Achieved high quality development against the tide – Growth in contracted sales & revenue
Contracted property sales achieved RMB172.00 billion, +4.2% YoY
Total profits remained steady; net profit margin amounted to 23.2%,
maintained at the forefront of the industry.
Interim dividend per share HK45cent, remained stable and committed to generating long term shareholder returns
(Hong Kong, 24 August 2020) China Overseas Land & Investment Ltd. (“COLI” or the “Group”, stock code: 0688.HK) announced its 2020 interim results today.
Delivering growth against set-backs. In the first half of 2020, under the looming impact of the Covid-19 pandemic, the Group’s outstanding execution capability and striving determination delivered key performance indicators that achieved quality growth against the tide. The Group Series of Companies achieved contracted property sales of RMB172.01 billion in the first half of the year, a year-on-year increase of 4.2%；the revenue of the Group was RMB88.63 billion; profit attributable to equity shareholders of the Company increased to RMB20.53 billion; net profit margin amounted to 23.2%, maintained a leading position in the industry. At the end of June 2020, the equity attributable to shareholders of the Company was RMB295.09 billion, an increase of 5.2% as compared to last year end, while the net assets per share was RMB26.93. The Group’s basic earnings per share was RMB1.87, with a proposed interim dividend of HK45 cents per share, where the dividend amount remained the same as the corresponding period last year, exemplifying the Group’s commitment to generate long term shareholder returns.
The Group has consistently held to its development objectives of targeting major cities, mainstream areas and mainstream products to keep pace with market trends and meet the needs of mid- to high-end customers looking for upgrading demand. During the period, the average sales price achieved by the Group Series of Companies exceeded RMB18,000/sq m, substantially above the national average sales price for residential housing. Sales in Beijing, Chengdu, Guangzhou and Shanghai each exceeded RMB10 billion.
Exercising caution in details and implementation, with stability and prudence as watchwords. The Group has maintained a prudent financial strategy. As at the end of June 2020, the liability to asset ratio was 59.77%, the net gearing was 32.95%, lowest among real estate companies with an annual contracted sales above RMB100 billion. In 1H2020, the weighted average borrowing costs was 4.01%, among the lowest level in the industry. The Group has ample cash on hand, amounting to RMB111.38 billion. The three major international credit rating agencies assigned to COLI the highest investment grade ratings among mainland property developers: Baa1 (Moody’s), BBB+ (S&P) and A- (Fitch) with counter-cyclical advantage.
The Group continues to cultivate its position in major cities and strengthen its competitive advantage in land reserves by acquiring mega-sized projects. In the first half of 2020, the Group acquired 21 land parcels in 13 cities in mainland China, adding a total GFA of 5.82 million sq m to the land reserve (attributable interest of 5.62 million sq m and total attributable land premium of RMB52.28 billion). Since the beginning of 2020, the Group has acquired a number of mega projects, including the Shanghai Hongqi Village project, Wuhan Hanyang District project, Taiyuan Tanghuaichanyeyuan District project, and Shanghai East Jianguo project. Each of these projects has a development and construction area of more than one million square meters and a total saleable value of tens of billions of yuan. At 30 June 2020, total land reserve of the Group Series of Companies reached 90.06 million sq m and around 87% of the saleable resources are located in first-tier and second-tier cities.
Improving commercial asset management, optimising asset structure and continuing to accumulate momentum. During the period, the Group’s total revenue from commercial properties was RMB2.03 billion, an increase of 1.1% YoY. During the period, the Group seized the opportunity for market integration presented by the impact of the pandemic, enhancing its capabilities in commercial asset revaluation to advance the full-cycle management of “investment, financing, management and exit” in commercial assets by selling or acquiring qualified commercial assets periodically. The Group enhanced tenant structure, strengthened cost control in commercial operations and improved innovation and service quality in its commercial services. As at the end of June 2020, the total area of commercial properties held by the Group Series of Companies and under operations was 4.5 million sq m, which comprised a total of 45 office buildings, 14 shopping malls, 12 premium hotels and two long-term rental apartments. The Group is the largest single ownership office developer and operator in mainland China, attracting more than 260 of Fortune Global 500 companies to be a tenant in the China Overseas office buildings. The Group’s flexible working office brand “OfficeZip” established presence in seven mainland China cities including Beijing, Shanghai and Chengdu, with a total of 15 OfficeZip projects with an area of approximately 74,000 sq m. It is expected that the total revenue from commercial properties will exceed HK$10 billion in 2023.
The Group proactively embraces change, creating innovative business models and leveraging the depth of its resources to cultivate new businesses. In addition to establishing new businesses in senior living, education and logistic, the Group set up a new supply chain management company that advantageously integrates various Group resources during the period. The new supply chain company leverages the Group’s consolidated merchandising capability and aims to be a premium B2B transaction and integrated services platform in the building materials sector. Another newly set up technology company will digitally manage residential development and business operations, smart communities, smart homes, smart commercial buildings, as well as digital products and services for other real estate development and operating scenarios. This investment by the Group in upstream and downstream technology companies will establish a technology ecosystem.
The Group continues to fulfill its corporate social responsibility and stay on the course of green development. In the first half of the year, the Group established the ESG strategy framework of “Four Excellences” and identified 29 sustainability topics as the basis for setting sustainability goals. Under the framework of “a Company of Four Excellences”, the Group established qualitative and quantitative sustainability targets for 2019 – 2023, covering green building area, air quality testing, customer satisfaction, employee satisfaction, employee training, carbon emissions and energy consumption density.
The Group secured green building certification for 21 new projects in 1H2020 , with a building area of 2.57 million sq m. Cumulatively, the Group has delivered 315 green building-certified projects with a total GFA of 58.04 million sq m. The Group’s “Sea of Hope” programme continued its targeted poverty alleviation efforts in Kangle County, Gansu Province, and created a local produce brand called “Kangle Mushroom”. The Group not only participated in the whole process of brand creation, from product selection to online sales, but also tapped into the power of its extensive customer resources to promote the brand, and gave out “Kangle Mushroom” products as complimentary gifts during the period, with an aim to drive online store traffic, help the brand gain visibility and boost sales. The Group has been included in the “Hang Seng Corporate Sustainability Index” for 11 consecutive years, received a BB rating from MSCI ESG Research and was included in the Hang Seng ESG 50 Index newly introduced by Hang Seng Index Company Limited in July 2020.
Looking ahead, the Group is fully confident in the prospects of the Chinese economy. The Group believes that the strong resilience of the economy will allow China to rise to the challenges of the epidemic and various external factors and achieve high-quality development post Covid-19. In 2020, the Central Government continues to increase counter-cyclical policies to ensure stable progress of the economy. Given the directives “houses are for inhabitation, not for speculation” and “stabilise land prices, housing prices and market expectations”, government policies continue to guide the steady growth of the real estate industry. The Group is confident of achieving steady and sustained growth in 2020.
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