SYSWIN (NYSE:SYSW), a China based real estate service provider priced its IPO on 23rd November, 2010 at lower end of range at $7 per ADS, giving first day negative return of 11.4%.
Business Overview (from prospectus)
We believe that we are a leading primary real estate service provider in China based on transaction value of properties sold, brand recognition and geographic presence. According to China Index Academy, an independent research firm, we are the largest primary real estate service provider in Beijing and Northern China, based on transaction value of properties sold in 2009. In 2010, we were ranked second among the top ten real estate consultancy and sales agency service providers in China in terms of brand value, according to 2010 China Real Estate Research Report on Brand Value of Consultancy and Sales Agency Service Providers, an independent research report issued by China Real Estate Top 10 Committee, a reputable research task force jointly organized by Enterprise Research Institute of Development Research Center of the State Council of PRC, Institute of Real Estate Studies of Tsinghua University and China Index Academy. We currently have operations in 17 cities throughout China. Our compound annual growth rate, or CAGR, in terms of aggregate gross floor area of properties sold from 2007 to 2009, was higher than each of the four publicly listed China-based primary real estate service providers, and our employee productivity, as measured by net revenue per employee in 2009, was also higher than these companies, according to China Index Academy.
Offering: 9.6 million shares at $7 per ADS. Net proceeds of approximately $15 million will be used towards merger and acquisition activities; approximately $26 million towards business expansion
Lead Underwriters: Morgan Stanley (NYSE:MS)
Revenue increased from RMB282.2 million in the nine months ended September 30, 2009 to RMB431.8 million (US$64.5 million) in the nine months ended September 30, 2010...Cost of revenue increased by 39.8% from RMB97.8 million in the nine months ended September 30, 2009 to RMB136.7 million (US$20.4 million) in the nine months ended September 30, 2010...Gross margin was 68.3% in the nine months ended September 30, 2010, as compared to gross margin of 65.3% in the nine months ended September 30, 2009...Selling, marketing and administrative expenses increased by 73.3%, from RMB54.0 million in the nine months ended September 30, 2009 to RMB93.6 million (US$14.0 million) in the nine months ended September 30, 2010...Net income increased from RMB90.9 million in the nine months ended September 30, 2009 to RMB132.7 million (US$19.8 million) in the nine months ended September 30, 2010...
The primary real estate sales agency and consultancy services industry in China is highly competitive, particularly in the metropolitan areas in which most of the property development projects are concentrated and real estate industry is highly developed, such as Beijing, Shanghai and Shenzhen. Significant capital commitments would be required to compete on a regional or national basis, though the industry has relatively low capital commitment requirements for small operations, especially participants with existing relationships with property developers in certain cities or regions. Companies primarily compete for primary real estate sales agency and consultancy services business on the basis of the scope and quality of services offered, reputation and brand recognition, local expertise and agency commission rates. The three major players in the primary real estate service market in China are E-house (China) Holdings Limited (NYSE:EJ) with primary markets in eastern China and based in Shanghai; World Union Properties Consulting Co., Limited with primary markets in southern China and based in Shenzhen; and our company with primary markets in Northern China and based in Beijing. All three players are seeking to expand their operations nationally. In addition to these national competitors, we also compete with local players in each of the 17 cities in which we have established operations. For example, in Beijing, we also compete with B.A. Consulting and the local operations of Centaline Property Agency Limited.