China Guo Xin Service Holding Limited submitted its application for a main board listing on the Hong Kong Stock Exchange on September 30, 2025, marking its debut in the capital markets.

Founded in 2006, Guo Xin Service is a comprehensive property management and agency service provider, primarily operating in Guangdong and Hunan provinces. Its business covers three main segments: property management services, property agency services, and value-added services. Following the acquisition of Hunan Zhida Property Management at the beginning of 2024, the company successfully expanded its operations into Hunan province.

From a financial perspective, Guo Xin Service has seen rapid revenue growth in recent years. From 2022 to 2024, revenue increased from 88.12 million yuan to 196 million yuan, with a compound annual growth rate (CAGR) of 49.1%. However, this high growth rate showed a clear slowdown in the first half of 2025, with revenue rising only 8.6% year-on-year to 89.1 million yuan.

Of particular concern is the company's phenomenon of “increasing revenue without increasing profit.” In the first half of 2025, Guo Xin Service's net profit decreased from 14.1 million yuan in the same period of 2024 to 12.2 million yuan, a decline of 13.6%.

At the same time, both the company's gross profit margin and net profit margin have shown a downward trend. The gross profit margin fell from a high of 44.0% in 2023 to 33.3% in the first half of 2025; the net profit margin declined from 22.9% in 2022 to 13.7% in the first half of 2025, a decrease of 9.2 percentage points over two and a half years. This change reflects ongoing pressure on the company in terms of cost control and profitability.

Guo Xin Service is significantly reliant on its controlling shareholder, Guo Xin Group. From 2022 to 2024, the percentage of revenue sourced from the controlling shareholder was 83.6%, 83.5%, and 55.3% respectively, with a still high dependency of 48.7% in the first half of 2025.

Looking at the revenue generated from properties developed by the controlling shareholder, this percentage is even more astonishing: it reached 100% in 2022 and still stood at 68.7% in the first half of 2025. Such a high level of reliance means that the company’s performance is deeply tied to the operational status of its parent company; any decline in the parent company's project development or delivery capabilities would directly impact the stability of the company's performance.

In terms of operational capabilities, Guo Xin Service's trade receivables exploded from 43,000 yuan in 2022 to 30.2 million yuan by June 2025, an increase of over 700 times. The accounts receivable turnover days expanded from 4 days in 2022 to 111 days by June 2025, and the turnover days for receivables from related companies also increased from 119 days to 210 days. This trend indicates a significant deterioration in the company’s ability to collect payments, extending the time funds are tied up and potentially putting pressure on cash flow.

Currently, the property management industry in China is highly fragmented, with over 350,000 property management service enterprises leading to intense competition akin to a "red ocean." Moreover, policy uncertainties, such as government-guided pricing for initial property management fees, have limited the pricing power of enterprises. As a labor-intensive enterprise, the continuous rise in minimum wage increases the pressure on profit margins.

Additionally, Guo Xin Service's business is highly concentrated in Guangdong and Hunan provinces. By the end of June 2025, all 42 of the company's property management projects were located in these two provinces. This concentration makes the company's operations vulnerable to regional economic fluctuations and policy changes, lacking the resilience associated with a national business presence.

Guo Xin Service’s IPO is being solely sponsored by Fosun International Capital. The company plans to raise funds through the listing to support market expansion, business diversification, and potential acquisition opportunities. However, in the current context of strict scrutiny from the Hong Kong Stock Exchange regarding property stocks, its high dependency on the parent company's business model, declining profitability, and worsening receivables situation may become focal points during the review process.

This IPO represents a critical step for Guo Xin Service in addressing industry challenges and seeking growth breakthroughs. While the company holds a certain regional market position and has demonstrated short-term performance growth, whether it can leverage the capital market to mitigate concerns amid accelerating consolidation in the property management industry remains to be seen.