On the evening of April 28, Fuxing Co., Ltd. (000926) released its first quarter report for 2024. According to the announcement, from January to March 2024, Fuxing Co., Ltd. achieved revenue of 1.085 billion yuan, net profit of 54.3806 million yuan, a year-on-year increase of 30.42%, non-net profit of 75.4704 million yuan, a year-on-year increase of 86.31%, and basic earnings per share of 0.0478 yuan.
At the same time, the company also announced the 2023 annual profit distribution plan, which intends to distribute 0.1 yuan (tax included) to all shareholders for every 10 shares converted to 4 shares. The next day, the company's share price was up and down, and as of the close of trading on April 29, the company's stock price was 3.61, and the net assets per share were 10.66 yuan.
High transfers can reduce the price of shares, increase the number of investors, and thus improve the liquidity of the share capital of listed companies. To a certain extent, the high transfer reflects the good operating conditions of the listed company and the potential to rise, especially under the premise that the company's stock price is far lower than the intrinsic value, which shows the company's confidence in the future operation.
In the context of the downturn in the real estate industry, Fuxing Co., Ltd. has been able to achieve gradually improving performance, mainly due to the company's adherence to the implementation of the strategy of steady operation. In fact, for the evaluation of real estate enterprises, the debt ratio and cash flow are more critical.
According to the data, the company's asset-liability ratio after excluding pre-receivables decreased from 66.07% at the end of 2020 to 53.63% at the end of 2023, and the net debt ratio decreased from 97.66% at the end of 2020 to 40.57% at the end of 2023, and the financial leverage has fallen to a healthy level. At the end of the period, the company's book funds on hand were 2.260 billion yuan, and the net cash flow from operating activities was 829 million yuan, and the funds on hand were sufficient.
At the same time, the company's financing channels are unimpeded, and at the end of December 2023, the company completed the issuance of shares to specific targets to raise 814 million yuan, providing strong support for the company's operation and the delivery of fundraising and investment projects. At the same time, some projects of Fuxing Co., Ltd., such as "Xingyu International", have been included in the list of the first batch of real estate financing projects in Wuhan.
At present, the real estate industry has entered a new normal, the number of 100 billion real estate enterprises has decreased sharply, the "three highs model" is coming to an end, the industry is no longer only about scale, and real estate companies are exploring new development models. In the process of changing the times, Fuxing shares have fully demonstrated the "small and beautiful" side.
First of all, the company's business focuses on the field of urban renewal, and has a first-mover advantage, which is in line with the development trend of the industry.
In the high-level tone, whether it is this year's government work report or the central financial work conference, "urban renewal", "trade-in", and "meet residents' needs for improved housing" have been repeatedly mentioned, which shows that urban renewal has stood at a certain height at the strategic level, and there are many opportunities in the field of old reform in the future.
However, even in the complex real estate industry, the old reform can be regarded as a very professional job, and a lot of experience takes time to accumulate and trial and error, and it will not work just by throwing money at it.
The advantage of Fuxing Co., Ltd. is that it is the largest old city renovation and urban village transformation and development enterprise in Hubei, and it is also one of the first listed companies in China to enter the field of "three old" transformation, with a very stable operation, and the development model is mainly carried out through the "urban village transformation" and "old city transformation", based on Wuhan, deeply cultivated in Hubei, and actively oriented to the Beijing-Tianjin-Hebei, Yangtze River Delta, Chengdu-Chongqing Economic Circle and other regions for strategic layout.
For more than 20 years, Fuxing has invested nearly 200 billion yuan in the transformation of urban villages, successfully promoted the transformation of many large-scale urban villages such as Hejiadun Village, Gusaoshu Village, Triangle Road Village, Tuanjie Village, and Heping Village, and built a series of benchmark projects such as Fuxing City, Huafu, Waterfront, International City, and East Lake City on the original site. The first-mover advantage has brought Fuxing a strong competitiveness, and it is easy to take projects and do operations.
In February, the Wuhan Municipal Government Work Report clearly stated that it would accelerate the coordinated development of the Wuhan metropolitan area and promote regional cooperation, expand the scale of urban development, promote the transformation and quality improvement of the main urban area, integrate the four sub-cities, accelerate urban renewal, and steadily implement the transformation of urban villages and scenic villages. It's a real good thing for Fuxing.
Starting the transformation of urban villages may require an investment of tens of billions of yuan, and the development cycle will take more than 5 years, which is not a small challenge, and it requires the participation of "old drivers". As of the end of 2023, the company's cumulative land reserve covers a total area of about 3,527,400 square meters, and the remaining developable construction area is 2,768,600 square meters.
In the face of a series of favorable policies, the company also said that it will be fully policy-oriented, actively follow the new policy of urban village transformation in Wuhan, and take urban village transformation projects or cost-effective projects for acquisition and mergers and acquisitions as the main direction of new land reserves.
Secondly, the small and beautiful of Fuxing shares is also reflected in its strong product strength.
In terms of product development, the company continues to promote product upgrading, improve the applicability and characteristics of products, create benchmark products, enhance premium capabilities, and practice the social responsibility of brand real estate enterprises.
In terms of product design and construction, with the goal of a happy life, we will integrate humanity into products and do a good job in the fine division of functional areas. Follow environmental protection measures, take green, intelligent and quality as the development direction, concentrate on green real estate, and improve the health and livability standards of products.
In terms of functional configuration, we will promote the construction of high-quality brand schools, streetscape bottom business design, community parent-child cultural parks, the construction of sponge communities, and the reservation of new energy vehicle charging piles.
In terms of quality, we do a good job in quality control management in the whole process of the project to meet customer needs with high quality.
In recent years, despite the increasingly sluggish property market transactions, Fuxing has repeatedly achieved good results with its excellent product design capabilities, whole-process quality control management capabilities and rapid delivery capabilities.
From "a fire in winter" Moon Bay No. 1 to "contrarian opening and hot sales" Fuxing Huafu Chenjing, the company has created one real estate miracle after another. Located in the riverside sector of Wuchang's Inner Ring Road, Fuxing Fitch Moon Bay One has been sold out several times in 2022 and won the annual luxury home sales crown in Wuhan's property market. In August 2023, Fuxing Huafu Chenjing will sell 124 sets for the first time, with a total sales of more than 335 million yuan before discount, and a removal rate of 70%. It was much higher than the overall opening rate of the Wuhan property market at that time.
All in all, as a small and medium-sized real estate enterprise, Fuxing shares have few projects but fine, business is not wide but in line with the general trend of the industry, under the financial sound business strategy, the company's performance is expected to continue to improve.