Summary: Why did you reach the top of the sales crown? (Welcome to pay attention to the leverage game)
Written by Zhang Yinyin & Editor | Xin Xinran
For the current real estate situation, not to mention that there is no increase in income, there is not much that can increase income.
Of course, there are also a few real estate companies that have performed relatively well, such as some central real estate giants. On the evening of April 22, 2024, Poly Development released its 2023 financial report, first officially sitting on the "sales crown", and then increasing revenue, of course, it did not increase profits.
Today, in the "Split Annual Report" column of the leveraged game, let's talk about Poly Development, the best-performing series among real estate companies, and take a look at the details of its 2023 performance.
1. Why did you reach the top of the sales crown?
In 2023, Poly Development, a state-owned enterprise, will top the real estate sales crown.
According to the "2023 China Real Estate Enterprise Sales TOP200 Ranking Report" by the previous market institution CRIC, the full-caliber sales amount of Poly Development in 2023 will be 424.6 billion yuan, exceeding the second place Vanke by 49.1 billion yuan and the third place China Overseas Real Estate by 114.8 billion yuan.
According to the annual report, Poly Development will achieve sales of 422.2 billion yuan in 2023 - the data is very different from the data of previous market institutions, ranking first in the industry, and the sales area will be 23.86 million square meters.
Looking back in recent years, according to the historical data of CRIC, from 2019 to 2022, Poly Development's full-caliber sales were 470.2 billion yuan, 502.8 billion yuan, 538.5 billion yuan, and 457.3 billion yuan respectively, ranking higher year by year from fifth, surpassing Vanke and Sunac China in 2022 and winning the runner-up, with a gap of only 7 billion yuan with the sales champion Country Garden at that time.
In 2023, the sales of private real estate enterprises will generally continue to decline, and Poly Development will successfully reach the top.
At the same time, the leverage game noted that the company has maintained the first central enterprise in the real estate industry for 15 consecutive years.
According to the disclosure of Poly Development's annual report, the company's sales contribution in the core 38 cities with strong certainty was nearly 9 percent, an increase of 2 percentage points year-on-year. The sales contribution of the Pearl River Delta and the Yangtze River Delta exceeded 110 billion yuan and 140 billion yuan respectively, the total of Guangzhou-Foshan exceeded 80 billion yuan, and the total of Shanghai exceeded 50 billion yuan.
In 2023, the market share will be 3.6%, an increase of 0.2 percentage points year-on-year, of which the market share of the core 38 cities will reach 6.8%, an increase of 0.7 percentage points year-on-year, and there will be 27 cities with a market share of more than 10%, and the ceiling of single-city market share will continue to break through and increase.
It is worth mentioning that if you look at the sub-districts, the revenue of the western and northeastern regions will decline greatly in 2023, especially in the west.
In addition, Leveraged Games believes that it is worth mentioning that the stock projects developed by Poly have achieved remarkable results.
The contracted value of existing projects was 257.5 billion yuan, accounting for 61% of the annual sales amount in 2023, and the contracted area was 16.43 million square meters, accounting for 69% of the annual sales area.
In 2023, Poly Development will start construction of 14.91 million square meters, a year-on-year decrease of 37%, concentrate resources to ensure quality delivery, complete the completed area of 40.53 million square meters, a year-on-year increase of 2%, and complete the quality delivery of 291,000 units, a year-on-year increase of 12%.
2. Revenue increased sharply, net profit plummeted, and dividends were generous
In 2023, Poly Development will achieve revenue of 346.8 billion yuan, a year-on-year increase of 23.42%. In particular, the annual report says:
The company has always maintained a cautious revenue recognition policy, and the revenue is recognized only after the completion and delivery of the project, so the company's contract liabilities at the end of the reporting period are 377.2 billion yuan, and the future income guarantee is high.
This statement seems to mean something.
In 2023, Poly Development achieved a net profit of 17.899 billion yuan, a year-on-year decrease of 33.68%, and a net profit attributable to the parent company of 12.067 billion yuan, a year-on-year decrease of 34.13%.
The gross profit margin carried forward in 2023 will be 16.02%, a year-on-year decrease of 5.99 percentage points, mainly due to the increase in the proportion of low-profit items carried forward, which is in line with the industry trend.
In addition, Poly Development said that it has adopted a conservative accounting policy for a long time, adhered to the cost method of measurement of investment real estate, and provided for depreciation every year, and out of prudence, the impairment of inventory and long-term equity investment totaled about 5 billion yuan......
As shown in the figure below, in the fourth quarter of 2023, Poly Development's attributable net profit was negative, which is not unrelated to the company's relevant financial arrangements.
After talking about the sale of properties, let's look at the asset management.
Poly Development's annual report said that in 2023, it will integrate resources in key formats such as apartments, office buildings, and commercials, accelerate the scale of operation, and effectively improve the operating quality of assets, with a return on opened assets of 2.7%, an increase of 0.5 percentage points year-on-year.
As of the end of 2023, Poly Development has added 28 to 135 commercial asset projects such as hotels, shopping malls, office buildings, and apartments under management, with a management area of 4.35 million square meters, a year-on-year increase of 12%.
With the double improvement of return on assets and operation scale, the asset management income will reach 4.17 billion yuan in 2023, a year-on-year increase of more than 30%.
In 2023, the performance of the capital market will continue to be sluggish, and Poly Development will implement a repurchase plan of no more than 2 billion yuan.
The cash dividend ratio has been increased from 20% to 40%, and 10 distributions of 4.1 yuan (tax included) are planned, with a total estimated cash distribution of 4.865 billion yuan. The ratio of cash distribution to net profit was 40.31%. This is the 18th cash distribution since Poly Development went public.
3. Enviable interest rates
At the same time, Poly Development continued to open up sources and reduce expenditure, and in 2023, the net cash flow from operating activities will be 13.9 billion yuan, which will be positive for six consecutive years.
In 2023, the annual recovery amount will be 430.4 billion yuan, with a sales recovery rate of 102%, of which the sales recovery rate in the current year will be 78.3%, an increase of 11.2 percentage points year-on-year.
By accelerating the return of investment in equity participation projects, revitalizing pre-sale regulatory funds in various ways, and speeding up tax refunds, a total of 52.9 billion yuan of available funds have been increased.
As of the end of 2023, Poly Development's monetary fund balance is 148 billion yuan, maintaining a reasonable level of about 10% of total assets.
In addition, as of the end of 2023, 96.6 billion yuan of funds (including output tax) have been sold to be withdrawn on a consolidated basis, and the available funds will be abundant in the future.
The asset-liability ratio was 76.55%, the asset-liability ratio after deduction was 67.14%, and the net debt ratio was 61.20%, down 1.56, 1.34 and 2.37 percentage points respectively from the end of 2022, and the cash short-term debt ratio was 1.28.
The balance of debts due within one year was 73.7 billion yuan, and the proportion of interest-bearing liabilities was 20.82%, down 0.46 percentage points from the beginning of the period.
As of the end of 2023, the balance of interest-bearing debt of Poly Development was 354.3 billion yuan, a decrease of 27.1 billion yuan from the beginning of the period, and the comprehensive financing cost was about 3.56%, a decrease of 36 bps from the end of 2022 - after reading this set of data, I am envious.
Direct financing accounts for 16.31% of interest-bearing liabilities, and the leveraged game sees that Poly Development believes that there is still a lot of room for improvement.
In 2023 alone, Poly Development will increase its financing by 137.1 billion yuan, with a comprehensive cost of only 3.14%, of which the three-year direct financing cost will be reduced to 3.0%.
Behind the low interest rate and relatively healthy finance, it is not unrelated to the strategic layout of Poly Development.
In 2023, Poly Development will expand a total of 103 projects, with a total land price of 163.2 billion yuan and an equity land price of 135.9 billion yuan, an increase of 26% year-on-year, and an increase of 16 percentage points to 83% in the expansion equity ratio - it seems amazing, but look at the layout:
99% of the new expansion amount is located in the core 38 cities, the value of residential business accounts for 95%, and the average floor price of new projects is 15,187 yuan / square meter. With high development efficiency and decentralization speed, 40% of the newly acquired projects in 2023 will be launched in the same year and contribute more than 30 billion yuan in contract amount, and all shareholder investment will be recovered in 2022.
According to the annual report, 41 new expansion projects will start construction in 2023, with an average opening time of 5.2 months and an increase in opening efficiency by 3.7 months.
It is worth noting that the profit margin of the pre-tax cost of the new project is more than 15% on average, and it has strong profitability.
As of the end of 2023, Poly Development's land reserve has a total area of 77.9 million square meters, of which 66.08 million square meters are existing projects and 11.82 million square meters are incremental projects, with the proportion of existing projects decreasing by 8 percentage points, and the area reserve of core 38 cities accounting for nearly 7 percent, an increase of 2.4 percentage points, and the resource structure has been continuously optimized.
As of the end of 2023, Poly Development's planned projects under construction cover an area of 90.08 million square meters, with a total construction area of 265.37 million square meters, an area under construction of 119.21 million square meters in 2023, a new construction area of 14.91 million square meters and a completed area of 40.53 million square meters in 2023.
This set of domineering numbers is rare now, and the leverage game is still a little uncomfortable.
Looking forward to 2024, Poly Development plans to complete direct investment of 335 billion yuan in real estate and related industries, with a planned new construction area of 18 million square meters and a planned completion area of 34 million square meters.
Poly Development believes that it has stable financial management capabilities, outstanding cash flow management capabilities, long-term sales recovery rate to maintain a high level in the industry, and has maintained positive cash flow from operating activities for six consecutive years, and has a reasonable asset-liability structure and low-cost advantages.
Some real estate companies may regret this thing, or some may not imitate it.
The financial charts not attributed to the source in this article are all from the relevant announcements of Poly Development, and are hereby explained and acknowledged
Copyright and Disclaimer: This article is created by Leveraged Games, unauthorized reprinting is prohibited! In addition, please indicate the source and author at the beginning of the article when authorizing reprinting, thank you! The views of any article in Leveraged Games are for learning and exchange and discussion, not investment advice. All investments made by the user on this basis are at their own risk. If there are omissions or mistakes in the article, please criticize and correct them.