Steady growth, quality development
Contracted sales RMB207.21 billion, +20.5% YoY
Core net profit RMB19.23 billion, +10.9% YoY
Net profit margin 19.3% maintained at the forefront of the industry
(Hong Kong, 23 August 2021) China Overseas Land & Investment Ltd. (“COLI” or the “Group”, stock code: 0688.HK) announced its 2021 interim results today.
Global economic rebounded in the first half of 2021, while unforeseen concerns regarding economic growth also arose. With our employee’s dedication and determination to pursue excellence, our Group had achieved steady growth. The Group Series of Companies achieved contracted sales of RMB207.21 billion in the first half of 2021, a year-on-year increase of 20.5%; the revenue of the Group was RMB107.88 billion, a year-on-year increase of 21.7%; gross profit margin amounted to 28.5%. Profit attributable to equity shareholders of the Company amounted to RMB20.78 billion, and profit attributable to shareholders excluding after-tax arising from changes in fair value gain of investment properties amounted to RMB19.23 billion, a year-on-year increase of 10.9%. Net profit margin amounted to 19.3%, maintained a leading position in the industry. At the end of the period, the equity attributable to shareholders of the Group was RMB328.05 billion, an increase of 4.4% as compared to last year end, while the net assets per share was RMB29.97. The Group’s half-year return on equity was 6.5%; basic earnings per share was RMB1.90, with a proposed interim dividend of HK45 cents per share.
The Group maintains prudent financial strategies. As at 30 June 2021, the liability asset ratio was 60.2%, the net gearing was 33.8%. The Group did not breach any of the “three red lines” and remained as a “green category” enterprise; the weighted average borrowing costs in 1H2021 was 3.6%, maintained at the lowest level in the industry; cash on hand amounted to RMB117.43 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). The Group has a stronger edge in risk-resilience.
In the first half of 2021, the Group Series of Companies (including COGO) acquired 49 land parcels with total land premium of RMB77.81 billion and a corresponding newly added saleable resources amounted to RMB174.64 billion. Among which, the Group acquired 20 land parcels with total land premium of RMB51.30 billion and a corresponding newly added saleable resources amounted to RMB110.49 billion. The domestic real estate regulations have been leading the real estate market through profound change. Based on the principle of “houses are for inhabitation, not speculation”, a series of policy measures have been introduced, including “three red lines” for real estate developers, “two red lines” for commercial banks’ real estate loans, and the “two centralised” land supply policy. In the first half of the year, the Group rationally controlled its investment rhythm, pursuing only quality investments proportionate to strategic need, further strengthened promotion of the “blue ocean strategy”, introduced new investment models, and successfully secured a batch of mega-sized projects including Suzhou Zhongtai Project, Suzhou Super Skyscraper Project and Epochal Uptown in Changchun. The Group has sufficient financial strength to acquire more quality land parcels in the second half of the year. Total land bank of the Group as at the end of 1H2021 was 92.24 million sq m.
The diversified growth of the Group will drive the business momentum. During the period, the Group’s revenue from commercial properties reached RMB2.50 billion, an increase of 23.3% as compared to the corresponding period last year. There will be a series of commercial projects to commence operation by the Group Series of Companies in 2021. In the first half of the year, 6 projects including Ningbo China Overseas building, Beijing China Overseas Fortune Centre have commenced operations. In the second half of the year, 15 commercial projects are due to reach market, encompassing office buildings, shopping malls, hotels, long-term rental apartments, logistics parks and other commercial business. New commercial GFA with approximately 1.01 million sq m is expected to be added during the year, an increase of 20.7% as compared with the total GFA in operation at the end of 2020.
During the period, the Group’s related diversified businesses, upstream and downstream of real estate development, achieved promising business growth, including Hua Yi Design, Lingchao Supply Chain Management Company, Haizhichuang Technology Company Limited.
With the implementation of China’s “dual carbon” climate goals, the Group is steadily marching towards new milestones in sustainable development. The Group achieved great results in the fields of environmental protection, corporate governance, and improving disclosure transparency. The Group continued to fulfill its commitment to building a healthy and sustainable community. During the period, the Group in its 2020 ESG report added the reference to SASB standards (Sustainability Accounting Standards Board Standards) to strengthen the disclosure of qualitative and quantitative indicators that meet the characteristics of the industry, as well as the reference to the TCFD (Task Force on Climate-Related Financial Disclosure) recommendations for the disclosure of climate change management work. The Group also established a Corporate Governance Committee under the board of directors to determine the terms of reference of the board of directors and related committees, to integrate climate change into governance responsibilities, and to clarify management responsibilities related to climate change.
In the first half of 2021, the Group added 48 green building certification projects with a total GFA of 8.01 million sq m. Cumulatively the Group has delivered 439 certified green building projects with a total GFA of 80.80 million sq m. The Group continued to facilitate rural revitalisation in three counties in Gansu Province with a focus on Zhuoni County, assisting in selection of native agricultural product and creating a quinoa brand, “Vale of Clouds”, by cooperating with local government. The Group participated in the whole process of brand creation including trademark registration, production, quality control, online and offline promotion of the product.
Looking ahead, the Group believes that policies and market environment will provide ample growth opportunities to well financed enterprises that pursue business logic to further accelerate the industry realignment. Property developers will revert to a development model based on steady operations and meticulous management. The Group will continue to pursue steady and prudent financial strategies, adhering to the “cash is king” principle, expediting turnover, consolidating the advantages in cost control, strengthening digital lean management, and maintaining industry leading profitability. Meanwhile, with abundant capital, the Group will seize opportunities emerging from industry realignment to capture more market share.
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