This year, the term "new quality productivity" was included in the "Government Work Report" for the first time, which not only marks the country's firm commitment to the innovation-driven development strategy, but also reflects the urgent need to accelerate the development of new quality productivity.
Especially in the field of real estate, Zhang Yadong, vice president of the China Real Estate Association and president of the construction association, emphasized at the recent China Real Estate Agency Construction Summit, "the agent construction business model is not only a new model of real estate development, but also a high-tech, high-efficiency, high-quality new quality productivity. ”
From the perspective of investment, the emphasis on new productivity at the national level has injected new development vitality and innovation impetus into the agency construction industry, and also guided investors to a potential investment direction.
As a benchmark head construction enterprise, Greentown Management is a good observation sample. Through its latest strategic actions and results, we can clearly see the growth of a leading agent builder.
1. The agency construction industry is an inevitable product, and the long-term incremental space is full
First of all, from the perspective of industry development, the current real estate industry is in a period of deep adjustment, and the rise of the agent construction model not only responds to the immediate needs of the market, but also points out the long-term transformation path of real estate enterprises through the cycle.
By observing the development process of real estate in mature markets such as Europe, America and Japan, it can be found that with the increasing maturity of the market and the increasing diversification of consumer demand, real estate services have gradually developed from the traditional single developer model to a more segmented and professional direction. The rise of the agent construction model is a concrete manifestation of this evolutionary trend.
For example, in the European and American markets, the asset-light operation service with "management" as the core has developed quite maturely, and the market penetration rate of the agency construction business can reach 20% to 30% in the overall real estate service market; in Japan, the cases of the three major real estate giants Mitsui, Sumitomo and Mitsubishi successfully overcoming the economic crisis through the asset-light model such as agent construction have an important enlightening effect on the transformation of China's real estate enterprises in the current period of deep adjustment.
Drawing on these international experiences, the growth path of China's agency construction industry has been very clear, and there is huge room for growth.
On the demand side, driven by the continuous promotion of the "Three Major Projects" and the policy guidance of "Circular 14", the demand for services from the government, state-owned enterprises and capital parties has increased significantly.
This growth trend has given rise to a number of emerging agency construction opportunities, including but not limited to the lack of project start-up by urban investment companies, the preparation of affordable housing, the comprehensive transformation of urban villages, the "guaranteed delivery" plan of distressed real estate enterprises, and the disposal of non-performing assets in the real estate sector by financial institutions.
For example, during the 14th Five-Year Plan period, 9 million units of affordable rental housing are planned, and third-party institutions predict that the transformation of urban villages will be about 1 billion square meters.
More importantly, the agency construction model provides a new cooperation model for local governments, urban investment companies, central enterprises, state-owned enterprises and financial institutions. Through agent construction, these entities can share resources, complement each other's advantages, and jointly promote the smooth implementation of the project. With its professional technology, rich experience and efficient management, the agency construction company can provide the whole chain of services from the early planning to the later operation of the project, ensure the high-quality completion of the project, and achieve a win-win situation for all parties.
On the market side, in the context of the continuous contraction of the domestic real estate industry, the agency construction industry has grown rapidly, showing counter-cyclical attributes, and it also indicates that its market penetration rate is expected to continue to rise, and the industry generally expects that the scale of the agency construction market will reach 100 billion.
According to data from Yihan Think Tank, in 2023, the total construction area of the agency construction industry as a whole will be nearly 170 million square meters, a year-on-year increase of 53%. This significant growth momentum has also attracted nearly 100 brand real estate companies to run into the field of agent construction, further promoting the rapid development of the industry.
Source: Yihan Think Tank
The cumulative number of winning bids for the construction project also confirms the rapid growth trend of the construction industry.
According to CRIC real estate research, the cumulative number of winning bids for construction projects in 2023 will reach 357, a year-on-year increase of 50%. Especially in the first quarter of this year, the number of winning bids for agent construction reached 118, an increase of 32.6% compared with the same period last year, setting a new high in a single quarter in recent years.
From the perspective of growth, the China Index Academy predicts that the proportion of the agency construction market in the industry will grow rapidly at an average annual rate of 21.3%. The market penetration rate is expected to increase from 4.8% in 2021 to 12.5% in 2025, compared with the current 20%-30% of the European and American agency construction business, if the average value of 25% is estimated, the penetration rate of the domestic agency construction industry still has 5.2 times of room for growth, showing huge market potential and development prospects.
In general, as a new model and new quality productivity for the transformation of the real estate industry, the agent construction model can ensure the scale of development, maintain the economic volume, and protect the stability of the entire industrial chain, and is gradually becoming the stabilizer of China's real estate market, and its long-term growth is beyond doubt.
Then, in the next stage of development, how to quickly adapt to new technologies and new concepts, and realize the deep integration with new quality productivity, has become an urgent problem to be solved in the agency construction industry. This requires practitioners in the agency construction industry not only to have keen market insight, but also to have the ability to continue to learn and innovate to adapt to changing market demand and technological progress.
We might as well focus our perspective on Greentown management.
2. Grasp the pulse of the industry and continue to consolidate the certainty and leading edge of growth
With its first-mover advantage, Greentown Management has developed to the forefront of the industry in terms of scale, and continues to maintain a leading position in the field of real estate development services, maintaining a market share of more than 20% in the agency construction industry for eight consecutive years.
According to the financial report, as of December 31, 2023, the agency construction projects managed by Greentown have been deployed in 122 major cities in 29 provinces, municipalities and autonomous regions across the country, with a total construction area of 119.6 million square meters, an increase of 17.9% over the same period last year.
Of course, to achieve such results, it is inseparable from the forward-looking vision and timely strategic adjustment of Greentown management.
First of all, Greentown Management conforms to the changes in the industry situation, continues to optimize the diversified customer structure, and continuously deepens business opportunities for the government, state-owned enterprises, financial institutions, etc.
According to the financial report, in 2023, the government, state-owned enterprises and financial institutions will account for 74.7% of the construction area of the new extension construction project. According to the construction area of contract projects, the proportion of government, state-owned enterprises, private enterprises and financial institutions is 26.8%, 34.2%, 31.7% and 7.3% respectively. It not only reflects the balanced development of Greentown Management among all kinds of customers, but also reveals its in-depth penetration in key market areas.
At the same time, the company is constantly expanding its business boundaries, expanding its business scope from traditional residential development to diversified businesses such as industrial parks, public rental housing, talent apartments, co-ownership housing, future communities, municipal facilities, commercial, hotels and offices. This diversification of business types not only brings new growth points to the company, but also demonstrates the flexibility and innovation ability of Greentown Management in the changing market.
Secondly, Greentown Management also combines a diversified customer structure and a nationwide business layout to promote the upgrading of the business model, take the lead in applying information tools, expand the business content of agent construction, and is committed to building a platform-based enterprise.
Specifically, the company has carried out in-depth dismantling and restructuring of the agency construction business, and refined the agency construction service into 6 major steps and 23 key touchpoints, forming a unique "M mountaineering model", which provides clear guidance and guarantee for the smooth implementation of the project.
Source: Company information
At the same time, through the promotion and use of the "Greentown M" APP, it has also successfully simplified the business decision-making process, optimized the evaluation mechanism, and significantly improved the company's operational efficiency and per capita effectiveness. This technology- and data-driven management method not only improves the business realization of B-end customers, but also creates a better life scenario for C-end customers through the "M Lucky Community", and maximizes customer value.
In addition, in the process of building a platform-based enterprise, Greentown Management not only pays attention to the integration of internal resources, but also actively seeks external cooperation opportunities. The "Baichuan Plan" launched by the company aims to introduce urban partners through multiple cooperation models, attract excellent teams and high-quality construction projects, and inject new vitality into the development of the entire industry.
Reflected in the financial data, the performance of steady growth is enough to verify the correctness and growth of Greentown's management business model and various strategic initiatives, and also demonstrates the continuous release and growth potential of the company's intrinsic value.
According to the financial report, in 2023, the company's new business scale will grow steadily, and its revenue and profit will continue to increase, achieving revenue of 3.302 billion yuan, a year-on-year increase of 24.3%, and net profit attributable to the parent company of 970 million yuan, a year-on-year increase of 30.8%, maintaining the absolute leading position in the agency construction industry.
In particular, the company also has abundant cash reserves. As of the end of 2023, the company's net operating cash inflow reached 955 million yuan, a year-on-year increase of 31.8%, and the strong growth of cash flow provided a solid financial guarantee for its continuous investment and operation. Cash and equivalents reached RMB2.044 billion, representing a year-on-year increase of 5.8%, which further enhanced the company's financial security and flexibility.
In terms of shareholder returns, Greentown Management maintained a high dividend policy, with a final dividend of RMB 0.4 per share and a special dividend of RMB 0.1 per share, corresponding to a dividend payout rate of about 100%, demonstrating the company's emphasis on shareholders' interests and confidence in the continuous enhancement of future profitability.
Source: Company information
3. Summary
Nowadays, under the trend of standardization and diversification in the agency construction industry, Greentown Management has shown a strong momentum of development and new growth potential in terms of scale expansion, market share increase, and business expansion. It is believed that with the continuous release of profitability, the market will also give it new recognition and value assessment.
Similarly, a number of brokerage institutions have recently given positive expectations for the growth of Greentown Management, such as Morgan Stanley, Citibank, CMB International, Haitong International, CICC, Industrial Securities, Soochow Securities, Guosen Securities and other securities firms have given the company "buy" and "outperform" ratings, we may be more concerned about it.