The principal activities of the Group are development properties for sale, property investments and management, hotel operations and the provision of construction, decoration services and other property development related services in the PRC.
The Group's profit attributable to shareholders for the 6 months ended 30-06-2019 amounted to RMB 12.87 billion, an increase of 43.2% compared with previous corresponding period. Basic earnings per share was RMB 1.8362. An interim dividend of RMB 0.129 per share was declared. Turnover amounted to RMB 45.85 billion, an increase of 4.7% over the same period last year, gross profit margin down 9.9% to 38.2%. (Announcement Date: 20 Aug 2019)
Business Review - For the six months ended June 30, 2019
In 1H 2019, the Group realized a consolidated turnover of RMB45.85 billion, profit attributable to the owners of the Company amounted to RMB12.73 billion, core profit attributable to owners of the Company excluding revaluation gain from investment properties amounted to RMB8.11 billion, the Group’s earnings per share achieved RMB1.84, of which RMB1.17 per share were core earnings. As of 30 June 2019, the net assets per share amounted to RMB20.81, representing an increase of 4.2% comparing to the end of 2018.
The Board has resolved to declare an interim dividend of RMB0.129 per share (equivalent to HK$0.144 per share), up 17.3% comparing to the interim dividend of 2018.
The Group attaches great importance to consistent shareholder value creation and pursues long-term sustainable growth with a balanced scale, risk and return model.
Through precise investment, efficient operation and further improved quality of product and service, the Group realized RMB36.61 billion development property revenue during the reporting period, up 0.3% YoY, with gross profit margin at 36.0%, 12.6pt lower YoY due to mix change in booked projects.
As of 30 June 2019, the Group’s investment properties in operation had a total GFA of 9.50 million square meters, leading the market in scale, with 22 MIXc/MIXc World malls and 13 MIXc One/Hi5 malls in operation and 48 projects in pipeline. Besides, the Group had 27 asset-light shopping mall projects, of which 18 were in operation and 9 were in pipeline.
In 1H 2019, the Group’s turnover from investment properties realized a YoY growth of 30.4% to RMB5.70 billion, of which turnover from shopping mall business amounted to RMB4.29 billion, turnover from office business amounted to RMB0.69 billion and turnover from hotel business amounted to RMB0.72 billion, up 39.5%, 11.9% and 5.6% YoY respectively.
In 1H 2019, Anshan MIXc One and Wujiang MIXc One were opened at 99% and 96% opening rate respectively and performed well after their openings. Another 8 shopping malls will come into stream for operation in the second half of this year, which will further scale up the Group’s investment property portfolio.
In 1H 2019, the Group continued its market penetration strategy and proactively replenished 39 land parcels with total land premium of RMB82.06 billion (of which attributable land premium was RMB52.70 billion). Total GFA acquired was 10.21 million square meters, up 24.8% YoY, of which 9.36 million square meters were for development properties and 0.85 million square meters were for investment properties. During the reporting period, the Group tapped into 5 new cities including Zhangjiakou, Shanwei, Yibin, Yichang and Chongzuo.
As of 30 June 2019, the Group had expanded its geographical exposure to 75 cities worldwide with a total land bank GFA of 67.37 million square meters, sufficient for the Group’s next 3 years development, of which 57.67 million square meters were for development properties and 9.70 million square meters were for investment properties. Land bank GFA in tier 1 and 2 cities accounted for 84.6% of total, such high quality land bank matches well with the Group’s business model.
X STRATEGY AND INNOVATIVE DEVELOPMENT
During the reporting period, the Group further crystalized its “2+X” business model by focusing on urban, consumption and industrial upgrade and transformed into an integrated operator in city investment, development and operation by promoting innovations and synergies in business sectors including urban redevelopment, property services, city development and operation, senior housing, leasing apartments, industrial funds, culture and sports, cinemas etc..
The Group takes an active part in urban redevelopment projects to meet the endogenous needs in city devolvement with focus in core cities in “Guangdong-Hong Kong-Macao Greater Bay Area”, and has gradually gained market influence and brand recognition. As of 30 June 2019, the Group had followed up with 46 urban redevelopment projects in Shenzhen, Guangzhou, Dongguan and Guangxi, of which 18 key projects had a total planned GFA of approximately 23.60 million square meters.
Property management business has made great efforts to improve customer satisfaction, and has actively expanded its business by acquiring high-quality projects in tier 1 and 2 cities, while steadily promoting the intelligent transformation with continuous experiments in smart communities and smart properties.
Senior housing business is committed to provide high quality medical care and healthcare services to high-end customers, targeting market in 5 metropolitan clusters and pursuits for operating capability improvement and stable business growth.
In compliance with the national strategy to support rental housing market, the Group has acquired quality projects in core cities with prime locations for leasing apartment business. At present, leasing apartment projects in operation has realized decent rental income and occupancy rate. The Group will gradually build up its leasing apartment business with quality scale growth.
Business Outlook - For the six months ended June 30, 2019
In the second half of 2019, facing challenges from the ever-changing global economic and political environment, the Group will endeavor to deliver “high quality, high efficiency, low risk” growth as committed to shareholders through innovative reforms to improve quality and efficiency to empower growth engines.
For development property business, the Group will further participate in the urbanization progress to achieve quality growth by precise investment, high efficient operation, and continuous focus on improvement of product and service quality.
For investment property business, the Group will further improve operation efficiency and return profile by seizing the new retail trend, embracing new technologies in internet and communications, exploring digital transformation, and improving off line customer experience. Meanwhile, the Group will scale up and keep its leading position in China by exploring opportunities in both primary and secondary markets through diversified channels.
For X strategy, with a focus on the urban, consumption and industrial upgrade trends, the Group will actively foster innovative businesses, explore new profit engines, with a strategic target to transform the Group into an integrated operator in city investment, development and operation.
Source: China Res Land (01109) Interim Results Announcement