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Public company info - Zhenro Properties Group Limited , 06158.HK
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Zhenro Properties Group Limited, 06158.HK - Company Profile
Chairman HUANG Xianzhi
Share Issued (share) 4,368,000,000
Par Currency U.S. Dollar
Par Value 1.0E-5
Industry Property Development
Corporate Profile Business Summary: the Group was principally involved in property development, property leasing and commercial property management. Performance for the year: Revenue for the year ended December 31, 2019 was RMB32.56 billion, representing a year-on-year increase of 23.1%. Profit for the year ended December 31, 2019 was RMB3.09 billion, representing a year-on-year increase of 38.6%. Core profit(1) for the year ended December 31, 2019 was RMB2.90 billion, representing a year-on-year increase of 42.7%. Core profit(1) attributable to owners of the parent for the year ended December 31, 2019 was RMB2.31 billion, representing a year-on-year increase of 20.4%. Business Review: High Quality Growth In 2019, the Central Government continued to adhere to the principle of “housings are built for living in, not for speculation” and promote “city-specific housing policies”, and pledged for the first time “not to use real estate as a short-term means to stimulate economic growth”. The Central Economic Work Conference held in December 2019 further put forward “fully implementation of city-specific housing policies, and developing a long-term mechanism for stabilizing land prices, property prices and expectations to ensure the steady and healthy development of the property market”, reflecting the continuity of government policies and the Central Government’s resolution to promote the steady and healthy development of the property market. Within the context of “stability”, the property industry, on the one hand, is still a pillar industry of the national economy, which will continue to play a significant role in stabilizing economic growth; and on the other hand, local governments will have greater authority to adjust property regulation policies as appropriate. Such regulatory ideas with both control and promotion will bring various opportunities and challenges to property companies, leading to further integration and differentiation of the property industry. The Group has actively taken responsive measures to capture growth opportunities in future. Year 2019 marks the first year of the Group’s “New Three-Year Strategy” and took “high quality growth” as the Group’s first priority, focusing on balancing of sound financial position, business scale and profitability. Despite of risks arising from uncertainties in the macro environment, the Group has striven for a steady progress by undertaking the optimization and upgrading of corporate structure to continuously enhance the Group’s core competitiveness, and steadily improved the Group’s operating performance through various measures. Steady Increase in Contracted Sales In terms of contracted sales, the Group recorded accumulated contracted sales of RMB130.7 billion with year-on-year increase of 21%, successfully achieving contracted sales target for the year despite of market fluctuations in 2019. The Group recorded accumulated contracted gross floor areas (“GFA”) of 8,439,482 sq.m., with contracted average selling price (“ASP”) of RMB15,488 per sq.m in 2019. Steady Investment Regional Penetration In terms of land investment, the Group insisted on the idea of steady investment and the strategy of regional penetration, and focused on core second-tier cities with strong base, laying a solid foundation for the continuous high-quality growth in the future. In 2019, through actively capturing the window time for land acquisitions, the Group acquired 41 parcels of land and expanded the Group’s presence into 30 cities, including the first land acquisition in Xiamen at near base price. In 2019, the Group added land bank with a total GFA of approximately 5.6 million sq. m., in which 85% are located at promising second-tier cities, further deepening the Group’s presence in six major regions of China. As at December 31, 2019, the Group had a total land bank with GFA of 26.15 million sq.m. in 30 cities across China, with an average land cost of RMB4,647 per sq.m. 74% of the land bank is located in first- and second-tier cities. Optimization of Structure and Products Enhancement of Operational Efficiency Under the regulatory background of “housings are built for living in, not for speculation”, operational efficiency and product quality have become the core competitiveness for property companies to cope with cyclical fluctuations, which are also the foundation of the Group’s high quality growth. Following the guideline of “optimization of headquarter and enhancement of regional companies”, the Group was committed to continuously enhancing operational efficiency, and reshaped the Group’s organizational structure and introduced management innovations through functional consolidation, differentiated authorization and standardized product management, thus embarking on a journey of sustainable and high quality growth. In addition, the Group focused on improving efficiency across the operational chain, and deepened reform of the Group’s operational system, achieving significant results. In 2019, the Group further reduced its average initial sale period to approximately 7 months with the average initial sale through rate of over 70%. On the other hand, the Group’s operational capacity of commercial property has improved steadily, with the leasing rate, rental collection rate and operating revenue reached regional benchmarks. Guided by the brand positioning of “Home Upgrade Master”, the Group has created three benchmarking product series, i.e. “Zhenro Mansion”, “Zhenro Pinnacle” and “Zhenro Habitat”. In 2019, the Group has increased the replication rate of standardized projects to 100% through upgrading computing methods and accelerating standardization of products. While significantly contributing to growth in sales revenue, the Group’s high quality products have also been recognized by various professional institutions of the industry. In 2019, the Group has received various design awards and recognitions by renowned institutions, including: – “Zhenro Mansion” Series was honored as “2019 Top Ten Quality Housing Products” – Changsha Meixi Zhenro Pinnacle was honored as “2019 New Landmarks in 100 Cities of China” – Xi’an Zhenro Pinnacle was honored “2019 Cultural Space Award for Western Cities and Architectures” at the Second Asia Architecture and Urbanism Alliance (AAUA) Competition Program – Putian Zhenro Fortune Center Tianyue was honored “2019 GFDA Nomination Award for Global Future Design Award” – Jinan Zhenro Jade Yue Jinyue Mansion was honored “2019 JCPRIZE Award for Excellent Space Design” Optimization of Financial Structure Upgrading Credit Rating Since the beginning of the second quarter of 2019, with the continuous introduction of new policies on the financing of the property industry, onshore and offshore financing channels for property sector were tightening to some extent, and the industry was facing a quite challenging financing environment as a whole. Under the guidance of “high quality growth”, the Group insisted on promoting financial soundness and maintaining sufficient liquidity, achieving breakthroughs in financing despite of the prevalent tightening financing environment in the industry. In 2019, the Group has raised funds through diversified funding channels, which include the issuances of senior notes, dim sum bonds, senior perpetual capital securities, syndicated loans, special bonds for long-term rental apartments, asset-backed securities, asset-backed notes, corporate bonds and shares placement. Meantime, the Group’s debt structure was further optimized and the debt maturity has been extended through continuous debt swaps. On the other hand, the Group continued to improve its major financial ratios and credit ratios. As at December 31, 2019, the Group’s net debt to total equity ratio was 75.2%, which continued to maintain at the average level of the industry, and the cash to short term debt ratio was improved to approximately 1.8 times with the proportion of short-term debt to total borrowings decreasing to 34.2%. The weighted average financing cost of debt as of year end was 7.5%. The Group’s prudent financial management and comprehensive strength were also highly recognized by credit rating agencies. In 2019, Moody’s upgraded the Company’s credit rating to B1 (stable), Fitch Ratings upgraded the Company’s credit rating to B+ (stable), and Standard & Poor’s upgraded the Company’s rating outlook to B (positive). In the meantime, China Chengxin Securities Rating Co., Ltd. raised the corporate credit rating of Zhenro Property Holdings Company Limited, a wholly-owned subsidiary of the Company, to the highest AAA rating with a “stable” outlook AWARDS AND RECOGNITION Since the Group’s listing in 2018, the investment value of the Company was well recognized by the public for the Group’s prudent operation principles, sound business results and outstanding brand values. In November 2019, the Company’s shares have been included as a constituent stock of the MSCI China Index. The Group has received research coverages and positive commentaries by various well-known institutions such as BNP Paribas, CCB International, Deutsche Bank, Haitong International, Huatai International, Industrial Securities, JP Morgan Chase, UOB Kay Hian, Northeast Securities, Soochow Securities, Southwest Securities and Guotai Junan Securities. In addition, the Group has received a number of honors and more than 90 awards in 2019, including ranking 17th in “China’s Top 200 Real Estate Enterprises in terms of Comprehensive Strength”, ranking No.1 in “2019 Top Five Operating Performance of Chinese Public Real Estate Companies”, “2019 China Top 100 Real Estate Developers – Growth Enterprises TOP 10”, “2019 Listed Enterprise Award” by Bloomberg Businessweek, “2019 Most Valuable Real Estate Company of Golden Hong Kong Stocks”, and “Top 10 Real Estate Companies Listed in Hong Kong with the Greatest Comprehensive Strength” for consecutive years. Prospects: Focusing on Operation and Improving Efficiency and Effectiveness Looking forward to 2020, the principles of “housings are built for living in, not for speculation” and “long-term mechanism”, remain the key government’s policy objectives, the “city-specific housing policy” principle will play a significant role in balancing home prices with urbanization, talents attraction and the development of metropolitan areas. Although the tightening of financing channels for property enterprises will become a normal trend in the foreseeable future, the reasonable financing demand of individuals and enterprises will still be supported. In the new stage of the property industry, the core competitiveness of a property company lies in its own strength rather than the boom of the industry. The Group will size up the trend and capture investment windows amid the continuous integration and differentiation of the industry. The Group will focus on the Group’s operations and improve the Group’s efficiency and effectiveness in order to achieve high quality growth. 2020 will be a year of hard battle for the Group’s “New Three-Year Strategy”. With a view to realizing the Group’s vision of high quality growth, the Group will focus on core businesses and spare no efforts in making breakthroughs, and the Group will build the Group’s sustainable and cross-cyclical competitiveness driven by both capitals and operations. In this regard, the Group will continue to enhance its management structure and talent pipelines, and improve incentive mechanisms to strengthen employee’s core competitiveness. The Group will continue to improve its decision-making mechanism and standardized management as well as upgrade its management mechanism, so as to enhance its operational and management capabilities. Meanwhile, the Group will focus on improving operational efficiency, cost control and develop core capabilities under the guidance of its strategic objectives, thus maintaining its industry-leading position and overall competitiveness. In 2020, the Group will stick to the principle of prudent investment, pay close attention to market changes, insist on the strategy of regional penetration, and focus on first and second-tier cities and their metropolitan circles, so as to fully explore investment opportunities through diversified ways. The Group has set the contracted sales target of RMB140 billion in 2020. Its sufficient and high-quality saleable resources will support the Group in achieving a high-quality, sustainable and steady growth. China’s economy was impacted by the COVID-19 epidemic in the first quarter, and the sales and construction progress of the property industry were also negatively affected under the general environment. However, the Group remains confident about the outlook and believes that the end-user demand for homes contained by the epidemic will be released and compensated in the future. In terms of financial management, the Group will focus on improving the efficiency and effectiveness of funds based on the management of cash flow and profit, and further improve its credit ratings and reduce financing costs. The Group will strengthen its capabilities for risk management, emphasize high turnover, and adhere to the strategy of strong operation, investment control and leverage control.

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