On the evening of April 22, Poly Development disclosed the results announcement of the previous year, showing that in 2023, Poly Development will achieve a total operating income of about 346.8 billion yuan, a year-on-year increase of 23.42%.
Looking forward to the performance of Poly Development in 2023, at a time when market sales are sluggish and corporate performance is generally declining, Poly has maintained its market share with forward-looking strategic research and judgment and high-quality development concepts, and its leading edge has been further strengthened. From the institutional point of view, Poly Development will strengthen its product and brand strength with the improvement of its quality core in 2023, and build a stable growth model in the new cycle.
Strengthen market resilience and be the vanguard of high-quality development
Under the deep adjustment of the real estate industry, the performance of real estate companies continues to diverge. Throughout 2023, the sales of real estate companies as a whole showed a trend of "high before low", with sales recovering rapidly in the first quarter and continuing to weaken since the second quarter. The sales performance of central and state-owned real estate enterprises is relatively resilient, and the performance of private real estate enterprises is greatly affected by the impact of market adjustment.
According to the latest "2023 China Real Estate Sales 10 Billion Enterprise Ranking" released by the China Index Research Institute in March, the total sales of the top 100 real estate enterprises in 2023 will be 6,279.10 billion yuan, a year-on-year decrease of 17.3%. The equity sales of the top 100 real estate enterprises were 4,346.84 billion yuan, with a market share of 34.5%, a decrease of 4.8 percentage points from 2022; The equity sales of 10 billion real estate enterprises were 4,486.20 billion yuan, with a market share of about 35.6%. In terms of specific performance, the sales performance of central state-owned enterprises is significantly better than that of mixed-ownership real estate enterprises and private real estate enterprises. In the context of the continued downturn in the market, Poly Development has shown sufficient resilience: its market ranking has risen to the first place in the industry, and it is the only real estate company in the industry with more than 400 billion yuan, and its market share has increased by 0.2 percentage points.
At the same time as the scale of commercial housing sales in the country contracted, the overall profit of real estate also rebounded in the same period. According to the data, in 2023, the average net profit margin and return on net assets of the top 100 real estate companies will be 5.0% and 3.0% respectively, and the profitability will decline. The average net profit margin and return on net assets of the top 100 enterprises decreased by 1.4 and 1.5 percentage points respectively compared with the previous year. Affected by multiple factors such as high carry-over costs, stock depletion, and asset impairment, the net profit margin of the top 100 enterprises has declined. This also means that after a period of rapid development, the overall profit of China's real estate is returning to a reasonable level.
For the leading enterprises in the industry, the sales scale and the quality of operation are being paid equal attention. CRIC's list shows that in 2023, the sales scale of Poly Development's equity will be 422.2 billion, which is basically the same as that of the same period last year, and the relevant data confirms that the sales quality of Poly Development is improving, and the sales amount attributable to shareholders is still guaranteed in the downward environment. While maintaining the scale, Poly Development also pays more attention to the quality of returns, and Poly Development has repeatedly emphasized the need for "cash sales". The annual recovery rate is as high as 102%, and sufficient recovery funds provide a solid foundation for resisting industry fluctuations and the company's business development.
In 2023, the performance of the urban real estate market will be more differentiated, and the three major urban agglomerations of the Yangtze River Delta, Guangdong, Hong Kong and Macao (Mainland), and Beijing-Tianjin-Hebei will make outstanding contributions to the sales of real estate enterprises. In this context, holding on to the core city means certainty. From the perspective of regional business layout, Poly Development has deepened the top-level tone of "city-specific policies" for hot cities with stronger cyclical recovery momentum, as well as core cities with a solid economic foundation and a large net inflow of population, and implemented "one place, one policy" in a timely and measured manner, so as to deepen the differentiated highlights of new expansion projects and open up the effective market share competition.
As a result, the certainty of development continued to improve: the sales amount of the 38 core cities accounted for 88% of the total sales amount, an increase for four consecutive years, and the market share of the 38 core cities reached 6.8%, an increase of 0.7 percentage points year-on-year. According to incomplete statistics, there are at least 27 cities with a market share of more than 10% of Poly Development. Behind the increase in market share, Poly Development has always been customer-centric, and its market reputation has been continuously improved, which has further consolidated and stabilized the moat for Poly's high-quality development in the future.
Strengthen financial security and eliminate liquidity risks
In the downturn of the industry, the safety of enterprises is more important than development. In 2023, Poly Development adhered to the financial system and strengthened financial security control. As a high-quality leading real estate enterprise, Poly Development has achieved resource replenishment and debt structure optimization on the premise of maintaining positive operating cash flow, ensuring a balance between security and development in a rapidly changing market.
According to the annual report data, Poly Development will have 148 billion yuan of monetary funds in hand at the end of 2023, ranking first in domestic real estate stocks in terms of related amount. Correspondingly, by the end of 2023, the scale of Poly Development's interest-bearing liabilities will be reduced by 27.1 billion yuan to 354.3 billion yuan, and the decline in the scale of interest-bearing liabilities will directly and effectively reduce the risk of debt repayment.
Not only that, Poly's comprehensive financing cost also decreased from 3.92% at the end of 2022 to 3.56% at the end of 2023. It not only reduces costs, but also cuts interest rates, and greatly improves its ability to resist risks. It is worth mentioning that due to the impact of the US dollar interest rate, the capital cost of overseas US dollar bonds of real estate enterprises is significantly higher than that of domestic ones, and is greatly affected by exchange rate fluctuations.
The strong cash flow from operating activities helps to ensure the virtuous cycle and self-balance of the company's income and expenditure, and is also the core competitiveness of the industry during the downturn. In 2023, Poly Development's operating cash flow will be 13.9 billion, which has been positive for the sixth consecutive year. The inflow side has a stable sales scale to ensure the return of the return, and the expenditure side can not only pay for rigid construction and security, implement the guaranteed delivery of buildings, but also have funds to ensure the expansion of land acquisition, and even have the money to do a repurchase of 1 billion yuan. It shows that the enterprise can rely on its own operation to achieve the positive cycle of its own hematopoiesis.
Sales and financing were good, liquidity continued to improve, and Poly Development's solvency and risk resistance were strong and stable. After a series of actions to actively optimize the financial structure, Poly Development's asset-liability ratio and net debt ratio at the end of 2023 were 67.14% and 61.20%, down 1.34 and 2.37 percentage points respectively from the beginning of the period, and the cash short-term debt ratio was 1.28.
Based on the overall performance of Poly Development, relevant research reports from many brokerage institutions such as Ping An Securities, Minsheng Securities, and Kaiyuan Securities believe that they have frequently won high-quality incremental assets in first- and second-tier core cities and hot spots, laying the foundation for location dividends for Poly Development to build quality projects in the future. With the new land acquisition to lay profit margins, the company's carry-over gross profit margin is expected to improve marginally in the future.
While ensuring financial stability, Poly also actively gives back to investors and delivers satisfactory answers to the capital market. According to the "2023-2025 Shareholder Return Plan" announced by Poly Development earlier, the dividend ratio in the next three years will jump directly to 40%, which is higher than the level of its peers. In order to strengthen investor confidence and do a good job in the market value management of the capital market, Poly Development has also completed the repurchase of 1 billion yuan of shares, and the annual dividend + repurchase amount is expected to exceed 6 billion yuan, demonstrating the company's self-confidence, and the dividend yield has reached 5%, ranking among the top in the industry. In the opinion of analysts, in the case that some leaders have stopped paying dividends, Poly's shareholder return arrangement is even more valuable, which is not only the sincerity to shareholders, but also the embodiment of its own cash strength and development confidence.
Strengthen the core competitiveness and improve the systematization of product services
When the development logic of the industry returns from emphasizing scale to emphasizing quality, Poly is the first real estate company to propose that the industry has entered the era of quality, and it is also the first company to implement the concept of product success. According to the data of its annual report, in 2023, Poly Development will have 79 product line projects, and the construction of product lines has entered the stage of momentum. In terms of product diversification and value superposition, it is necessary to take into account the needs of rigid demand, rigid reform, improvement, and luxury housing, and at the same time highlight the highlights and characteristics of high-quality projects, create a benchmark for phenomenal high-quality projects, and continuously improve market competitiveness.
In terms of product quality upgrading, Poly Development has developed three product lines of "Tian-Yue-He" based on the humanistic characteristics of different regions, and met the differentiated needs of different customers from the characteristics of new top luxury courtesy, new elegant humanities and new pyrotechnics.
Focusing on the core goal of providing customers with "good products, good services, and good life", Poly Development will continue to enhance its internal strength in operation and management in 2023 and establish a systematic construction system of "Development Tree". By building a management link for the whole life cycle of the project, deepening the standardization of products, brands and services, and integrating investment positioning, the development efficiency has been further improved. In 2023, Poly Development will complete the delivery of 291,000 sets of products, and customer satisfaction will continue to improve while the delivery volume has increased by 12% year-on-year.
The selection list of "2023 Top 100 Chinese Real Estate Enterprises in Product Power" organized by CRIC Research Center was officially announced. Poly Development Holdings was selected as one of the "Top 100 Chinese Real Estate Enterprises in Product Power in 2023", and its product power ranking rose from fifth in 2022 to third place. Poly Development Holdings Tianzi won the 2023 National Top 10 Luxury Residential Products, and Yuezi won the 2023 National Top 10 Light Luxury Boutique Products. The seven major projects of Tianyue and the product department are listed on the list of the top ten works in the country in 2023, and the poly and apartment under it are on the list of the top ten white-collar apartments in the country in 2023.
According to the analysis of the China Index Research Institute, in 2023, Poly Development will adhere to the "brand thinking in the era of quality" and achieve steady and high-quality development, mainly thanks to: 1. Correct strategic direction and firm strategic implementation. In recent years, Poly Development has always adhered to the development of ordinary residential buildings and the deep cultivation of core cities, and in recent years, the cargo volume of the 38 core cities has been nearly 70%, and the residential volume accounts for more than 95%. Second, the customer-centric product service systematization is improved. From the "full life cycle living system" to the concept of "humanistic community" and the upgrading of the "Tianyueren" product and service system, Poly Development deeply explores the people's yearning and demand for a better life, and continuously upgrades and iterates the product and service system. 3. Industry-leading brand credit. Poly's development of strong brand credit has further enhanced the trust and recognition of the market. Over the years, Poly Development has continued to enhance customer recognition and promote the continuous improvement of brand value through high-quality products and services.
Industry observers said that in 2024, the real estate industry will continue to adjust deeply, and many cities will introduce policies to limit purchases and sales, and reduce the proportion of down payments and mortgage interest rates, and the expectations and confidence of the real estate market will be restored to a certain extent. Real estate companies represented by Poly Development are actively starting innovative marketing, seizing important traditional consumer marketing nodes such as "May Day" and "Double Eleven", and boosting steady growth in revenue performance with high-quality products. With the joint efforts of all market participants, we will gradually promote the clearing of market risks and promote the healthy and stable development of the real estate market in 2024 in an orderly manner.
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