Qingke Apartment is on the market.
Editor’s note: This article is from WeChat public account: Hexun Real Estate, (ID: hexunhouse) author: Xie Min, authorized reprint
After the National Day, the third largest long-term apartment in China, Qingke Apartment submitted a prospectus to the US Securities Regulatory Commission and became the first long-term apartment company to disclose the prospectus. Tsinghua Apartment is expected to land on Nasdaq with “QK” as the transaction code, and plans to raise approximately US$100 million to expand the number of properties, investment technology, infrastructure and general operations. Morgan Stanley and CICC will jointly act as the underwriters of this IPO.
Since the establishment of Qingke Apartment, the valuation has been rising. After receiving more than 4 million angel investments from Newport Ventures in early 2013, it won the A-round of 40 million RMB in the morning of September. In 2014, after one year of hard work, Qingke once again won the competition. Letter Chuang and other institutions voted for 30 million US dollars.
In 2018, the c-round financing was completed, and the total amount of four-round equity financing of Qingke Apartment exceeded 100 million US dollars. According to the prospectus document, the largest external investor of Qingke Apartment is Kaixin Capital, with a shareholding ratio of 28.1%.
With the rounds of financing, the valuation of Qingke has also risen sharply, from 4 million yuan, 40 million yuan to over 200 million yuan. So, is Green Customer really worth so much money?
High proportion of associated debt
Combing the prospectus of the Green Apartment, you can be amazed that there is a high proportion of debt associated with Green.
The prospectus revealed that the four debtors of Qingke have direct or indirect contact with Jin Guangjie himself. In the past three years, Qingke has continuously purchased equipment and logistics services from Shanghai Xulong Trading Co., Ltd., an entity controlled by the actual controller Jin Guangjie, to purchase value from Shanghai Qingji Property, a company controlled by the non-directors and executive management of Qingke. Service and research and development services. As of 2017 and September 30, 2018, Qingke owed a total of 9.7 million and 31.5 million yuan in Xulong trade. As of June 30, 2019, the amount owed was 1.3 million yuan. In addition, Jin Guangjie, as Qingguangong Intelligent Technology Co., Ltd., is the actual controller of 100% of the shareholding ratio. As of September 30, 2017, the arrears were 20.6 million yuan.
The other Shanghai Laiguan Industrial, which has debts with Qingke Apartment, is the outsourcing company responsible for the management of Qingke Apartment. It is also the entity controlled by the non-director and executive management of Qingke. Close connected transactions expose the company’s suspicion of transferring assets and funds to affiliates. At present, Qingke does not provide pricing basis for related related transactions.
Heshang Real Estate interviews Qingke, Jin Guangjie and his parentsThe necessary reasons for the company to provide loans, and how the company can avoid expanding such loans after listing, in order to reduce the damage to minority shareholders. However, the latter did not respond to this, but only stated in general terms that all publicly disclosed financial statements prevail.
But the information disclosed in the prospectus makes the objectivity and authenticity of the company’s valuation questionable.
According to public reports, the BC round of financing for the Green Apartment has the participation of New Venture Capital. Kaixinbao’s public business registration information shows that Qu Chengcai, the vice president of Qingke, actually has another identity, one of the shareholders of Newcomer Langfan. Newson Langfan is also a venture invested by Newport Venture Capital.
So, will Xinxin’s investment in Qingke be related to the shareholder status of Qu Chengcai’s New Zealand Langfan valuation? Does this ultimately affect the valuation of Qingke in the BC round? Hexun Real Estate used the telephone and mail to inquire about Qu Cheng, and did not get the explanation of the problem.
Liann Year Loss
The valuation of Tsinghua Apartment was questioned and related to the company’s poor financial performance.
The prospectus shows that in FY2017, the net profit of Qingke Apartment was -245 million, and the net profit for FY18 was -4.99 billion. By the end of June this year, the net profit was -3.73 billion, compared with last year. In the same period, -323 million yuan was still 40 million yuan lower.
The loss in successive years has put the company under pressure to be insolvent.
The total assets of Qingke Apartment are only 2.03 billion yuan, but the total debt is as high as 2.7 billion yuan. In reality, Qingke has been “insolvent.”
The tightness of funding can also be seen from the slowing pace of its expansion. When completing the C round of financing, Qingke had proposed that the number of listings exceeded 120,000 and the revenue reached 1.2 billion. Because of the profit balance of 120,000 rooms, only by breaking this number can companies achieve profitability.
But the prospectus shows that the growth rate of Qingke Apartment began to stagnate in 2019. As of June 30, 2019, Qingke Apartment disclosed that it supplied 97,721 rooms, which is only 7% compared with 2018.
In fact, the long-rent apartment industry in which Qingke is located is currently entering the “cold winter”. On the same day that Qingke Apartment submitted the prospectus, Henan Yueru Apartment has transferred all the shares to Suntech Company due to business and financial pressure. Throughout 2019, as many as 25 parents rented apartments that went bankrupt due to broken capital chains and poor management.
In July 2019 alone, six apartments announced their withdrawal. Such as Nanjing Yuheng Apartment, Xi’an Wanchao, Hangzhou An Leisure Residence and so on. Some large-scale housing companies have begun to take a cautious view of the long-term apartment business. Lands, Ocean and other real estate companies have divested their long-term rental business. Vanke, Country Garden and World Bank have suspended the expansion of their long-term business.
Jin Guangjie once said that long-term rental apartments are a small profit industry. If you want to live, you have to constantly find money to expand. Intense competition in the marketThe company continues to expand in size to preserve and consolidate its existing market position.
In the past two years, Qingke has lost a negative net profit of $11, and forced companies to urgently seek secondary markets to inject new capital into the development of apartments.
Going to the US IPO may be the only way to get the most out of it. Only in this way can you win a chance.
China version of We Work?
However, the timing of the arrival of the Green Apartment is not a good time.
We are also part of the shared real estate WeWork, and the previous valuation was as high as $47 billion.
However, the IPO of the New York Stock Exchange this year has finally made it look like it.
This star-studded company in the shared office field submitted a prospectus in August this year. It was originally planned to raise $3 billion, but investors’ doubts were caused by the mismatch between profitability and high valuation.
From the perspective of the profitability of the prospectus, WeWork has accumulated a net loss of $3.291 billion for three years from 2016 to 2018. Due to poor profitability, WeWork was constantly being pushed down by the issue price when it was issued. In the end, they had to give up the initial public offering, and the valuation of the stock has fallen to between 10 billion and 12 billion dollars.
The green customers who are very similar to WeWork in the business model and development process obviously have a high probability, and they are also on the way to this listing in the US.
As the largest number of parents renting apartment companies in China, if the final listing of Qingke Apartment fails, it will inevitably have a huge impact on the entire long-term rental apartment market.
The long-rental apartment giants who use capital to promote rapid “blowing” will also be greeted with a cruel shuffle in the same way as sharing bicycles, taxi software and video sites.