Annual Report Observation | The New Hope service station looks at the back end and the front end

On March 26, New Hope Service held its 2023 annual results conference.

For the full year of 2023, New Hope Services achieved revenue of RMB1.261 billion, an increase of 10.7% year-on-year, gross profit of RMB440 million, an increase of 2.1% year-on-year, profit attributable to equity shareholders for the reporting period of RMB215 million, an increase of 5.9% year-on-year, and basic earnings per share of RMB0.264, a year-on-year increase of 6%.

In terms of projects, the number of contracted projects was 253, with a contracted floor area of 38.172 million square meters, a year-on-year increase of about 5.6%, and the number of projects under management was 230, with a floor area under management of about 32.258 million square meters, a year-on-year increase of about 11.9%.

As of the end of the Reporting Period, New Hope Services' net operating cash flow increased by 87.1% year-on-year to RMB335 million.

High-energy cities

As a property company rooted in Chengdu and deeply engaged in Southwest and East China, New Hope Service continues to adhere to the development strategy of regional deep cultivation and focus on high-energy cities.

Geographically, New Hope Services are mainly distributed in East China and Southwest China, with a floor area under management of 27.545 million square meters, a year-on-year increase of 10%, accounting for 85.3% of the total floor area under management.

Among them, the floor area under management in the southwest region was 16.918 million square meters, accounting for 52.5%, and the property management service revenue accounted for 47.4%, a year-on-year increase of 17.7%, while the floor area under management in the East China region was 10.628 million square meters, accounting for 32.9%, and the property management service revenue accounted for 37.9%, a year-on-year increase of 60.2%.

In terms of urban energy level, 95.1% of the property management projects of New Hope Service are located in first-tier, new first-tier and second-tier cities, and 93.8% of the property management revenue also comes from projects under management in such cities, but mainly in the new first-tier cities dominated by Chengdu and the second-tier cities where Wenzhou and Kunming are located, and only 180,000 square meters of projects in the first-tier cities are located in Shanghai.

Although the layout of first-tier cities is small, the overall average urban energy level of the projects under management is still high. Among them, the new first-tier cities have an area of 16.258 million square meters, accounting for 50.4%.

As the core development city of New Hope, Chengdu has an area under management of 10.642 million square meters, accounting for 33% of the total area under management. Secondly, second-tier cities have an area of 14.23 million square meters, accounting for 44.1%.

In terms of external expansion, New Hope Service will add more than 20 new expansion projects in 2023, including high-end residential projects such as Sunshine City Tanyue and Binjiang Jiuli in residential projects, and financial industry projects such as Kunming Branch of China Guangfa Bank and Xinjin/Dayi Branch of Sichuan Branch of China Construction Bank, as well as industrial park projects such as Jiangnan Industrial Park and Vipshop Guangxi Headquarters.

In addition to the direct expansion of the market, in recent years, the state-owned assets in the land auction market have been active, and the number of land acquired by urban investment and development enterprises has increased significantly. Therefore, many property companies will choose to strengthen cooperation with local and local enterprises and central state-owned enterprises to obtain high-quality projects through joint ventures, and New Hope Services is no exception.

In 2023, New Hope Services signed strategic cooperation agreements with Chengdu Wuhou Guotou and Chengdu Dujing Economic Development Zone Investment Co., Ltd. to establish joint ventures respectively, and successfully signed projects such as Shuanghua Digital Industrial Park and Tiefo Park.

During the period, the contracted area of independent third parties accounted for approximately 40% of the total contracted area, but decreased by 6.9 percentage points compared with 2022. Li Hongjia, the management, said that in order to avoid problems such as negative profits and poor cash flow of projects, the company will withdraw some projects with negative contributions in 2023, with a total of 27 projects withdrawn.

Although New Hope's third-party expansion area has decreased, its revenue has increased from 175 million yuan in 2022 to 249 million yuan.

Thanks to New Hope Wuxin Industry's strong performance ability, nearly 37,000 units will be delivered as scheduled in 16 cities across the country in 2023, bringing definitive support for the company's continuous growth in the area under management, and the average property fee of the projects under management during the period is 2.95 yuan/square meter per month.

Outside the basic property management

According to investors, CEO Chen Jing said at the performance meeting: "Our core advantage is to be able to stand at the back end and look at the front end, and to be able to combine 'property + business', 'property + group meal', 'property + retail', 'property + repair' and other capabilities." ”

In 2023, New Hope Services will achieve revenue of 1.261 billion yuan, excluding the 53% revenue share occupied by basic property management services, and the remaining nearly half of the revenue comes from diversified services such as life services, non-owner value-added services and commercial operation services.

Among them, life services account for a relatively high proportion of the realized revenue in addition to basic property management, mainly including community life services, community asset management services, online and offline retail services and catering services, with a total revenue of 291 million yuan in 2023, accounting for 23.1%.

Thanks to the resources of related parties in the food, dairy products, condiments, FMCG and other sectors, New Hope Service has achieved stable performance growth in the development of group meals, with a growth rate of more than 44%. In 2023, the group catering and retail revenue will reach 111 million yuan, and the current group meal operation projects are 22, an increase of 8 year-on-year, and successfully obtained the canteen service of Chinese Life Guangxi Branch, the canteen of the Nanning Research Institute of Guilin University of Electronic Science and Technology in Jiangnan Industrial Park, and other property + group meal projects.

Commercial operations are mainly aimed at shopping malls and office buildings, and the services include market research and positioning, tenant solicitation, and commercial property leasing, and the revenue from commercial operations in 2023 will be 154 million yuan, an increase of 30.1% year-on-year.

In 2023, New Hope Services will manage a commercial project with a floor area of about 539,000 square meters, an average occupancy rate of 87.8%, a gross profit margin of 60.2%, 1,270 merchants under management, and new Chengdu Zhongding 316 Open Street, Chengdu Financial Commercial Plaza, Mingyu Building, etc.

Non-owner value-added services were the business line that shrank more, with revenue from this segment falling by 26.1% year-on-year, mainly including case site services, design consulting and pre-delivery services, and preliminary planning, etc., which mostly occurred in the scenario of real estate development, sales and delivery projects.

For the full year of 2023, New Hope Services' gross profit margin decreased by 3 percentage points to 34.9% from 37.9% in 2022. Affected by the downward cycle of the real estate industry in the Mainland, the gross profit margin of value-added services for non-owners decreased most significantly, by 6.5%. The main property management services also decreased by 2.1 percentage points due to the increase in the proportion of third-party project revenue.

In the face of this phenomenon, management said that this structure is healthier and more independent, and although the revenue growth rate has been reduced, the overall profitability continues to improve.

As of December 31, 2023, New Hope's service trade receivables were $318 million, a decrease of 2.2% from $325 million as at December 31, 2022, mainly due to the increase in the collection management of accounts receivable during the reporting period.

The trade receivables of affiliated companies amounted to RMB120 million, an increase of 11% from RMB107 million in 2022, accounting for the same proportion of the overall trade receivables as of the previous year. The trade payments to foreign customers decreased, from $226 million in 2022 to $221 million in 2023.

Regarding the performance of trade receivables, Chen Jiang, the management of the company, said to the participating investors that at the strategic level, this is due to the deep cultivation of enterprises in high-energy cities in the past and the selection of high-quality projects, high-energy cities have better habits in terms of service payment and payment, and high-quality projects can help enterprises locate a group of customers with certain consumption power.

In terms of operating cash flow, as of the end of the Reporting Period, New Hope Services' net operating cash flow was approximately RMB335 million, compared to approximately RMB179 million from operating activities in the same period of 2022.

According to the annual report data, the total cash at the end of the year was 1.145 billion yuan, compared with 1.04 billion yuan at the end of last year, which did not show a significant growth trend.

In terms of cash use, according to the participating investors, Liu Xu, the management of New Hope Service, said: "The company's cash will be mainly used for market expansion and high-quality development, and will also be used to support business operations and life service business development. ”