Guandian.com's sales last year were particularly bright, and Yuexiu Real Estate announced its 2023 annual results on March 26, and the financial report data is still good.
According to the data, in the past year, Yuexiu Real Estate's operating income recorded about 80.22 billion yuan, an increase of 10.8% year-on-year. The corresponding recorded property income was 75.72 billion yuan, an increase of 9.7% year-on-year, and the property area of 3.16 million square meters was settled, an increase of 10.2% year-on-year.
In terms of finance, as of the end of the period, Yuexiu Real Estate maintained the green level of the three red lines, with the asset-liability ratio, net borrowing ratio and cash short-term debt ratio after excluding advance receipts being 67.4%, 57.0% and 2.01 times, respectively. In terms of ratings, Moody's and Fitch maintain their investment grade credit ratings.
During the same period, Yuexiu Real Estate's weighted average borrowing rate was 3.82%, down 34 basis points year-on-year, and the average borrowing cost was 3.63%.
Benefiting from the background of the shareholders of Yuexiu Group and Guangzhou Metro, Yuexiu Real Estate's financing channels remained smooth during the year, including the successful issuance of corporate bonds totaling RMB6.9 billion in China with a weighted average annual interest rate of approximately 3.37%, the overseas issuance of RMB free trade zone bonds totaling RMB3.4 billion with a weighted average annual interest rate of approximately 3.92%, and dim sum bonds amounting to RMB1.21 billion with a coupon rate of 4%.
In addition, Yuexiu Property completed a rights issue in April last year to raise HK$8.36 billion.
This brought Yuexiu Property's cash and cash equivalents and monitoring account deposits to approximately RMB46.10 billion at the end of the period, which is sufficient to cover RMB22.961 billion of debt maturing in the coming year.
Market response
The biggest problem facing Yuexiu Real Estate is still the uncertainty of the real estate market.
In 2023, China's real estate industry has experienced multiple tests, and although there has been a considerable degree of support at the policy level, including the lifting of purchase restrictions in many core cities, it reflects that there is still a certain lag in the market, and there are certain concerns about the future prospects of consumers.
The performance of Yuexiu Real Estate has naturally become a microcosm of the overall trend of the market.
According to some indicators, the company's gross profit margin in 2023 will be about 15.3%, down 5.1 percentage points year-on-year, core net profit will be 3.49 billion yuan, down 17.5% year-on-year, and net profit attributable to the parent company will be 3.19 billion yuan, down 19.4% year-on-year.
In terms of sales, Yuexiu Real Estate will achieve contracted sales of 142.03 billion yuan in 2023, completing the annual sales target and increasing by 13.6%.
In the first two months of 2024, Yuexiu Real Estate's cumulative contracted sales were 10.361 billion yuan, a year-on-year decrease of about 54.1%, and the cumulative contracted sales area was about 373,500 square meters, a year-on-year decrease of about 41.8%.
Compared with the industry data in the same period, Yuexiu Real Estate sales are still better than its peers. According to the data released by the National Bureau of Statistics, the area and value of commercial housing sales nationwide fell by 8.5% and 6.5% year-on-year respectively last year, of which the area and value of residential sales decreased by 8.2% and 6.0% respectively.
According to the research results of the "Sales Performance of Real Estate Enterprises from January to February 2024" of the Guandian Index Research Institute, the total sales amount of the top 100 real estate enterprises in February 2024 was 140.8 billion yuan, down 61.7% year-on-year and 21.7% month-on-month.
The question is, how does Yuexiu Real Estate maintain its advantage under the general trend of the industry?
In the face of such a situation, Lin Zhaoyuan, chairman and executive director of Yuexiu Real Estate, said that the company's overall strategy is still seeking progress while maintaining stability.
In terms of profitability, we adhere to a multi-pronged approach, including precise cost input, strive for more efficient business management, and continue to effectively control procurement costs and management costs.
He judged that in the future, the state will continue to provide greater support for real estate financing.
"The overall scale should stabilize at 7 trillion or 1 billion square meters in the future. It said that although the overall size of the market will decline, cities will remain fragmented, and some opportunities will appear in core cities.
In terms of housing purchase policies in major cities, he believes that the purchase restrictions will continue to be relaxed. Therefore, Yuexiu Real Estate will still make "valuable investments" in the new year and continue to focus on core cities.
Sales target
It is understood that Yuexiu Real Estate implemented a strategic merger between the central and western regions last year, and Wuhan became the regional headquarters of Yuexiu in the central and western regions.
Lin Zhaoyuan said that Yuexiu Real Estate's current strategy is "1+3", that is, the Greater Bay Area plus three areas: East China, Central and Western China, and North China. This is also in line with the company's strategy of focusing on core cities.
According to the data, Yuexiu Real Estate will maintain a certain investment momentum under this general tone in 2023, adding 28 new plots of land in 11 cities throughout the year, with a total construction area of about 4.91 million square meters, all of which are located in first-tier and key second-tier cities. Including the end of December last year, a total of 4 parcels of land were acquired in Guangzhou, Hefei and Xi'an within two days, with a total transaction value of about 10.5 billion yuan.
As of December 31, Yuexiu Real Estate had a total land bank of approximately 25.67 million square meters, of which 10.75 million square meters were located in the Greater Bay Area, accounting for about 41.9%. In addition, 95% of the total land bank is located in first-tier cities and key second-tier cities.
The quality of the land reserves is high, but the outlook is shrouded in fog, and Yuexiu Real Estate has set a more conservative annual sales target.
According to reports, the company's sales target for 2024 is set at 147 billion yuan. Based on the annual sales amount of 142.03 billion yuan in 2023, the increase will be about 3.5%.
At the same time, Yuexiu Real Estate's saleable resources in 2024 will be about 270 billion yuan, of which the Greater Bay Area accounts for 51%, East China 21%, the Midwest 17%, the North 11%, and the Greater Bay Area and East China account for 72%.
The Greater Bay Area, especially Guangzhou and East China, are the two key granaries of Yuexiu, with the two regions contributing 108.98 billion yuan in sales last year, accounting for 76.7% of the total sales. Among them, Guangzhou alone contributed 61.32 billion yuan.
Yuexiu Real Estate continues to focus on two major areas, which is conducive to stabilizing the sales scale. On the other hand, Guangzhou's current purchase restriction policy has also been relaxed.
In addition, urban renewal, which was not very impressive in the company's business in the past, is expected to become a new engine for Yuexiu Real Estate's future development. It is reported that at present, the old renovation business is mainly concentrated in two major advantageous cities - Guangzhou and Shanghai.
According to reports, the total saleable value of Yuexiu's old renovation projects is about 69 billion yuan, and the planned land supply in 2024 is 340,000 square meters, and the new saleable value is expected to be 18 billion yuan.
The management mentioned that more than 90% of the Guangzhou Nanyang Electric Appliance Factory, which has been laid out for a long time, has signed a contract as a whole, and plans to implement land supply this year, with an estimated total saleable value of about 4.5 billion yuan. The Shanghai Hongkou renovation project, which was newly acquired in October last year, is expected to have a total saleable value of about 3 billion yuan, and it is also being promoted.
As a local real estate enterprise in Guangzhou, Yuexiu Real Estate needs to give full play to its own advantages in promoting the renovation project in Shanghai.
In addition to the above-mentioned Hongkou renovation is a state-owned enterprise cooperation project, Yuexiu Real Estate has signed strategic agreements with Hangzhou Metro, Shanghai Jiushi Real Estate and Shanghai Lingang Group (with Yuexiu Group as the signatory) during the year, seeking to open up land acquisition channels in the fields of industrial land acquisition, TOD and urban renewal.
The following is an excerpt from the Q&A session of Yuexiu Real Estate's 2023 annual results conference:
On-site question: It is reported that the Financial Supervision Bureau is pushing banks to speed up the approval of developer loans, what is the current situation of bank loans in Yuexiu? In addition, what measures will be taken to improve the quality of profits?
Management: Since last year, the state's support for real estate financing has been relatively large. For the time being, we expect it to remain in the current state for some time to come.
In terms of profitability, the Group has been adhering to a multi-pronged approach in the past two years, one is accurate cost investment, more efficient business management, and the other is that procurement costs and management costs have been effectively controlled.
On-site question: Can you talk about the company's organizational structure adjustment?
Management: Regarding the organizational adjustment, the central and western regions were merged last year, and the whole group should be "1+3", with 1 being the Greater Bay Area, 3 being the East China Area, the Central and Western China Area, and the North Area.
This adjustment is also due to the management range, from the perspective of our business layout, mainly in the core cities, it should match "1+3".
On-site question: Since the beginning of this year, there has been a further downward trend in the real estate market, has Yuexiu Real Estate done a sales stress test, and is there any more plans for REITs?
Management: Since last year, the downward pressure on the industry has been increasing, in fact, Yuexiu Real Estate cannot talk about expansion, but still insists on seeking progress while maintaining stability.
You can pay attention to some data, although the industry is down, but last year we have grown in many cities, Guangzhou increased by 8 points, Hangzhou declined, but Beijing, Shenzhen is growing, Chengdu is growing, Chongqing is also growing.
The overall size of the real estate market is currently declining, but the structure has been optimized, and some cities are actually more resource-intensive.
Therefore, in the past few years, Yuexiu Real Estate has insisted on seeking progress while maintaining stability and insisting on valuable investment. Where to invest, which city to invest in, and which region to invest in are all necessary to penetrate and study in the early stage.
We have maintained a steady growth rate over the past few years, and we have also maintained a moderate investment intensity.
Regarding REITs, we are currently sorting out some assets (including leasing REITs and commercial REITs) in REITs, and we are also striving for the right time.
On-site question: Does the management think the purchase restrictions in core cities will be further relaxed?
Management: From the current point of view, the adjustment is basically continuing, and the overall scale should stabilize at 7 trillion or 1 billion square meters in the future. The overall size may be a bit down, but there will be some differentiation in the major urban areas.
I think the purchase restrictions will continue to be relaxed. The state has clearly defined the new development model, which is divided into two categories: one is called security, which should be further improved, and the other is marketization, which should be marketized according to market rules.
I think this is a promising time, and I am personally confident that the policy will be relaxed in the future.