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Public company info - Greentown China Holdings Ltd. , 03900.HK
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Greentown China Holdings Ltd., 03900.HK - Company Profile
Chairman Zhang Yadong
Share Issued (share) 2,494,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Property Development
Corporate Profile Business Summary: Greentown China is a leading property developer and integrated living service provider in China. Backed by the full support of state-owned enterprise CCCG and Hong Kong blue-chip enterprise Wharf, together with founding shareholder Song Weiping and other substantial shareholders, Greentown China has adhered to the Company’s strategy of “Balancing the Development of Light and Heavy Assets” and insisted on taking advantage of the practice of mixed ownership, evolving to engage in the businesses of property development, town development, construction management, asset operation and living services. It maintains a leading position in the industry with high construction quality and excellent living services and strives to be the No.1 “Integrated Service Provider for an Ideal Life” in the country. With focuses on the first-tier and second-tier cities as well as quality third-tier and fourth-tier cities, Greentown China’s scope of business currently covers more than 20 provinces, autonomous regions and municipalities. It has presence in over 100 cities, having constructed more than 500 exquisite property complexes. Performance for the year: Revenue amounted to RMB61.593 billion, representing a year-on-year increase of 2.1%; Profit before taxation amounted to RMB9.953 billion, representing a year-on year increase of 25.9%; Profit attributable to owners of the Company amounted to RMB2.48 billion, representing a year-on-year increase of 147.3%; core net profit attributable to the shareholders amounted to RMB4.336 billion, representing a year-on-year increase of 14.2%; Basic earnings per share was RMB0.55, representing a year-on-year increase of 205.6%; Business Review In 2019, China’s economy faced growing downturn pressure in a complex and volatile international environment, such as slowing growth in global economy and international trade, and escalating trade frictions between China and the US. In line with the central government’s emphasis on “not to use real estate as an economic stimulus in the short term”, “stability” continues to be the key tone of real estate policies and controls. A long-term management and control mechanism which aims at stabilizing land prices, housing prices and expectations has been established according to “one city with one policy and adopting city-specific strategies”, with development and investment as well as commercial housing sales sustaining moderate growth. In respect of capital markets, some real estate enterprises have become more rational and cautious on land acquisition as it is increasingly difficult to secure financing, and capital chain is tightened due to the fact that prudent management of real estate financing has been continuously strengthened by the central government under the principle of “stabilizing leveraging levels”. Given that the industry is undergoing profound adjustments and increased concentration, the extensive and high-leverage growth approach is no longer sustainable. As the sector’s quality benchmark, the Group always adheres to a distinctive, sustainable and quality development model and the strategy of “quality first while taking into account others”, so as to accelerate its full transformation from a traditional real estate developer into an “integrated service provider for an ideal life”. With the support of substantial shareholders and the relentless efforts of all employees, both contracted sales amount and saleable value of newly-acquired land parcels in 2019 exceeded RMB200 billion, and the Group ranked first for customer satisfaction in major cities across the PRC for the ninth consecutive year. Meanwhile, it continued to raise its operating efficiency while management fee rate and finance costs hit record lows, and maintained its leading position in terms of quality and branding in the industry. During the Year under review, Greentown received honors and awards including “China’s Real Estate Industry Competitiveness Benchmark Enterprises”, “China’s Real Estate Branded Enterprises by Contribution”, and “Social Responsible Enterprises of the Year”. It was named “Top 10 among 100 Chinese Real Estate Enterprises by Comprehensive Strength” for the fifteenth consecutive year, and was again awarded the “Top 10 Chinese Real Estate Companies by Brand Value (Mixed Ownership)” for the sixteenth consecutive year with a brand value of RMB52.1 billion. Operating Results Steadily Improved The Group generated revenue of RMB61,593 million for the Year, representing an increase of 2.1% from RMB60,303 million in 2018. Profit before taxation of the Group amounted to RMB9,953 million for the Year, representing an increase of RMB2,049 million or 25.9% from RMB7,904 million in 2018. Profit attributable to owners of the Company amounted to RMB2,480 million for the Year, representing an increase of RMB1,477 million or 147.3% from RMB1,003 million in 2018, which was mainly attributable to the increase in gross profit of RMB1,888 million over the previous year. After deducting the net post-tax effects of foreign exchange gains and losses, gains from acquisitions, provision and reversal of impairment losses on certain assets and fair value adjustments on certain assets, the core net profit attributable to owners of the Company amounted to RMB4,336 million, representing an increase of RMB540 million or 14.2% compared with RMB3,796 million in 2018. Basic earnings per share amounted to RMB0.55 for the Year, representing an increase of 205.6% from RMB0.18 per share in 2018. The Board recommended the payment of a final dividend of RMB0.30 per share for the Year ended 31 December 2019 (2018: RMB0.23 per share). Sales Scale Hit Record Highs For the 12 months ended 31 December 2019, Greentown Group (including Greentown China Holdings Limited and its subsidiaries, together with its joint ventures and associates) recorded a total contracted sales area of approximately 10.27 million sqm, and a total contracted sales amount of approximately RMB201.8 billion, representing a year-on-year growth of 29%. In 2019, Greentown Group recorded a total contracted sales area of approximately 5.22 million sqm and a total contracted sales amount of approximately RMB135.4 billion from investment projects, of which approximately RMB76.8 billion was attributable to the Group, representing an increase of 38% from last year. As at 31 December 2019, the Group recorded a total subscription sales amount of approximately RMB2.9 billion from its investment projects, of which approximately RMB1.5 billion was attributable to the Group; average selling price of investment projects reached approximately RMB25,936 per sqm (2018: RMB25,455 per sqm), an industry-leading level. In addition, Greentown Group in 2019 recorded a total contracted sales area of approximately 5.05 million sqm and a total contracted sales amount of approximately RMB66.4 billion from the projects under its project management business where Greentown Group delivered brand value and management expertise (non-investment projects, referred to as “projects under project management”). In 2019, the Group comprehensively applied the marketing strategy of “all staff, all people, all aspects” with huge success and recorded contracted sales of over RMB5 billion each in nine cities, among which the Group recorded contracted sales of over RMB10 billion in Hangzhou, Ningbo and Beijing. Nine projects recorded sales amount of over RMB3 billion each, among which the performance of Xi’an National Games Village and Hangzhou Xiaofeng Yinyue was particularly outstanding with sales amount each exceeding RMB6 billion. The overall sell-through rate of investment projects reached 68%, with the sell-through rate in the first- and second-tier cities reaching 70%. The sell-through rate of the newly-launched projects was outstanding at 71%, among which hot-selling ones such as Hangzhou Xiaofeng Yinyue, Xi’an National Games Village and Nantong Orchid Residence were sold out immediately after their launch. In the meantime, we initiated certain special campaigns such as “Spring Ploughing Operation”, “Autumn Harvest Operation”, and “Carnival Season for Greentown Fans” to dispose of property inventories that are difficult to sell for quite some time and achieved destocking value at approximately RMB6 billion. Overall cash collection rate remained at a high level of 87%, showing an accelerated return of cash. Meanwhile, the Group actively implemented project groups management in marketing, achieving lower cost and higher efficiency. The average sales amount per capita increased to RMB84.3 million, representing a year-on-year increase of 34%, and marketing expenses rate dropped by 18% year-on-year. Inheritance, Innovation and Quality First Maintaining a leading position in the industry in product quality. In 2019, the Group continued to forge its core competence by insisting on the product-oriented concept and carrying forward the artisan spirit. The Group has constantly enhanced product innovation and successfully completed the research and development of new products including sky villas and Chinese-style condos. The Group has also paid attention to people’s living quality by increasing investment in green and healthy communities, smart communities as well as in quality control and testing, highlighting the advantages of its products. Meanwhile, the Group has sorted out and refined a multi-dimensional, three-dimensional, large-scale and sustainable product genealogy, including 8 product series, 22 product categories and 22 product architectural styles. The Group also published the book Creating Beauty for Cities – Greentown Product Genealogy (1995-2020) (《創造城市的美麗 — 綠城產品譜系 (1995-2020)》) on 8 January 2020, which presents diversified samples for the development of urban construction in China and global architecture. In addition, the Group established the Planning and Design Committee and the Engineering Quality Committee to provide strong support for product innovation and quality management and control. In the meantime, the Group also set up a construction research center to safeguard with multiple efforts its leading position in product quality. Furthermore, the Group has achieved considerable results in respect of product cost management and control. Progress and efficiency of projects were greatly secured by further expanding its standardization system. Meanwhile, through centralized strategic procurement, 70 product categories were procured (representing a year-on-year increase of 16 categories), and the prices fell by 6-20%, generating cost savings of RMB126 million, with application rate of procured materials reaching 97.8%. Enhancing service quality in all aspects. The Group has continued to strengthen its service quality, by enhancing customer service orientation as well as providing full-cycle housing services and customer services around the main business of real estate development. In 2019, the Group took the second “Greentown Life Developers Conference” as an opportunity to launch the version 2.0 of living service system, which aims to optimize service through scenarization, improve service efficiency through commoditization, combine the online-offline experience through digitalization and ensure continuous service through commercialized operation. All of these efforts have enhanced the overall customer service system and helped maintain a competitive edge in service quality in the industry. Leveraging on its excellent service quality, customers’ satisfaction has improved continuously. In 2019, in respect of residents’ satisfaction, the Group achieved a score of 89.3, 16.3 points above industry average, ranking first in 16 cities; at the same time, in respect of sales service satisfaction, the Group achieved a score of 92, a benchmark level in the industry. Diversification of Land Acquisition and Optimization of Land Bank In 2019, the Group continued to adhere to the strategy of “focusing on regions and deepening footprints in cities”, basing itself in Yangtze River Delta and centering on the five major urban agglomerations, as well as flexibly adjusted its investment strategy at different stages and made precise investments with remarkable effect. The Group proactively broadened its investment channels by enhancing its investment efforts and quality in auction, listing and tendering on the one hand and significantly strengthening the capabilities for mergers and acquisition on the other hand. The Group successfully obtained 17 projects throughout the Year, including a number of high quality ones such as Shanghai Xinhu Pearl City and Xi’an Guiyu Lanting. The value of acquisition projects recorded a year-on-year increase of 332%, which facilitated improvement in both the scale and quality of overall investment. In 2019, the Group acquired a total of 54 new projects with a total gross floor area (“GFA”) of approximately 12.36 million sqm. Land cost/acquisition amount totaled approximately RMB69.1 billion, of which approximately RMB52.3 billion was paid by the Group. It is estimated that the total new saleable amount will be approximately RMB205.7 billion, a historic new investment value record for Greentown, of which approximately RMB108.6 billion will be attributable to the Group. The average land cost of the new land parcels was approximately RMB6,923 per sqm. In respect of geographical distribution, most of these newly-added land parcels are situated in first- and second-tier core cities such as Hangzhou, Ningbo, Suzhou, Xi’an, Hefei and Guangzhou, accounting for 76% of the total saleable amount. In respect of regional distribution, the Yangtze River Delta as an area of strategic importance accounts for 60% of the saleable value, which helps consolidate the Group’s performance and position in Jiangsu and Zhejiang region, base of Greentown. The Group has also steadily increased its presence in the Pearl River Delta Area and Chengdu-Chongqing Area, which accounts for 10% of the Group’s total saleable value. Thus, business footprint has been further extended and risk resistance capacity for the future has been effectively elevated. In addition, the turnover rate of the newly-added saleable value has been significantly improved. It is expected that 42% of the saleable value will be converted to sales in 2020, representing a year-one-year increase of 8 percentage points. As at 31 December 2019, Greentown Group had a total of 142 land reserve projects (including those under and pending construction) with a GFA of approximately 38.73 million sqm, of which approximately 22.4 million sqm was attributable to the Group. The total saleable area was approximately 26.48 million sqm, of which approximately 15.21 million sqm was attributable to the Group. The average GFA land cost was approximately RMB6,119 per sqm. Land reserve in first- and second-tier cities accounted for 73% of the total saleable value. Retaining Characteristics and Pursuing Constant Innovation In 2019, in addition to actively exploring high-quality traditional development projects, the Group put great efforts into developing featured businesses, continued to maintain its leading position in project management business in the industry, and innovated the product lines through emerging businesses such as TOD (Transit-Oriented Development), town projects, land acquisition by application mechanism, urban renewal, continuously uplifting composite capabilities in development and operation. Leading in project management industry. The Group firmly maintains a solid position as the largest project management company in the PRC real estate market and earns the trust of customers. The Group was successively awarded the “China’s Leading Enterprise in Real Estate Project Management Operation”, and was honored with “Annual Influential Business Model Award” and “Annual CSR Contribution Award”. As to project management for the government, the Group has gained high recognition from different sectors of society and generated significant benefits to society. In 2019, the scale of the project management business expanded rapidly, with 72 projects added. As at 31 December 2019, the Group had 260 projects under management, with a total GFA of approximately 67.54 million sqm, and a total saleable amount of approximately RMB368.9 billion. Thanks to the continuous expansion of the Group’s project management business, its leadership position in the industry has been strengthened and profitability has grown steadily over the years, which would in turn further increase the profit contribution of asset-light business to the Group. Focusing on implementing town strategy. In line with the trend of reverse urbanization, the Group has seized the historic opportunity of rural collective land entering the market to focus on the development of town projects. To date, the Group has completed the layout of 15 cities with 30 town projects implemented. After the successful launch of a group of towns with industrial features, including Dalian Jinshitan Port Wine Town, Hangzhou Longwu Tea Village, Jiangxi Gao’an Bafulo Agricultural Complex, and Sichuan Cuisine Town in Chengdu, the overall development landscape of ideal towns has been completed. Town projects in large scale with low land cost to saleable value ratio, as well as low peak of shareholder investments and high production to investment ratio have gradually become an important growth pillar of high-quality expansion for the Company. Accelerating development of featured businesses. The Group has accelerated the promotion of featured projects to seek new growth opportunities and breakthroughs and further enhance profitability. The Group has increased the proportion of land acquisition by application mechanism, and actively captured the opportunities brought by China’s rapid development of railway transportation. The Group has accelerated the nationwide layout of TOD projects, and channeled great efforts to become a leading TOD integrated developer and operator in China. To date, 10 TOD projects featuring multi-regions, multi-categories and multi-types of businesses, and seven urban renewal projects including industry parks, future communities and reserved land have been obtained, which contributed to a quality land bank. Healthy Financial Condition and Smooth Financing Channels Steady growth in operations. Benefiting from the financial and credit support of its largest shareholder, China Communications Construction Group Ltd. (“CCCG”), and the Company’s overall sound operating performance, the net gearing ratio of the Group was 63.2% as at 31 December 2019. Bank deposits and cash (including pledged bank deposits) amounted to RMB51.894 billion. The weighted average interest cost of the total borrowings in 2019 was 5.3%, which fell by 0.1 percentage point as compared to 5.4% in 2018. Diversified and smooth financing channels. By proactively carrying out market research, capturing the low interest window and exploring financing channels, the Group completed the annual financing target while controlling the interest rate of the open market financing at a record low level. For offshore financing, the Company swiftly captured the right windows in the market in January 2019 by issuing two tranches of three-year USD senior perpetual notes to the public in quick succession within only two weeks in a principal amount of USD500 million in aggregate. Both tranches of perpetual notes have received enthusiastic responses from the market and investors during the book-building period. On 4 November, the Company completed the issuance of 364-day USD600 million senior notes at a distribution rate of 4.55%. Due to the successful pricing strategy and the excellent credit qualification of the Company, the senior notes were highly popular in the market and achieved multiple oversubscriptions, which was again a proof of capital markets’ confidence in the Company’s sound operating results and its development strategies, and further demonstrated the robust financing capabilities of the Group in overseas capital markets. For onshore financing, the Group carried out public issuance of bonds in an aggregate amount of RMB18.062 billion with an average interest cost of 4.48% in 2019, representing a decrease of 0.98 percentage point as compared to 2018. It reflected a record low in onshore financing costs, presence of barrier-free channels and reasonable structure. Among these, the Group issued corporate bonds in an aggregate principal amount of RMB1.5 billion with an interest rate ranging from 3.78% to 4.34% per annum, medium-term notes of RMB0.5 billion with an interest rate of 3.84% per annum and perpetual medium-term notes of RMB4.6 billion with interest rates ranging from 5.59% to 5.6% per annum. Meanwhile, the Group further improved its financing innovation capability, liquidated dormant assets, explored new financing channels and innovatively promoted securitization. During 2019, the Group successfully issued hotel CMBS in the amount of RMB1.592 billion with an interest rate of 5.14% per annum, the supply chain ABS in the amount of RMB8.87 billion with interest rates ranging from 3.85% to 4.07% per annum, and the specialized bonds of household leasing in an amount of RMB1 billion with interest rates ranging from 3.61% to 3.98% per annum. Efficient Management to Improve Quality and Efficiency Constantly optimized governance structure. In 2019, the Group completed the recomposition of the Board, with the directors and management team becoming more professionalised and market-oriented and the management framework flattened. Also, the Group has continued to optimize its system and mechanism that orient toward operating results, forming an “8+3” structure encompassing asset-heavy and asset-light sectors, and seeing regional companies gradually prosper. In the meantime, internal structure has been adjusted to “7+4”, namely, in addition to the original seven functional divisions, four divisions (featured real estate division, town development division, financial division and commerce management division) have been newly established to coordinate resources at all levels and enhance operation efficiency. Horizontal structure of the double “eleven” has on an ongoing basis streamlined management structure while minimizing operating costs. Efficient operation and accelerated cycles. The Group gradually established a central nervous system for its operation with the mission of “target-orientation and information symmetry”. By continuously promoting the construction of “Greentown AI” great operation system and enhancing digital operating management, the Group has achieved efficient planning and arrangement for all projects in their entire cycles. Meanwhile, the Group has gradually improved its risk control system to enhance the dynamic control over shareholding investment companies. Benefited from highly efficient operations management during the Year, the project operation cycles from land acquisition to construction commencement, presale, return on shareholders’ investment and delivery were significantly accelerated by 10%, 12%, 2% and 7% respectively. Emphasis on labor force as strengthened support. The Group adhered to streamlining scheme and enhanced control on both staff and expenses, with talent allocation further optimized and more projects commenced without engaging extra employees throughout the Year. At the same time, the Group firmly promoted project group management by transferring 133 projects to 24 groups, which covered 75% of investment projects. Thus the area under construction per capita increased by 25% year-on-year, which reflected a significant improvement in efficiency. In addition, the Group promoted win-win mechanism at a steady pace. In 2019, 38 new projects were open for co-investment, while 178 existing projects have clarified medium-to-long term incentive measures to effectively boost team momentum. Staff dedication was 11% higher than the premium level in the industry, providing strong support for quality development of the Company. Generating Synergy with Support of Shareholders As an exemplary mixed-ownership realty enterprise, the Group is not only strongly backed by the profound strength of state-owned enterprise CCCG, but also the flexible mechanism and vigor of private enterprises. These two factors complement and facilitate each other. In terms of project cooperation, positive progress has been made in projects such as Guangzhou Nansha, Harbin TOD, Sichuan Cuisine Town in Chengdu thanks to our deepening partnership with CCCG. Benefiting from the qualifications and repute of CCCG, the Company’s financing capabilities have been further enhanced. In terms of maintaining our product’s core competitiveness, from product planning and design to town development and operation, we have received full support from Mr SONG Weiping. In terms of corporate governance, The Wharf (Holdings) Limited, our substantial shareholder, has given valuable advice including on Listing Rules, corporate governance system. Despite market competition amid increasing industry concentration, the Group’s outstanding advantages will definitely lay a solid foundation for long-term, stable and high-quality development. Prospects: In respect of macro policy, with the central government’s key tone of “housing instead of speculation” remaining unchanged, and its new measure of “fully implementing targeted policies for different cities” in place, the policy of “three stabilizations” promulgated throughout China is expected to be implemented in a more rapid, flexible and well-directed manner. Looking forward to 2020, policies of regulating real estate market across different urban centers will further differentiate from one another and the real estate operation cycles will vary by city. In addition, affected by the outbreak of COVID-19 since the beginning of 2020, the sales centers of commercial houses have been temporarily closed down and project construction has also been suspended in most cities in China. The Group has performed strict control over the epidemic situation while steadily promoting the resumption of work and production. The Group believes that a better reflection of its advantages and value will be realized by enterprises with solid capability, high-quality products and flexible mechanism in face of difficulties and challenges. The impact of the COVID-19 on the real estate industry is temporary rather than a game changer. Under the current challenge, the demand for high-quality houses and services from customers will witness an explosive growth. The Group will focus on being customer-oriented and further innovate product functions and optimize living services to realize customers’ pursuit for better lives. Although market regulations and COVID-19 have put certain pressure on development, the position of real estate as a pillar industry in China’s economy remains unchanged. Moreover, with the steady improvement of people’s living standards as well as the continuous progress of urbanization, the industry will be transformed from a rapid growth model to a high-quality development model. The Group will actively respond to changes, take a long-term view from a strategic perspective, leverage its strength as the industry’s quality benchmark, adhere to the “Strategy 2025” goal of maintaining “top-notch product quality, number-one customer satisfaction and top comprehensive performance”, as well as emphasize the layout of the three main business lines, namely heavy assets, light assets and “Greentown+”. First of all, the Group will persist in its main business in the asset-heavy segment by continuing to step up efforts in mergers and acquisitions, striving to develop featured businesses and increasing the quantity and quality of investment through public auction, listing and tendering, so as to improve profitability and optimize business structure; secondly, it will enhance expansion capacity of the asset-light segment, establish Greentown sub-brand of project management, upgrade the current project management model and improve management mechanism to ensure the quality of project management products and cement its No. 1 brand in the project management industry; thirdly, it will enrich the content of the “Greentown+” segment. Centering on the asset-light and asset-heavy segments and focusing on the emerging markets, it aims to lengthen its industry chain and expand the industrial clusters, thus tapping into the value points in the upstream and downstream of the real estate industry as well as creating more value for customers. At the same time, it will improve its management layout, continue to optimize organizational structure, strengthen the work of business committee, shorten the management chain, improve decision-making efficiency and enhance operation efficiency. In order to achieve the strategic goals and visions of the Company, the Group will strengthen its strategic implementation. We will uphold the product-centric, growth- and profit-oriented principles and improve our development quality, striving to become a front-runner for quality in the real estate industry, a leader in the project management business, and the forward-looking innovator of integrated business. Saleable Resources in 2020 In 2020, the total saleable area of Greentown Group is expected to reach approximately 16.96 million sqm, with a total saleable amount of approximately RMB358.3 billion. Of these, investment projects are expected to provide a saleable area of approximately 10.45 million sqm, and a saleable amount of approximately RMB267.4 billion, (of which approximately RMB63.5 billion will be attributable to inventory property projects in 2019; approximately RMB203.9 billion is expected to be new saleable properties). The total saleable area in first- and second-tier cities is expected to be approximately 7.72 million sqm, and the saleable amount is expected to be approximately RMB212.4 billion, representing 79% of the saleable amount for investment projects in 2020. In addition, the saleable area of Greentown Group’s projects under project management is estimated to reach approximately 6.51 million sqm, with a saleable amount of approximately RMB90.9 billion.

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