Per reporter: Liu Songhui Per editor: Wei Wenyi
On the evening of August 22, Dragonair China Real Estate (HK6968, stock price HK$0.33, market value of 535 million yuan) released its 2023 first half results announcement, showing that the first half of the year achieved revenue of 7.439 billion yuan (RMB, the same below), a year-on-year increase of 36%; net profit attributable to shareholders was 190 million yuan, a year-on-year increase of 6%; Gross profit was 1.350 billion yuan, gross margin was 18%.
As at the end of June this year, Dragonair China Real Estate had total bank and other borrowings of about $5.705 billion, of which about $2.95 billion would be repaid within one year and about $2.755 billion would be repaid one year later.
The reporter of "Daily Economic News" noted that under the downward pressure of the real estate industry, small and medium-sized housing enterprises generally face the situation of reducing staff and salaries. As of the end of June this year, Dragonair China Real Estate had a total of 573 employees, a decrease of 171 compared with the end of 2022, a reduction of about 23%; Salary and welfare expenses were approximately $115 million, a decrease of $81 million compared with the end of 2022, or a salary reduction of about 41%.
Source: Dragonair China Real Estate 2023 Interim Report
The Yangtze River Delta is the main contributor to the performance area
According to the report, in the first half of the year, Dragonair China Real Estate confirmed the delivery of about 668,800 square meters, an increase of 35% year-on-year; Profit attributable to owners of the company was approximately RMB190 million, a year-on-year increase of 6%; The contracted sales were about 6.801 billion yuan, and the average selling price was about 11,920 yuan / square meter.
Dragonair China Property mainly benefited from property sales, which increased confirmed property sales due to an increase in property deliveries during the reporting period. Among them, the projects that recognized revenue are distributed in Changzhou, Nantong, Wuxi, Wuhu, Suzhou, Yancheng, Chengdu, Sichuan, Hefei, Guizhou and other places in Jiangsu.
In terms of cost of sales, the amount, including construction costs, land costs and capitalized interest, was approximately $6,089 million, compared to approximately $4,338 million in the same period last year. Sales and marketing expenses and general and administrative expenses totalled approximately $411 million, representing a year-on-year decrease of approximately 9%.
Source: Dragonair China Real Estate Financial Report
Affected by the fierce competition in the real estate industry and the continuous tightening of regulatory policies, coupled with the changes in the relevant sales prices, construction costs and land costs of delivered properties, Dragonair China Real Estate recorded a gross profit margin of about 18% in the first half of the year, compared with 21% in the same period last year. Gross profit rose to approximately $1.35 billion, compared to $1,141 million in the same period last year, driven by an increase in deliveries.
As at the end of the Reporting Period, Dragonair China Land (together with its joint ventures and associated companies) owned 62 projects with a land bank of 6,162,500 square meters, of which 55 projects were located in cities in the Yangtze River Delta region. In addition, it plans its layout in the Guangdong-Hong Kong-Macao Greater Bay Area and the southwest region, and retains high-quality projects in Guangzhou and Chengdu.
Dragonair China Real Estate said that the overall operation in the first half of the year was stable, and through the adoption of accurate classification and reasonable pricing marketing strategies, it achieved good sales and promoted payment collection; Through quality control and model first, firmly guarantee the quality of the project; Achieve on-time delivery by optimizing the quality of delivery services and continuously improving customer satisfaction; By streamlining the organization, optimizing the process, focusing more on production and operation, and quickly responding to market changes; Sort out the final projects, and actively promote the project settlement and cooperative project clearance work.
The loan needs to be repaid within one year of 2.95 billion yuan
Continuing the performance of the previous reporting period, Dragonair China Property maintained monitoring and management of its cash-to-debt ratio, net gearing ratio and gearing ratio. The company's net gearing ratio is 22%, the total cash short-debt ratio is 1.1 times, and the asset-liability ratio after deducting contract liabilities is about 53%, and the "three red lines" maintain the green file.
According to the report, Dragonair China Real Estate's gearing ratio decreased, mainly due to an increase in total equity, which was due to more project deliveries and a decrease in total borrowings. The Company's current ratio increased from approximately 1.43 times as at December 31, 2022 to approximately 1.45 times as at June 30, 2023.
Total cash (including restricted cash, secured time deposits and cash and cash equivalents) amounted to approximately $3,224 million, total new borrowings from banks and other trust financing arrangements amounted to approximately $224 million and borrowings repaid from banks and trust financing arrangements amounted to approximately $1,335 million.
Source: Dragonair China Real Estate Financial Report
As at the end of June, Dragonair China Real Estate had total bank and other borrowings of approximately $5.705 billion, of which about $2.95 billion would be repaid within one year and about $2.755 billion would be repaid after one year.
Dragonair China Real Estate stated that in the next step, it will continue to effectively manage working capital through the working capital management policy, and continue to utilize the Group's available financial resources, including proceeds from the sale and pre-sale of property projects, drawdowns of bank financing and other borrowings, and negotiate payment arrangements for contractors in accordance with the latest construction progress.
In terms of human resources, Dragonair China had a total of 573 employees (744 employees at the end of December 2022) and total employee salary and welfare expenses of approximately $115 million (approximately $196 million as at the end of June 2022).
After the reduction of staff and salaries, the Company's general and administrative expenses decreased by approximately 20% compared with the same period, from approximately $242 million as at the end of June 2022 to approximately $194 million as at the end of June 2023.
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