Onewo, the property services management arm of Shenzhen and Hong Kong-listed China Vanke, provides community space living consumption services, commercial and urban space integrated services and artificial intelligence of things (AIoT) and business process as a service (BPaaS) solution services.
Onewo’s key product is “Onewo Town +”, which the company describes as an “industrial interconnection ecology”. Onewo Towns are selected sub-districts which bring together the company’s managed properties and facilities across several spaces.
“Within a geographical space of a 3km radius, we break through the walls of traditional residential properties and enhance service efficiency through systematic changes made by intelligent internet of things (IoT) hardware … In terms of data, the number of Onewo Towns increased from 459 to 584 in FY2022,” says Onewo in its FY2022 ended December 2022 results announcement.
We like Onewo for its large proportion of cash assets, which make up 36.2% of its total assets. This is the highest among the top 10 stocks featured here, with the second-highest stock in cash over total assets coming in a far second. A company with excess cash means that it is self-sufficient and is more likely to tide through any potential crises such as the Covid-19 pandemic. As at Dec 31, 2022, Onewo’s cash and cash equivalents stood at RMB13.35 billion ($2.59 billion).
We also like how Onewo is seeking to reduce its dependence on transactions that are connected with its parent company, Vanke, and is also looking to diversify its customer base. For instance, through its brand, Cushman & Wakefield Vanke Service, the company has also become a provider of property management services for leading names in the tech, finance and high-end manufacturing industries. In FY2022, the revenue from its property and facilities management services provided to third parties amounted to RMB6.40 billion.
In March 2022, following a set of poor results from impairments, China Vanke announced it would boost its annual dividend payout ratio to 50% of earnings from 35% in 2020 and buy back up to RMB2.5 billion worth of shares. The Shenzhen-based developer also disclosed that Chinese regulators had approved the spin-off of Onewo as a fresh listing in Hong Kong, to raise new funds for its parent company. The company’s IPO also had six cornerstone investors — including Temasek Holdings — who took up about US$276 million ($368.4 million) worth of shares based on the midpoint of the estimated issue price range.
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Priced at HK$49.35 per share, Onewo’s initial public offering (IPO) raised about HK$5.8 billion. However, on its first day of trading last September, Onewo closed 6.8% lower on the Hong Kong Stock Exchange (HKEx). While Onewo recovered to a high of HK$56.15 ($9.54) in January, at current levels, it remains significantly below its IPO price. As at April 18, Onewo shares closed at HK$36.80, which is above its NAV of HK$15.70 as at Dec 31, 2022.
In FY2022, Onewo reported revenue of RMB30.11 billion, representing a y-o-y growth of 27%. Of this, RMB16.58 billion was generated from the community space living consumption services, up 26% y-o-y; RMB11.14 billion was generated from the commercial and urban space integrated services, up 28.2% y-o-y; and RMB2.38 billion was generated from the AIoT and BPaaS (Business process as a service) solution services, representing a 28.5 y-o-y increase.
Gross profit rose 5.2% y-o-y to RMB4.23 billion, gross profit margin was 14.1%, while the adjusted gross profit margin was 15.9%. Ebitda rose 7.6% to RMB2.84 billion but net profit fell 7.5% to RMB1.59 billion.
Recurring income came in at RMB23.35 billion for the year, up 351% y-o-y; and adjusted gross profit was RMB3.23 billion, up 36% y-o-y. The dividend works out at 10% of its ebitda or RMB0.241 per share (including tax). According to a Bloomberg Intelligence report, Onewo could see earnings growth from the expansion of its digital services and Onewo Town. “The broad client base of its BPaaS segment might deliver an earnings boost despite the feeble market. Its peer-trailing residential margin could improve with the Onewo Town initiative, fostering cross-project synergy,” says analyst Yan Chi Wong.
In addition, the recovery of China’s property sector could also be a positive catalyst for the stock.
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