This year, the trend of "Hong Kong people going north" for consumption has become more popular in the Hong Kong living circle, and the "Hong Kong content" in Shenzhen on weekends has been continuously soaring. Statistics from the Hong Kong Immigration Department show that in the first half of 2024, the number of Hong Kong citizens "going north" to Shenzhen reached 44.66 million person-times, with an average of about 6 times per person.
Behind this consumption trend, the actual situation is that the Guangdong-Hong Kong-Macao Greater Bay Area has achieved closer interconnection and integrated development, and the "one-hour living circle" of the Greater Bay Area has become a reality. The high-quality life services in the mainland have brought great attraction to Hong Kong and Macao residents.
Among them, Shenzhen Futian Xinghe COCO Park has become the first choice for Hong Kong people to come to Shenzhen for dining, entertainment, and shopping. As a commercial benchmark project highly recognized by the market, Futian Xinghe COCO Park has formulated promotion strategies for "Hong Kong people going north", continuously iterating services, occupying the dividends of Hong Kong customers, and transforming traffic into stock, accurately grasping the consumption boom of Hong Kong customers.
This is inseparable from the meticulous operation of the Greater Bay Area commercial operation service provider - Xingsheng Business. It has taken root in the Greater Bay Area with COCO Park, COCO City, COCO Garden, iCO product lines, and has created a commercial layout across the country.
On August 29, Xingsheng Business (6668.HK) released its 2024 interim performance. The current industry has entered the era of stock competition, and the pursuit of high-quality development has become the general direction. From the performance of Xingsheng Business, it has shown a relatively stable operation by actively strengthening its business capabilities and exploring new market opportunities.
The gross profit is about 161 million yuan, and the profit is about 86.5 million yuan. In the first half of the year, cash and cash equivalents and short-term bank deposits totaled about 1.466 billion yuan, further increasing from the end of last year. The interim dividend is 0.048 Hong Kong dollars, with a dividend payout ratio of about 50%, injecting more confidence into shareholders and investors with practical actions.
What kind of strength does Xingsheng Business have to drive resilient growth? Combining this financial report, it is worth delving into it.
Continuous and stable operation, with certainty and growth
As a leading commercial operation service provider in the Greater Bay Area, Xingsheng Business has achieved stable growth by deeply deploying multi-brand shopping centers, providing property owners and tenants with comprehensive solutions including property management, brand management output, and whole rental services.In the first half of this year, Xing Sheng Business has won multiple top industry awards with its strong strength and outstanding performance in the commercial real estate field, obtaining official recognition from top industry media such as the China Index Academy, the National Housing Federation, the China Shopping Center Association, CCFA, and Ying Shang Network. The group and project dimensions have been verified by the industry, reflecting the further rise of Xing Sheng Business's brand strength and market reputation.
The commercial properties developed and owned by Xinghe Holdings are 100% operated by Xing Sheng Business. As the controlling shareholder of the group, it achieved stable operation in the first half of the year, maintaining the "three red lines" in the "evergreen" state. In June 2024, it was rated as AAA in long-term credit rating by the United Credit Rating, with a stable rating outlook. Xinghe Group has now obtained dual AAA credit ratings from United Credit Rating and China Securities Credit Rating, and has been honored for four consecutive years. This provides a solid guarantee for the business development of Xing Sheng Business.
Looking back at the financial report data, in the first half of the year, although the brand and management output services of Xing Sheng Business faced certain pressure, the entrusted management services and whole rental services both achieved significant growth, driving the overall revenue level to continue to improve. Among them, the revenue from entrusted management services increased by 10.37% year-on-year to 210 million yuan; the revenue from whole rental services increased by 72.32% year-on-year to 61 million yuan.
Specifically, in terms of project regional layout, Xing Sheng Business continued to promote the dual center of the Greater Bay Area and the nationalization strategic layout in the first half of the year, providing a solid foundation for its own performance to achieve sustainable growth. As of the end of June this year, Xing Sheng Business has provided services to 54 commercial property projects, covering 21 cities in China, with a total contract construction area of about 2.77 million square meters. There are 29 projects that have been opened and 17 projects under preparation.
At present, there are 11 projects that have been opened in Shenzhen, 5 projects that have been opened in Guangzhou, and 19 projects that have been opened in the Greater Bay Area. In the first half of the year, COCO Park was opened in the Health Port of Liwan District, Guangzhou, and Xinghe COCO Garden in Pudong, Shanghai, was successfully opened. Xing Sheng Business insists on opening high-quality projects, which will drive the performance to achieve steady growth.
Specifically, in terms of operational effectiveness, in the first half of the year, Xing Sheng Business's cumulative same-store sales increased by 8% year-on-year, and the cumulative same-store passenger flow increased by 16% year-on-year, continuing to maintain an upward trend. At the same time, the occupancy rate and collection rate continue to maintain a high level in the industry, and the number of cooperative merchants has further increased to more than 5,000, reflecting the brand strength behind Xing Sheng Business's commercial management services, which continues to attract customers.
Looking at the development trend of the industry, the head effect of domestic shopping centers is becoming more and more prominent. With the support of the gathering of advantageous resources, it will achieve "the strong are always strong", and it may be possible to look forward to the long-term business performance of Xing Sheng Business.
In the latest research report, Orient Securities pointed out that larger shopping centers have a richer brand combination, enough adjustment space, can continuously bring fresh content and experiences to customers, and continuously attract high-quality customer groups. At the same time, their risk resistance is also stronger, and shopping centers with larger sales volumes are less likely to experience a decline in sales.
Xing Sheng Business actively and cautiously layouts shopping centers with high commercial value. Its positioning and location have scarce attributes, and its competitive advantage is obvious, which indicates that future growth has sufficient stability and growth potential.Refining Operations to Achieve High-Quality Sustainable Development
To achieve high-quality development, it is essential for Starshine Commerce to focus on precision and refined operations, tap into consumer potential, and create new drivers for growth. With years of experience in the commercial operations field, Starshine Commerce has developed a comprehensive commercial management system that covers the entire industry chain and process. This system not only ensures the high-quality and efficient operation of ongoing projects but also attracts high-quality commercial resources, thereby forming a strong brand power.
Firstly, with its efficient resource integration capabilities, Starshine Commerce provides consumers with impressive and unique immersive experiences. In the first half of the year, it continued the "Fan Favorite Plan" and the "Crush On COCO" blockbuster festival IP; actively embraced government-enterprise collaboration to create a dual-city experience officer for Shenzhen and Zhongshan; followed the pulse of the times, crossed the top IP, and landed the DIMOO South China exclusive exhibition, the first Shenzhen exhibition of Zan Meng Lubi, and the first Shenzhen exhibition of the swimsuit girl ROSEE.
In creating benchmark projects, Starshine Commerce uses its keen business acumen to perceive new trends in Hong Kong consumer spending in the north. It promotes a series of promotional strategies such as Sino-Hong Kong official activities, special bus services, characteristic blocks, Hong Kong consumer special gifts, cooperation with leading platforms, and mainstream Hong Kong media placements, continuously iterating services, capturing the Hong Kong consumer dividend, transforming "traffic" into "retention," making Futian COCO Park the first stop for urban Hong Kong consumers, and developing Longgang Xinghe COCO Park to create a new highland for eastern Hong Kong consumers.
In terms of member operations, Starshine Commerce has been deeply exploring and continuously iterating. Since officially refreshing the member system at the beginning of the year, relying on the online member system of COCO CLUB and the linkage with merchants, the continuous optimization of points and additional rights, and the enhancement of SP marketing efforts, as well as the targeted issuance of various format coupons, Starshine Commerce has achieved significant improvements in member acquisition, retention, conversion, and repurchase.
In addition, Starshine Commerce also uses efficient digital tools to promote commercial innovation. For member operations, it enhances member operations through intelligent marketing, online shopping malls, and multi-channel deployment to achieve the transformation from traffic to retention. For merchant operations, it uses the "Star Butler" platform to simplify merchant services, optimize data management, and improve consumption conversion efficiency.
Overall, in the era of stock, focusing on refined operations is the general trend, and Starshine Commerce strengthens its internal cultivation. Against the favorable background of the country's efforts to boost the consumer market, it is expected to seize more new increments in the industry. With its excellent organizational management system and strong commercial operation capabilities, Starshine Commerce will continue to maintain a leading position in the industry and achieve its own high-quality sustainable development.
The Golden Opportunity for Value Investment, Strengthening the Industry Cycle
In addition to the high-quality development at the operational level, as long-term investors, they often pay attention to macro policies, industry trends, and company fundamentals to find industries and enterprises with long-term growth potential. Returning to the logic of value investment, how is the quality of Starshine Commerce as an investment target?
In terms of macro policy, the State Council recently issued the "Opinions on Promoting the High-Quality Development of Service Consumption," which makes comprehensive and systematic arrangements for the development of service consumption, aiming to further optimize and expand service supply and release the potential of service consumption. With the introduction of consumption promotion policies, the demand for consumer upgrading by residents is released, and enterprises represented by Starshine Commerce are expected to accelerate with the favorable policy, helping to improve the quality and expand the capacity of the consumer market.The growth rate of China's property management industry has declined, showing a trend of differentiation, with leading companies expected to continue expanding their advantages. Especially for Starshine Commerce, opportunities are embedded in challenges, providing a window of opportunity and a market environment for a comprehensive shift towards high-quality development. Starshine Commerce maintains steady growth, with increasingly healthy financial performance, and has the strength to navigate through industry cycles and clear the fog.
For many years, the company's current assets have accounted for more than 60%. As of the first half of 2024, Starshine Commerce's total assets amounted to 2.353 billion yuan, with current assets accounting for 64.24%. At the same time, cash and cash equivalents, along with short-term bank deposits, totaled approximately 1.466 billion yuan, a 3.9% increase from the end of 2023. The liquidity is becoming more abundant. Starshine Commerce demonstrates a stronger ability to withstand market risks and smooth out cyclical fluctuations.
For investors, Starshine Commerce has the sustainability of high dividends and high dividends, and has been committed to providing stable returns to shareholders, which is reflected in its continuous dividend policy.
The interim dividend for 2024 is 0.048 Hong Kong dollars per share, with a payout ratio of about 50%. Looking back at 2021-2023, the company's payout ratio has been climbing, with a dividend of 0.13 Hong Kong dollars per share in 2023, a year-on-year increase of 23.8%. The long-term stable performance has provided a solid financial foundation for the company's shareholder returns and will also support future dividend plans, continuously boosting the market's confidence in the company's future development.
It is worth mentioning that Starshine Commerce also has its controlling parent company - Galaxy Holdings, which provides strong support for its future development as a solid backing. The parent company, Galaxy Holdings, has maintained steady operations and excellent financial conditions for many years, and has ample land reserves in the Greater Bay Area. Relying on the long-term stable cooperation with Galaxy Holdings, Starshine Commerce has ample high-quality reserve projects, which will inject a high degree of certainty into the continuous growth of performance.
In conclusion, Starshine Commerce focuses on the Greater Bay Area, consolidates the position of benchmark projects, thereby achieving high-quality expansion of business scale, and actively and prudently layouts across the country. At the same time, Starshine Commerce relies on its strong refined operation capabilities, deeply cultivates brand strength with a strategy that keeps pace with the times, and strengthens the stability and growth of profitability.
Currently, under the logic of value investment, Starshine Commerce shows a clear growth path in macro policy, industry trends, and company fundamentals, with great potential for future profit growth. It can be expected that Starshine Commerce will continue to maintain an upward growth posture, continuously improve its intrinsic value, and create returns beyond expectations for investors.
- 12 July'24
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