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Zhenro Properties Announces Interim Results 2020

Update: August, 25/2020 - 02:54

  • Focus on High-Quality Growth
  • Core Profit up 8.3% y-o-y
  • Optimized Financial Position
  • Enhancement of Operation Effectiveness and Efficiency


Financial Highlights:

RMB mn

 

For the six months ended 30 June

Changes

 

2020

2019

Revenue

14,542

13,648

+6.5%

Profit for the Period

1,275

1,179

+8.1%

Core profit 1

1,243

1,148

+8.3%

 

 

2020.06.30

2019.12.31

Changes

Cash on hand

39,810

35,307

+12.8%

Net debt to total equity ratio

71.4%

75.2%

-3.8pts

Short-term debt to total debt ratio

30.0%

34.2%

-4.2pts

Cash to short-term debt ratio

209%

176%

+33pts

Onshore other borrowings to total borrowing ratio

8.7%

20.4%

-11.7pts

Weighted average cost of borrowing

7.0%

7.5%

-0.5pts

 

HONG KONG, CHINA - Media OutReach - 24 August 2020 - Zhenro Properties Group Limited ("Zhenro Properties" or "the Group"; stock code: 6158), a leading PRC property developer, announced its unaudited interim results for the six months ended 30 June 2020 (the "Period").

 

Results

During the Period, the Group achieved stable earnings growth. Its revenue increased by 6.5% yoy to RMB14,542 million. Profit for the Period was RMB1,275 million, representing a yoy increase of 8.1%. The core profit1 was RMB1,243 million, representing a yoy increase of 8.3%, core profit margin was 8.5%

 

Innovative Targeted Marketing in Response to the COVID-19 Pandemic

In the first half of 2020, affected by the COVID-19 pandemic, the Group coped with the situation and established a "Pofeng Action (破風行動)" team which was responsible for the smooth resumption of construction projects, punctual supply of units and minimization of risks associated with units delivery, and attained project resumption rate of 100% within 45 days of the shutdowns. In addition, the Group dynamically adjusted its business strategies. It quickly carried out online-to-offline marketing, including the launch of an online sales app of "Zhenro Home (正榮置家)" to provide a new experience of virtual reality online tour of residential units. The Group also launched a series of innovative and targeted online live marketing activities to draw more attention in the market. These measures have thus led to a continued recovery in sales since March. In the first half of the year, the Group recorded aggregated contracted sales of RMB55.993 billion, which was equivalent to about 40% of the annual contracted sales target of RMB140 billion.


Regional Penetration with Equal Emphasis on Quality and Equity Interests of Investment

The Group pursues the strategy of "regional penetration" by expanding its business presence in the metropolis and their surrounding areas. In the first half of 2020, the Group acquired 19 parcels of land with total estimated GFA of 3.02 million sq.m. in 12 cities. Of the Group's newly acquired land bank, 52% and 26% are located respectively in the Yangtze River Delta region and the Western Taiwan Straits region, which are two core areas where the Group has considerable advantages. In terms of the tiers of cities, 65% of the Group's newly acquired land bank is located in first- and second-tier cities with good economic fundamentals. Besides, the Group's overall equity interest in the newly acquired land bank increased to 73% in the first half of the year. As at 30 June 2020, the Group had a land bank with GFA of 27.4 million sq.m. in 32 cities in the PRC, 76% of the land bank is located in first- and second-tier cities. The Group's equity interest in the land bank as at 30 June 2020 increased to 58% from 55% as at the end of 2019.The average land cost was RMB4,919 per sq.m..

 

Improvement and Upgrade of Products, Enhancement of Operation Effectiveness and Efficiency

In the first half of 2020, the Group strived to improvement and upgrade of products, as well as enhancement of operation effectiveness and efficiency, so as to achieve a sustainable "high-quality growth". Having positioned itself as "Home Upgrade Master", the Group launched the "Zhenro Oasis Community Plan (正榮綠洲社區計劃)" for building an ideal and modern community to live in. The plan is aimed at comprehensively upgrading the system of common spaces in communities, the system of access to home and the system of furnishings and appliances for a home by considering such dimensions as "Truth", "Arts", "Nurture" and "Return". The Group has been recognized by professional organizations in the industry for its high-quality products. In addition, the Group strives to improve its operation efficiency throughout the whole development cycle. By improving the efficiency of the design and accelerating the standardization of products, the Group increased both the rate of project standardization and the rate of replication of furnished projects to 100% during the Period. The average period for a project to confirm its positioning after land acquisition is 0.9 month and the average initial sale period of a project is approximately 7 months. The Group has also enhanced its commercial property operation capability, setting benchmarks in terms of such performance indicators as occupancy rate, rental collection rate, operating revenue and quality in the region of its operations.

 

Optimized Financial Structure and Decreased Financing Cost

In the first half of the year, the Group succeeded in raising funds despite the significant fluctuations in the global capital markets. Besides, the Group has managed to secure a total of approximately US$161 million bank loan facilities offshore in July, reflecting the banks' confidence in the Group's prospect. In the domestic market, the Group also continued to deepen its cooperation with various financial institutions in traditional financing, while appropriately reducing its reliance on higher-cost non-traditional financing channels, so as to optimize its debt structure.

 

Due to its optimized debt structure, cash collection and cash flow management, the Group's major financial ratios and credit ratio were further improved. As of 30 June 2020, the Group's net debt-to-total equity ratio was 71.4%, and its cash-to-short term borrowing ratio was improved to approximately 2.1 times with the proportion of short-term debts decreasing to 30.0%. The onshore other borrowings to total borrowing ratios fell significantly to 9%. The Group also recorded a decrease in the cost of its newly raised financing in both the domestic and offshore capital markets. As at the end of the Period, the weighted average cost of borrowings further decreased to 7.0%.

 

The Group has been recognized by credit rating agencies for its prudent financial management and overall strength. In the first half of the year, Zhenro Property Holdings Company Limited, a wholly owned subsidiary of the Company, was assigned "AAA" corporate credit rating (which is the highest rating) with a stable outlook by China Chengxin International Credit Rating Co., Ltd. (中誠信國際信用評級有限責任公司) and Dagong Global Credit Rating Co., Ltd. (大公國際資信評估有限公司). Despite the increasingly complicated global situation, Moody's, Fitch Ratings and Standard & Poor's maintained the credit ratings of B1 (stable), B+ (stable) and B (positive) respectively for the Company.

 

Looking ahead, Mr. Huang Xianzhi, Chairman of the Group said, "In the second half of this year, the PRC government is expected to press on with the policy of 'stabilizing the prices of land and housing while managing market expectations' under the principle that 'houses are for living in, not for speculation'. Meanwhile, its city-specific policies on the regulation of the property market will continue to play an important role in flexibly striking a balance between the housing prices on one hand and the new type of urbanization, the absorption of immigrants as talent and the comprehensive development of urban clusters on the other hand. There is limited room for relaxation on the financing channels of real estate enterprises in the foreseeable future but the real estate sector's role in stabilizing the overall economy cannot be downplayed, especially in the light of the current downward pressure on the macro-economy. The reasonable needs of individuals and enterprises for capital will still be met. As the property sector takes its development to the next level, the industry players will increasingly enhance their core competitiveness by giving full play to their own strengths. To capitalize on the rapid consolidation of the industry and the more segmented market, the Group will seize opportunities for investment opportunity and improve both the quality and efficiency of its operation. All these will enable the Group to achieve 'high-quality growth'."



1Defined as profit excludes changes in fair values of investment properties and financial assets, exchange gain or loss and the relevant deferred taxes


About Zhenro Properties Group Limited

Zhenro Properties Group Limited is a leading property developer in the PRC with nationwide business presence in six key economic regions. The Group achieved contracted sales of RMB130.7 billion in 2019 and was ranked 17th in the Best 200 China Property Developers by Comprehensive Strength in 2019. Upholding its brand position of "Home Upgrade Master", the Group focuses on bringing quality residences to middle class and affluent home upgraders. Zhenro Properties was listed on the Main Board of the Hong Kong Stock Exchange in 2018. It is a constituent stock in the Hang Seng Composite LargeCap/MidCap Index, Hang Seng Large-Mid Cap Value Tilt Index and the MSCI China Index and is included in the list of eligible stocks for southbound trading of the Shenzhen/ Shanghai - Hong Kong Stock Connect.

Zhenro Properties Group Limited

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