Transfering from NEEQ to the Hong Kong Exchange, China’s biggest real estate SaaS company is now available for global investors.
Ming Yuan Cloud (00900:HK) has been approved for an IPO on Hong Kong Exchanges and is available for the public. The 20-year-old company was traded on NEEQ from 2015 to 2019. Offering ERP and SaaS solutions to real estate developers, Ming Yuan Cloud has the largest market share of around 25% in China by its contracted sales value.
Ming Yuan Cloud focuses on the real estate and provides SaaS (Software-as-a-Service) and ERP (Enterprise Resources Planning) services to the industry. Cloud-based services cover from marketing, property management to real estate development. From its statement, over 90 out of China’s top 100 property developers are its clients, contributing 42% of total revenue in 2019. Ming Yuan Cloud’s revenue increased from CNY 580 million in 2017 to CNY 1,264 million in 2019.
For all SaaS companies, retention is a critical index to indicate their capability of making profits. With respect to the top 100 property developers, ERP solutions and SaaS products' revenue retention rates were 149% and 138% respectively in 2019, while the customer account retention rates were 87% and 96%.
Real estate development in China is consolidating as the CR10 increased from 17% in 2015 to 27% in 2018. Ming Yuan Cloud’s revenue retention rates echoed to the consolidating tendency as the revenue retention rate is relatively high with respect to the top 100 property developers; customer account retention is 87%.
China’s real estate industry has been soaring throughout this century. The commercial housing’s GFA (gross floor area) increased by 8,938 km^2, around 11 New York City size. The real estate developer CR4 further expanded in China. For instance, the real estate titan Country Garden (02007:HK) reported revenue growth of 28.18% in 2018-2019 from CNY 379.08 billion to CNY 485.91 billion. Behind developers’ optimistic financial numbers, the increasing commercial housing projects offer a ground for real estate SaaS to grow. Vertical SaaS services providers like Ming Yuan Cloud can benefit from the growing industry.