Evergrande is finally selling its "most valuable" asset.

Author | Wang Hanyu

Editor | Zhang Fan

After the acquisition deal with Hopson Development was on the verge of completion but ultimately aborted, Evergrande Property Services has found another potential acquirer.

On September 12, Evergrande Property Services issued an announcement stating that it had received a letter of engagement from the joint and several liquidators of China Evergrande Group and CEG Holdings. The letter indicated that on September 9, the liquidators had received non - binding acquisition intentions for Evergrande Property Services from several interested parties.

This means that there is now more than one party interested in acquiring Evergrande Property Services.

Previously, market rumors suggested that China Overseas Group and a subsidiary of China Resources Group had participated in the bidding. In response, 36Kr sent letters to China Overseas Land & Investment, China Resources Land, and their associated listed property management companies, China Overseas Property Services and China Resources Mixc Lifestyle, to verify the authenticity of the rumors. As of press time, no confirmation had been received.

However, the emergence of a new potential acquirer clearly met market expectations. On the second day after the announcement, Evergrande Property Services' shares rebounded and once soared by more than 38%. Subsequently, the share price retraced, but it ultimately closed up 20.65% on that day.

The "Star Stock" Is Caught in a Valuation Quandary

Although market confidence has been boosted by the acquisition news, Evergrande Property Services' share price has been fluctuating around HK$1 recently. This is clearly far from its issue price of HK$8.8 and its peak price of nearly HK$20.

Currently, Evergrande Property Services has a total market capitalization of approximately HK$12.1 billion, a decline of HK$187.9 billion from its peak market capitalization of HK$200 billion. Recall that when it first went public, its market capitalization was second only to Country Garden Services' HK$126.9 billion among property management stocks.

However, from a performance perspective, Evergrande Property Services has performed reasonably well. The financial report shows that in the first half of 2025, Evergrande Property Services achieved an operating income of approximately RMB6.647 billion, a year - on - year increase of 6.9%; net profit was approximately RMB491 million, a year - on - year decrease of 6%; the gross profit margin and net profit margin were 18% and 7.4% respectively, down 2.2 and 0.6 percentage points year - on - year.

In contrast, the revenue growth rate of 63 listed property management companies declined by 0.5 percentage points to 4.1% year - on - year during the same period. The average net profit was RMB170 million, a year - on - year increase of 20%. The average gross profit margin and net profit margin were 19.4% and 7.2% respectively.

Source: CRIC Property Management

Specifically, in terms of the managed area, which is the main driver of property management companies' performance, as of the end of June this year, Evergrande Property Services' managed area was approximately 596 million square meters, ranking third among 63 listed property management companies that disclosed relevant data. At the same time, its cash reserve was RMB2.651 billion, a year - on - year increase of 20.83%.

Compared with the real estate development business, which has a high debt ratio and is in a downward trend, the property management sector, with relatively sustainable cash flow and profitability, is undoubtedly China Evergrande's highest - quality asset at present.

However, its operations have inevitably been dragged down by China Evergrande's liquidity crisis. The expansion of a property management company's managed area largely depends on the progress of its parent group's development business. The semi - annual report for 2025 shows that the conversion of approximately 150 million square meters of contracted projects from China Evergrande has stalled.

In fact, the collective decline in the valuations of listed property management companies in recent years is also due to the market's dim outlook for the real estate development they rely on.

Previously, from 2019 to the first half of 2021, as real estate industry regulatory policies tightened, property management companies, with their characteristics of light assets and stable cash flow, briefly experienced a wave of listings and often received high valuations of more than 30 or 40 times, becoming "star stocks" in the secondary market.

On the one hand, most property management companies are spin - offs from real estate developers. Establishing a property management company can be seen as an inevitable result of the further downstream extension of the industrial chain after the real estate developer has accumulated a certain project volume. Compared with the one - time residential sales business, the property management business, although with a smaller capital scale, is more stable and sustainable.

On the other hand, in the capital - intensive real estate industry, spinning off the property management sector for listing was also a financing channel that real estate developers focused on during that period.

However, due to the potential concern that listed property management companies would "transfuse blood" back to their real estate parent companies and the reality that the business expansion of the former depends on the development scale of the parent group, from the second half of 2021 to 2024, when real estate developers defaulted on their debts in large numbers and the high - turnover model was no longer sustainable, the valuations of property management stocks gradually declined. The price - to - earnings ratio dropped from an average of 39.5 times in 2020 to 11.3 in 2023. In 2024, the average price - to - earnings ratio was 11.9 times, still at a relatively low level.

Source: Ding Zuyu's Real Estate Review

Evergrande Property Services currently has a price - to - earnings ratio of 11.12 times, lower than the average level in the past five years. During its peak period in February 2021, its price - to - earnings ratio exceeded 100 times for many days.

Hidden Debts May Influence the Acquisition Outcome

Currently, the development and delivery progress of the real estate industry remains at a low level, directly affecting the scale expansion of property management companies. Therefore, it will still take some time for listed property management companies to rebuild investors' confidence.

Specifically, Evergrande Property Services has performed well in terms of performance, but its long - term valuation dilemma may be mainly due to the drag of its related party, China Evergrande. This is also the most important issue that potential acquirers and investors need to focus on at present.

CRIC Research believes that the disposal of related - party assets may lead to changes in Evergrande Property Services' related - business business model and a decline in profits. At the same time, it will weaken the company's brand trust and bargaining power in bidding, new customer acquisition, and existing customer renewal. This puts Evergrande Property Services at a disadvantage in market competition, and it faces pressure in new business expansion and customer maintenance.

Beyond its core business operations, related - party debts are an even greater hidden danger.

Previously, in October 2021, Hopson Development was interested in acquiring 51% of the issued shares of Evergrande Property Services held by China Evergrande, with a total transaction consideration of approximately HK$20.04 billion. However, the acquisition ultimately fell through because the two parties failed to reach an agreement on some "key terms."

At that time, market rumors suggested that the reason for the termination was that Evergrande Property Services had hidden debts that had not been clarified. Four years later, whether Evergrande Property Services still has hidden debts or guarantees and how the resulting disputes will affect the transaction price may be the key to whether this acquisition can be completed.

However, in any case, for investors, a new acquirer means new hope.

In August this year, market rumors suggested that China Evergrande's liquidators had hired UBS Group and CITIC Securities to find potential buyers for Evergrande Property Services. Judging from the market reaction at that time, Evergrande Property Services' share price rose 6.25% on the day the news broke and continued to rise 10.59% the next day, indicating the market's expectation for a potential buyer to step in.

Currently, although China Overseas Group and China Resources Group have not confirmed their acquisition intentions, if Evergrande Property Services is acquired by such large - scale central state - owned enterprises, it may have a chance to break out of the valuation dilemma.

CRIC Research analysis shows that a new buyer can use its own resources and advantages to help Evergrande Property Services solve the problems left by its related parties and improve its brand image. Large central state - owned enterprises such as China Overseas and China Resources, with their management experience, financial strength, and good brand reputation, can quickly improve Evergrande Property Services' financial situation, enhance its market expansion ability, and break through the current bottleneck in business development. At the same time, this will also contribute to the further disposal of China Evergrande Group's debts by realizing asset sales to repay some debts and relieve the debt pressure.

*Disclaimer:

The content of this article only represents the author's views.

The market is risky, and investment should be made with caution. In any case, the information or opinions expressed in this article do not constitute investment advice to anyone. Before making an investment decision, if necessary, investors must consult professionals and make decisions carefully. We have no intention of providing underwriting services or any services that require specific qualifications or licenses to the parties involved in the transaction.

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