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100 property management companies has increased from 16% in

2013 to 29.4% in

2016 (see figure 8). The operating scale of top

10 players are growing even more quickly, their market shares have increased from 4.9% in

2013 to 10.2% in 2016. Greentown Service , Colour Life Services (1778 HK, N-R), and China Overseas Property Holdings (2669 HK, N-R) are three Hong Kong-listed property management services companies and all rank within Top 10. Figure 8: Top

10 and Top

100 market shares from 2013-2016 Sources: China Index Academy, CMS (HK) Figure 9: Top

10 Property mgmt. service companies ranked in order of managed GFA (2016) Name Managed GFA (mn sqm) in

2016 Colour Life Services Group Co., Ltd. (彩生活服务集团有限公司) (1778.HK) 395mn sqm Vanke Property Development Co., Ltd. (万科物业发展有限公司) 360mn sqm Guangdong Country Garden Property Services Co.,Ltd. (广东碧桂园物业服 务股份有限公司) 200mn sqm Jinke Property Group Co., Limited (金科物业服务集团有限公司) 160mn sqm ChangCheng Property Group Co., Ltd. (长城物业集团股份有限公司) 150mn sqm Greentown Service Co. Ltd. (绿城物业服务集团有限公司) (2869.HK) 105mn sqm Poly Property Development Co., Ltd. ( 保利物业发展股份有限公司)(871893.CH) 100mn sqm China Overseas Property Holdings Ltd. (中海物业集团有限公司) (2669.HK) 100mn sqm Gemdale Property Management Co.,ltd. (金地物业管理集团公司) 80mn sqm Longfor Property Services Group Co.,Ltd. (龙湖物业服务集团有限公司) 41mn sqm Source: Company data, China Index Academy, CMS (HK) Most of the top

10 players are the property management arms of major property developers including China Vanke (2202 HK, BUY) and Longfor (960 HK, BUY) with diversified geographical coverage. These players have access to multiple funding channels with wide geographical coverage, together with on-going M&

As and strategic co- operations, we expect the scale of top-10 players to grow even faster than the growth of completed residential property inventory (4.4% CAGR in 16-20E) and their market shares to increase from 10.2% in

2016 to 15% in 2020E. Friday, September 29,

2017 To access our research reports on the Bloomberg terminal, type CMHK

5 Industry driven by urbanization and Increasing Disposable Income We expect the increasing urbanization in China to increase the number and size of cities, resulting in an increased demand for residential and other real estate projects, together with growing demand for property management services to manage the increased stock of properties. With reference to the National New Urbanization Plan (2014 C2020) (国家新型城镇化规划(2014C2020)), urbanization rate in China is estimated to increase to 60% by 2020. Additionally, we reckon the urbanization is set to drive the disposable income and hence the investment and consumption in city. According to the National Bureau of Statistics of the PRC, annual disposable income per urban capita grew from RMB15,781 in

2008 to RMB33,616 in

2016 with CAGR of 9.91%. We therefore expect Chinese citizens to be more willing to pay a premium for some high-quality products and services. The property man........