Beijing Capital Land Announces 1H2018 Interim Results
(Hong Kong – August 27, 2018) Beijing Capital Land Ltd. (“BCL” or the “Company”, together with its subsidiaries (collectively the “Group”); stock code: 2868.HK), one of the leading integrated property developers in China, today announced the Group’s interim results for the six months ended 30 June 2018.
During the first half of 2018, the total contracted sales area of the Group’s projects was approximately 1.363 million sq.m., up 26.4% from the same period last year. Total contracted sales were RMB36.07 billion, up 47.2% from the same period last year. Average selling price was RMB26,460 per sq.m., up 16.5% from the same period last year. During the period, the Group’s core cities contributed significantly. Five core cities and Australia achieved contracted sales of RMB31.90 billion, up 42.0% from the same period last year and accounted for nearly 90% of total contracted sales. Beijing further demonstrated its position as a major driver of contracted sales growth as the city alone contributed RMB21.56 billion, or nearly 60% of total contracted sales, representing a year-over-year increase of 103.2%.
During the first half of 2018, the Group’s revenue totaled RMB7,116,813,000, down 3.41% from the same period last year. Profit attributable to equity holders of the Company was RMB736,528,000, up 13.97% from the same period last year. Gross margin increased 0.10 percentage point year-on-year to 33.55% while net profit margin increased 1.14 percentage point year-on-year to 15.01%. Earnings per share were RMB0.19. The board resolved not to declare an interim dividend for the six months ended 30 June 2018.
Mr. Zhong Beichen, the new President of BCL, commented, “During the first half, focusing on three key metropolitan areas including the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Guangdong-Hong Kong-Macau Greater Bay Area, BCL continued to strive to achieve ‘quality growth’ as its core vision in response to the market cooling policies, and managed to strengthen its ‘fast turnover’ strategy by executing city-specific measures. As a result, the Group achieved a year-on-year significant growth of approximately 47% in terms of total contracted sales. Looking ahead, BCL will continue to improve its competitive advantages and implemented its ‘increased investment, fast turnover, expand scale’ strategy, in order to achieve growth in both sales scale and profits. The Company will further enhance its strategic layout in three key metropolitan areas including the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Guangdong-Hong Kong-Macau Greater Bay Area, and launched more representative projects in diversified business sectors including commercial property, cultural and creative business, high-tech industry and rental housing, shaping up more systematic development. The Company will sprint to become an enterprise with over RMB100 billion in value, and create greater value for shareholders.”
During the first half of 2018, the Group effectively implemented its strategy to accelerate turnover to improve operations. New projects were fully in compliance with the “369 construction time limit standards”, and strictly adhered to the requirement to release new projects within 9-months. While accelerating the development of existing projects, the Group ensured that all projects were launched for sale with a refined marketing program. The Group further pushed forward its“BCL Made 2020” product strategy, accelerated and promoted the deployment of major product lines, and successfully rolled out its “Tian Yue” series in Beijing, Tianjin, Shanghai and Chongqing. BCL’s in-house sales team was also fully deployed across all projects. The Group was able to successfully increase both transaction volumes and transaction prices by effectively utilizing its local marketing subsidiaries in core cities. As a result, the Group ranked in the top three in terms of total contracted sales in Beijing for the first time.
As for land investment, the Group executed its strategies to increase its investment in and focus on three key metropolitan areas. With the Group’s solid financial position and strong balance sheet, it effectively took advantage of favorable conditions for land supply in an effort to actively expand the scale of its land bank via various channels, including mergers and acquisitions and exploiting the synergies with the primary land development business. As of the end of July, the Company entered Guangzhou and Foshan for the first time, and acquired multiple plots in the Guangdong-Hong Kong-Macau Greater Bay Area, further expanding developments in Shenzhen, Guangzhou and Foshan. During the first half, the Group added ten new secondary land development projects in core areas such as Beijing, Tianjin and Guangzhou, with a total GFA of 2.14 million sq.m. and an aggregate investment of RMB25.4 billion, representing an increase of 120% year-over-year and an average land premium rate of less than 12%. The Beijing, Tianjin and Guangzhou markets accounted for more than 94% of the Company’s total land investment. As at 30 June 2018, the Company’s total land bank consisted of a GFA of 11.92 million sq.m., and a total ground area of 9.01 million sq.m.. The Group considers its existing land bank to be sufficient for its development needs over the coming three years.
In the first half of 2018, the Group continued to push forward its primary land businesses in the Beijing-Tianjin-Hebei region. During the period, the company won a bid for a primary land development project in Zhangjiakou, Hebei Province, with a planned total GFA of 1.04 million sq.m. As of the end of the period, the Company had acquired 10 primary land projects in total in the Beijing-Tianjin-Hebei region with a total area of approximately 8,650,000 sq.m. Meanwhile, the Company also successfully acquired multiple plots of high-quality land in areas such as Pinggu Beijing and Wuqing Tianjin by leveraging its synergies in primary and secondary land development. The primary land development business has become a key advantage of the Company when it comes to securing high-quality land resources.
In terms of commercial property, Beijing Capital Grand (1329.HK), the commercial property arm of the Group, further increased the scale of its outlets business with optimized operational efficiency. As of the end of July, the Group acquired two new projects in Qingdao and Nanning, expanding the deployment of the outlets business to 16 cities and further extending its advantage in the industry in terms of the total number of outlets. With the successful opening of the Wuhan Capital Outlets, bringing the total number of existing outlets to seven. During the period, the Group’s outlets business aimed to meet customer demand by utilizing big data analytic tools and leveraging its operational advantages in running multiple projects, chain stores and large-scale developments. The Group has established strategic alliances with various well-known brands with refined management and achieved steady improvement in operating performance. During the period, the Group’s existing outlets generated turnover of nearly RMB2.37 billion, an increase of 43% year-over-year, and recorded customer traffic of more than 10.32 million, an increase of 23% year-over-year.
In the first half of the year, the Company achieved the layout on diversified businesses. On one hand, the Group proactively expanded rental housing business by seizing market opportunities to deploy rental housing projects on collectively-owned land and developing multiple rental projects in Chaoyang and Daxing Districts in Beijing. During the period, the Group released “He Yu” serviced apartment brand and pushed forward the projects in Beijing and Tianjin to be launched in September. On the other hand, the Company actively developed cultural and creative and industrial property businesses, which is expected to become a key and sustainable business line over the long term. The Company won the Beijing Sanluchang project and established an innovative service platform for intangible cultural heritage projects, striving to efficiently implement the Company’s strategy to expand its cultural and creative industrial property businesses. The project is positioned as an innovation center for intangible cultural heritage. It is located in a priority development zone of the capital city, and will harmoniously combine the surrounding historical sites with modern cultural and creative developments. BCL plans to develop the intangible cultural heritage site under the theme of “meeting people, seeing artifacts and living a life”.
In the first half of the year, with its stable financial performance and state-owned enterprise background, the Company maintains smooth financing channels while the financing structure was further optimized. With rising contribution from various types of bonds and insurance funding, it remains low financing costs. During the period, the Group enhanced cooperation with big banks and raised nearly RMB12 billion by issuing multiple bonds including offshore USD bonds, domestic private placement bonds, inter-bank medium term notes and ABS, hitting record low interest rates in the market.
Looking out to the second half of 2018, the current rigid market regulations are expected to remain in place in the short term following the overarching theme of “housing is for people to live in, not for speculation”, and developers are facing unprecedented financing challenges ahead. Against the background of strict industry-wide regulations and financial deleveraging, the traditional business model of property companies has been challenged, and companies are looking to diversify their business models. The Group will ensure to reach its annual target of contracted sales of more than RMB75 billion and strive for RMB80 billion based on “fast turnover” strategy in order to improve its operating capabilities on all fronts. The Group will continue to promote its “BCL Made 2020” product strategy. The Group will also continue pushing forward its cultural and creative industrial property and rental housing businesses as a part of its strategy to accelerate business diversification and transformation. Additionally, The Group will take multiple measures to further expand its financing channels and resources by cooperating with big banks, and simultaneously drive “business expansion + capital management,” which would help the Company both diversify and transform its business.