprise. Project under management covers 18 provinces and cities across the country, totaling 155. GFA under management is about 18.52 million square meters, among which residential properties, commercial properties and other types of properties are GFA under Management calculations accounted for 82.1%, 11.2% and 6.7% respectively. The company currently has 30 projects reserve, with a reserve GFA of approximately 8.18 million square meters, and an average conversion period of 1-2 years.
We believe that through the acquisition of the target company, the company can further expand the company’s business scale and market scale in the field of property management services in Southwest China. The target company’s project under management is mainly concentrated in the Southwest. According to the geographical distribution of GFA under management, the Southwest, East China, Northwest and Central China account for 83.5%, 9.3%, 4.7% and 2.5% of GFA under management respectively. TIMES NEIGHBORHOOD has been focused on the Greater Bay Area and has begun to expand into different regions in recent years. On June 30, 2020, TIMES NEIGHBORHOOD has a reserve GFA of 1.671 million square meters in the southwest region. After the acquisition, the company can rely on the target company’s related parties and its strong external expansion capabilities for the development of the southwest region.

About the author

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Timothy Chong
Analyst
Research

Timothy Chong received Bachelor’s Degree with first class honor in Banking and Finance from University of Leicester. He is currently studying Master of investment management in Hong Kong Polytechnic University. Before joining Phillip Securities, Timothy worked at BOCOM international and he is equipped with years of experience in the capital market. Timothy is now a licensed research analyst at Phillip Securities and covers Consumer / Property Management sectors.

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