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Public company info - Baoye Group Co. Ltd. - H Shares , 02355.HK
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Baoye Group Co. Ltd. - H Shares, 02355.HK - Company Profile
Chairman Pang Baogen
Share Issued (share) 212,000,000
Par Currency Renminbi
Par Value 1.0
Industry Construction & Decoration
Corporate Profile Business Summary: The principal activities of the Group are the provision of construction services, sale and installation of building materials and development and sale of properties in the PRC. Performance for the year: For the year ended 31 December 2019, the Group achieved a consolidated revenue of approximately RMB24,799,413,000 (2018: RMB23,230,614,000), representing an increase of approximately 6.8% compared to the previous year; operating profit reached approximately RMB1,483,662,000, (2018: RMB1,393,588,000), representing an increase of approximately 6.5% compared to last year; profit attributable to the owners of the Company amounted to approximately RMB856,691,000 (2018: RMB874,175,000), representing a decrease of approximately 2% from last year, earnings per share was RMB1.52 (2018: RMB1.53), leveling the relative level in the preceding year. Business Review Construction Business For the year ended 31 December 2019, the Group’s construction business achieved revenue of approximately RMB19,029,840,000, up approximately 10% over last year; operating profit amounted to approximately RMB467,100,000, down approximately 8% over last year. The increase of revenue and decrease of operating profit of the construction business was mainly due to the increased construction capacity of construction projects and lower profit margin in 2019. In 2019, the external economic environment was complicated and difficult brought by the Sino-US trade disputes while the domestic economy experienced a down turn. In order to stabilize economic growth, the domestic monetary policy has been loosen, and fixed asset investment has also maintained certain momentum. However, under the policy background of “housing is for living, not for speculation”, it is unrealistic to expect the real estate market returning to the high growth rates in the past. There was also great uncertainty in the investment in manufacturing facilities affected by the external environment. As the pillar industry of the national economy, its development is closely related to economic development for the country as a whole. According to the 2020 National Economic Statistics Report released by the National Bureau of Statistics in January 2019, the total output value of the national construction industry in 2019 still reached RMB24,844.6 billion, a year-onyear increase of 5.7%, which was slightly lower than the GDP growth rate of 6.1%. In 2019, the Group’s construction continued to implement the “big customer” strategy, optimized regional layout, enhanced public construction project market sharing, and established the corporate brand image by undertaking local public and iconic projects. In 2019, the construction business continued to contribute most of the Group’s operating income and steady profits. The contract value of new projects was approximately RMB28.8 billion (2018: approximately RMB23.6 billion), an increase of approximately 22% from last year. The Group undertook a number of high-quality vanity projects, such as the Shaoxing Public Security Bureau’s business and technology rooms, Shaoxing People’s Hospital Jinghu Headquarters, Reconstruction and Expansion Project of Shaoxing Restaurant, Hangzhou Qiantang River Museum, Hangzhou Bay Area Accounting Academy and so on. Adhering to the spirit of craftsman, Winning awards At the Commendation Conference of 2018-2019 China Construction Engineering Luban Prize (National Prime-quality Project) held on December 10, 2019, six projects of the Group won the Luban Award. The Group contracted for three of the six projects, namely Kaifeng Haihui Centre project, Djibouti Tajura Port Project and Djibouti’s new presidential palace project, and participated the construction of the other three projects, namely curtain wall and interior engineering project of Kaifeng Haihui Centre and HVAC installation of Ningbo Cixi Grand Theatre. Winning 6 Luban awards in one time sets record breaking in Baoye’s history. As of 2019, the Group has won a total of 38 Luban Awards. The Luban Award is the highest award in China’s construction industry, also the highest honor for Baoye’s adherence to the “craftsman spirit” and high-quality construction. As a veteran who has been working hard in the construction industry for more than 40 years, the Group will always apply rigorous construction standards and scientific quality control in each of the Group's construction projects. Property Development Business Property Sales For the year ended 31 December 2019, revenue of the Group’s property development business amounted to approximately RMB2,089,186,000, representing a decrease of approximately 32% from last year. Operating profit amounted to approximately RMB757,445,000 which is approximating the same level of last year. The decline in real estate development business turnover while maintaining the same level of operating profit was mainly due to the decrease in the recognized revenue in 2019, but the higher profit margins of the units recognised. For the year ended 31 December 2019, the sales contracts of the Group’s property development business amounted to approximately RMB2.56 billion (2018: RMB2.78 billion) and a contract sale area of approximately 237,041 square metres, excluding the property sales registered under joint ventures that will be progressively completed, delivered and recognised as revenue in the next two years. Projects under development Baoye Four Seasons Garden is located in Kuaijishan Tourist Resort Zone, a “province-rank” resort district in Zhejiang Province. With historical culture and spectacular scenery, the area is where ancient civilisation flourished. Other than its profound cultural tradition and being the origin of many myths and folklores, the area also has a large number of historical heritages. Being only 5 kilometres from the downtown of Shaoxing City, it is known as the “natural treasure in the heart of a city”. Baoye Four Seasons Garden has a site area of approximately 1,050,000 square metres and a planned gross floor area of approximately 650,000 square metres for the development of deluxe villas, semi-detached villas and town houses, all fully equipped with supporting facilities, such as a golf club, a five-star resort hotel, two leisure parks, a sport park, a shopping arcade, kindergarten and a central lakeside garden. Phase I still a few spare houses for sale. Phase II of approximately 300,000 square meters is currently under planning. The presale of the first part of terrace house has begun and is in good condition. Daban Green Garden, located in Keqiao District, Shaoxing City, Zhejiang Province, has a site area of 80,945 square meters and a plot ratio of 1.8, and a gross floor areas of 145,700 square meters on the floor and approximately 100,000 square meters under the floor. The project will be built in a prefabricated method and fully and well decorated. The project is very close to the Banhu Lake and the railway station of Hangzhou and Shaoxing. It enjoys well-developed facilities of convenient transportation, scenic environment, hospitals, schools and shopping malls. The project will be a landmark of residential building in the Banhu area of Keqiao. Xialv Project consists of three separate parcels of land with a total cost of RMB511,036,354 and a total land site area of 262,862 square meters, pursuant to which the Group is interested in 60%. The Group acquired the land use rights through public auction in 2017. As of now, Baoye Yunxili, one of the three parcels of land has begun planning. Guanyun Road Project, located at the south of Guanyun Road, Qingpu District, Shanghai City, is very close to the Dianshanhu Road Station of Line 17. The project has a site area of approximately 38,649 square meters, and a gross floor area of approximately 94,722 square meters with a plot ratio of 1.5. The Group acquired this parcel of use rights at a total consideration of RMB913,630,000 in September 2019. This project has residential and commercial parts, and is positioned as a construction art respecting to architecture and facing the future. The project will be built as a landmark with green, healthy, intelligent, civilized and artificial and artistic characteristics. Baoye Huajie Fengqing is located in Liandu District, Lishui City, Zhejiang Province. It covers an area of 95,794 square meters and has a total construction area of 260,363 square meters. The residential area is 165,516 square meters of which about 106,563 square meters will be repurchased by the government. The plot ratio is 1.88. The remaining 58,790 square meters are owned by Baoye and presale has begun in October 2019. Xingyufu project, located in Xinzhou District, Wuhan City, Hubei Province, has a total land area of 129,528 square meters and planned construction area of approximately 259,056 square metres. The Group acquired this parcel of land use right in December 2017 at a consideration of RMB780 million. At the end of 2019, presale has begun. Mengcheng Binghu Green Garden, located in Mengcheng County, Anhui Province has a total land area of 78,640 square meters and gross floor area of 201,572 square meters of highrise residential buildings, garden houses, townhouses and commercial housing. The Group acquired this parcel of land use right in August 2018 at a consideration of RMB366,000,000. The project has started presale in the second half of 2019. Baoye Fuxing Jiayuan, located in Jieshou City, Fuyang City, Anhui Province, has a total site area of 172,656 square meters and a total gross floor area of 467,293 square meters. The Group acquired this parcel of land use right in June 2018 by public tendering at a total consideration of RMB370,348,000. The project has started the construction and is expected to be delivered in 2020. The project will be repurchased by the local government upon completion. Baoye Taihe City Green Garden is located in Taihe County, Anhui Province with a total gross floor area of 420,000 square metres, comprising of unique and niche residential units, elegance shopping arcade, an international bilingual kindergarten and high-end swimming pool facilities. Personalized and scientific design in dividing motor vehicle flow and pedestrian flow enable residents to enjoy quality and comfortable living. The project is closed to an ecofriendly park with rich community facilities, which sets the new generation in the City. The project will be developed in four phases, among which Phase I, II and III had already been delivered to customers, and Phase IV with 95,770 square meters is expected to be delivered in 2020. Baoye Longhu Yucheng is located in a prime area of Eastern New City, Kaifeng County, Henan Province. It has a total site area of approximately 648,000 square metres and an estimated gross floor area of approximately 972,000 square metres. After completion, it will become the city’s new business centre and leisure centre. The project will be developed in 5 phases. Nearly 100,000 square meters of Phase I was delivered to the owners, and the remaining 70,000 square meters are under construction and will be delivered by the end of 2020. Phase II of about 140,000 square meters is under presale. Phase III is currently under construction. Baoye Junyue Green Garden is located in Lu’an city, Anhui Province. Baoye bided the project through judicial auction in September 2017. The project has a site area of approximately 54,220 square meters, and an estimated gross floor area of approximately 129,665 square meters, and the remaining site area of 7,220 square meters is clean land for development. The project enjoys well-developed facilities, convenient transportation with parks, banks and shopping malls. The project will be developed in two phases. In February 2019, the Company obtained a parcel of land use right on the west side of this project with a total land area of approximately 111,947 square meters, which is currently under presale. Zhengzhou Project, with a total site area of 336,776 square meters, located in Zhengzhou City, Henan Province, the Group acquired this parcel of land use right in November 2018 at a consideration of RMB184,660,000. The project is in Jianshan Tourist Resort Zone, Xinmi City, Zhengzhou City, with convenient transportation, spectacular scenery and historical culture. The project is under planning currently. Sizhou Green Garden, located in the economy development zone of Sixian County, Suzhou City, Anhui Province, has a total site area of 46,888 square meters, and a total gross floor areas of 124,907 square meters. The Group acquired this parcel of land use right at a total consideration of RMB113,500,000 in May 2019 through public tendering in which the Group is interested 51%. This project enjoys well-developed facilities, convenient transportation and education resources. The project has begun presale at the beginning of 2020 and is expected to be delivered in 2021. New Land Reserve The Group continues to adopt a prudent but proactive role in land acquisition and business expansion. The Group has land reserve in cities in the eastern and central China, such as Zhejiang, Hubei, Shanghai, Anhui and Henan, which can ensure its profits and capability of risk resistance benefitting from low land cost and reasonable regional coverage. Increased Investment in Property Development For the year ended 31 December 2019, revenue of the Group’s building materials business amounted to approximately RMB3,203,090,000, representing an increase of approximately 28% over last year; operating profit was approximately RMB156,238,000, representing a surge of approximately 132% from last year. In 2019, the revenue and operation profit have achieved an obvious increase as the selling prices of building materials segments increased obviously. All major segments of the Group’s building materials business are under fierce competition, and are highly inter-related to the real estate industry and national infrastructure construction. In 2019, the Group’s building materials business adhered to the “price-cost-profit” business principle, strengthened accounts receivable management, and implemented the “big customers” strategy by coordinating team work with the construction business. In accordance with the Group’s development strategy, Construction industrialization business advanced in an orderly manner. As at now, the Group’s construction industrialization bases have been deployed in Zhejiang, Shanghai, Hubei, Anhui, Jiangsu and so on. The extensive layout of the construction industrialization bases are not only the fruit of the successful market expansion of the construction business in the past, but also a good foundation for the coordinated development of construction business and real estate business in the future. Prefabricated construction, as the leading industry of the urban manufacturing industry after automobiles and home appliances, is an important carrier for the transformation and upgrading of the real estate industry and the construction industry. The Group has accumulated rich experience through more than 20 years of continuous research and development in the construction industrialization industry. The Group believes that as the market matures, the construction industrialization business will bring sustainable fruitful business results and profits to the Group. Prospects: Construction business is the platform for the Group’s business development At present, China’s economic development is in the transition phase from investment-driven to consumption-driven, but this transition phase takes time, so the function of investment in stimulating the economy is still very obvious. In accordance with the guidance of the State Council, the special debt issued in 2020 will be used in more than 10 infrastructure areas such as transportation, municipal administration, and environmental protection. The increase in infrastructural investment can effectively stimulate the development of the construction industry. In addition, the process of urbanization in China has entered into its mid-tier phase. Urban agglomerations will become the main carriers of China’s urbanization and urban population growth will merge in between metropolitan cities and sub-urban counties. Anywhere population accumulates, investment will pour in, where the market will be. As the pillar industry of the national economy, the construction industry is closely linked to infrastructural construction and real estate investment. In the future, the state will “make up for shortcomings” in people’s livelihood projects, so the construction of public service projects and the construction of living environment will provide a huge market for building construction business. In the new development period, Baoye will continue to consolidate its management, strengthen process control, deepen service awareness, pay close attention to project quality and safety and forge advanced productive force in order to enhance the Group's core competitiveness. Leveraging the demands from customers, projects and the industry as the starting point, Baoye shall keep providing its unique products and services to the market. Property development business contributes substantial profit for the Group In the past year, the central government repeatedly emphasized the “no speculation” positioning of the real estate industry. Then, at the end of last year, the Central Economic Working Conference sets out the general direction of the “stability in six aspects”. Under such background, the Group expects that the general direction of the state’s regulation of the real estate market will remain unchanged. It will continue to maintaining the stability of the real estate market according to different situations in different cities. Although the golden demand stage for housing was peaked under the prevailing severe economic conditions but the demand is partially compensated by the continuous urbanization and mobility of population policies, such as the impact of the second-child policy, urban population growth increasing demand for urban renewal and transformation, and demand for improvement in living environment. The demand for residential real estate remains strong which has paved a huge potential room for growth. As one of the core businesses of the Group, Baoye’s real estate development business has adhered to the ingenious concept of “Baoye builds good houses” at all time. In the future, the Group will continue to cultivate in the markets where the Group is familiar and increase land reserves at reasonable prices. The Group firmly upholds the concept that “If housing changes, society changes”. Relying on the latest research results of the National Research Institute of Housing Technology and incorporating advanced Japanese and German technology elements into the Group's products, the Group is able to supply the market with highly comfortable and low-carbon technology housing which can save, store and create energy. Housing industrialization is an important strategy to sustain continuous growth for the Group In recent years, the energy-saving and environmental-friendly prefabricated construction industry has become a hit because of the aging of the population, the gradual decline of the demographic dividend, environmental pollution and resources problems. The central and local governments have intensively introduced incentive policies to promote the development of construction industrialization and the prefabricated construction. There are also many companies rushing head-to-head into this field. It seems that all construction companies or building material manufacturers can be transformed into construction industrialization companies overnight. However, any single link, like industrialized manufacturing of building components or equipments for industrialized components, cannot be called construction industrialization. As the Group always emphasizes, the industrialization of construction is a system engineering and an urban manufacturing industry. It must be characterized by design standardization, components classification, and construction mechanization. It is a new sustainable production mode that fully integrates the entire industrial chain, including design, production, construction, and operation, to fully realize the energy-saving and environmental friendly features of the building which maximizes the value of the building’s entire life cycle. Baoye not only has more than 20 years of experience in research and development on construction industrialization, but also intensively cultivates in the field of general construction which includes building construction and real estate development for more than 40 years. The Group can proudly say that the Group masters better about architecture. The Group is better in understanding operations and the inherent need of improving quality. Through field assembly and industrialized production, the Group has completed the transformation and upgrade of the traditional construction industry during the past two decades. The Group has truly transform construction into manufacturing, and make the life span of the Group's construction products last beyond 100 years. In the future, Baoye will continue to explore ways to improve the traditional construction industry, while the Group increases the technological content of products through the industrialized construction method, and promote the coordinated development of the three major industries of the Group. The Impact of the Outbreak of Novel Coronavirus In 2020, the rapid outbreak of COVID-19 imposes a major test to the global economy. The Chinese government has introduced and implemented a series of effective control measures. Thanks to the hard work of the people throughout the country, especially medical professionals, the epidemic disease in China is now under well control, but the situation remains severe elsewhere in the world. The Group has comprehensively assessed the impact of the epidemic disease on the Group’s three business segments and the construction business, real estate sales and production resumption of the Group's regional companies. The Group believes that the epidemic disease will have a short-term negative impact on the Group's business. But so far, except for Hubei, projects in other regions have been resumed one after another in an effort to make up for the lost time. The Group is full of confidence and convinced that as long as the Group work together, the Group will vanquish the disease. As at the date of this announcement, the Group does not anticipate any significant financial impact resulting from the COVID-19, following which the Group will pay close attention to the situation of the COVID-19 and continue to assess the impact of the epidemic disease on the Group’s finances and operations from time to time, as the case may be. At the same time, the Group will ensure the steady development as always by improving internal management, valuing “preserving cash as king and focusing on receivable management”, and continuously optimizing business management model, while enhancing the Group's brand image to ensure continuous stable development.

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