One of China’s largest property developers is now carrying a new brand after COFCO Property (Group) Co. Ltd announced on March 1st that it would change its name to Grand Joy Holdings Group Co., Ltd.
The rebranding of the Shenzhen-based firm, which is China’s 29th-largest developer by sales, was announced soon after COFCO Real Estate completed the RMB 14.76 billion ($2.15 billion) acquisition of its Hong Kong-listed commercial real estate division, Joy City Property on January 28th.
The new branding will applied to all of the company’s projects, with COFCO’s portfolio of Joy City malls now to be renamed as Grand City, and the group’s office, hotel and residential projects also to adopt the new name.
Grand City will now be the sole real estate platform of Beijing-based COFCO, the largest food processor and manufacturer in China. The developer’s ticker symbol will also be updated from COFCO Property to Grand Joy, although it will still use the same 000031 stock code, according to the company statement.
COFCO Property explained that the name change accords with the company’s efforts to increase the value of its core brand.
Completing a Year-Long Acquisition
COFCO first touted the plan to combine its two real estate units – Shenzhen-listed residential developer COFCO Property and Hong Kong-listed commercial real estate developer Joy City Property — in January 2018, as a part of a company-wide restructuring program following Beijing’s call to make state-owned enterprises more efficient.
Under the plan, COFCO Property would pick up a controlling 64.18 percent stake in Joy City for HK$14.76 billion ($2.35 billion) from Vibrant Oak Ltd, a wholly-owned subsidiary of COFCO. In return, Vibrant Oak would receive 2.14 billion shares issued by COFCO property.
The proposal was finally approved by the China Securities Regulatory Commission (CSRC) in December after having been initially rejected by the regulatory body on the grounds that the valuation price of the target asset lacked “justification and a logical base.”
Injecting Commercial Assets into Residential Business
The acquisition of Joy City Property injects valuable commercial real estate assets into the core business of COFCO Property, with the company saying they expect the integration of its residential and commercial divisions to release synergistic effects.
Ranked 29th on China’s Top 100 builders list, COFCO Property lags behind other state-backed developers such as Poly Property Group, China Overseas Land and Investment and China Resources Land in terms of its sales and market presence.
The Shenzhen-listed firm has traditionally focused on residential developments in and around Beijing, Shanghai and Shenzhen, but home sales in first- and second-tier cities have slowed significantly as the government has imposed tightening measures to rein in an overheated market.
COFCO Property recorded total sales revenue of RMB 14 billion in 2017, down 22.1 percent from the previous year’s RMB 18.02 billion, according to its financial statements. As of June 2018, the developer had RMB 73.12 billion in debt, with total assets of RMB 85.4 billion.
Absorbing a Top Five Commercial Developer
Where COFCO has struggled, Joy City has prospered, ranking as one of China’s top five commercial real estate brands in 2018, with the developer’s projects winning a number of accolades from the International Council of Shopping Centers among other bodies.
According to an audit report prepared by Ruihua Certified Public Accountants, Joy City’s 2017 revenue would account for 45.39 percent of the business income and 48.75 percent of the operating profit of the merged company, indicating that the commercial real estate developer has become a core asset of COFCO Property.
Last year, Joy City accelerated its pace of expansion by opening a total of one new commercial project each in Shanghai, Hangzhou, Kunming and Xi’an.