Beijing Capital Land Announces 2019 Annual Results
March 24, 2020, 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 annual results for the year ended 31 December 2019.
In 2019, the Group’s revenue totaled RMB20,786,255,000, representing a decrease of approximately 11% compared with the previous year. Operating profit increased approximately 12% year-over-year to RMB3,552,458,000. Net profit attributable to owners of the Company totaled RMB2,122,572,000, representing an increase of approximately 10% compared with the previous year. Basic earnings per share (EPS) totaled RMB0.43, compared with RMB0.45 in 2018. The Board resolved to recommend the payment of a final dividend for the year ended 31 December 2019 of RMB0.17 per share (2018: RMB0.22 per share).
During the year, the Group continued to focus on its mission of generating “quality growth,” adapting to policy and market changes, and taking full advantage of its core strengths. These efforts allowed the Group to enhance its operating performance and realize significant breakthroughs in many areas.
Record contracted sales driven by “Stable Land Investment” and “Securing Major Resources”strategies
-In 2019, the Group continued to implement its “fast turnover” strategy and ensure that its projects meet the “369 project construction standards”. The Group fully upgraded its “BCL Made 2020” operating strategy that incorporates thorough market research, quality building materials, first-rate engineering technology and timely delivery. The Group continued to hone its core product lines in an attempt to take its product quality and service quality to the next level. Led by its “Endeavor Initiative”, it continued to improve its performance assessment and incentive systems and accelerated project launches, cash collection and project delivery. The Group’s in-house sales team played a major role and contributed approximately 40% of contracted sales, boosting its sales performance to a new record. During the year, the Group witnessed total contracted sales rose 14.4% year-over-year to RMB80.81 billion.
-During the year, the Group continued to focus on the three key metropolitan areas and key tier-2 cities with growth potential. By employing a prudent land investment strategy and capitalizing on favorable land market opportunities, the Group flexibly adjusted the pace of land investment in a differentiated manner and diversified its land acquisition channels by creating synergies between primary and secondary land development, coordination across industries, M&A and joint development. During the year, the Group acquired 22 premium secondary land development projects with an aggregate GFA of 7.789 million sq.m. and total investment of RMB35.55 billion. As of January 2020, the Group has made its first foray into the Dongguan, Xiamen, Ningbo, Zhengzhou and other residential property markets. During the year, the Group stepped up efforts to acquire major strategic projects, and successfully acquired the Changshui Airport Project in the Dianzhong New Area of Kunming, with an aggregate GFA of 1.776 million sq.m.. As a core project with major land resources with a GFA of over 1 million sq.m. in a key city, the new project significantly expanded BCL’s core land bank.
Comprehensively upgraded “BCL Made 2020” product strategy with rapid progress in innovative businesses
-In 2019, the Group comprehensively upgraded its “BCL Made 2020” product strategy and completed the upgrade of its high-end brands including “Tian Yue”, “Xi Rui” and “Xi Yue”, among others. Following the upgrade, the Group has been recognized as an industry benchmark by respected third-party assessment agencies citing the high-quality and exquisite craftsmanship of its projects. The Group also made solid progress in cost optimization, exceeding its annual targets for cost reductions. Meanwhile, the Group continued to improve the selection of suppliers and increased its strategic coverage rate to 97%. Furthermore, the Group established Beijing Capital Land Property Services Co. Ltd., a wholly-owned property management platform, to further improve the customer experience which has resulted in a 99.5% customer satisfaction rating for projects upon delivery.
-During the year, BCL continued to support the government’s masterplan of turning Beijing into “the political, cultural, international communication and technology innovation center of China.” To do so, the Group continued to explore innovative business and new profit drivers that could benefit from the resources and synergies in its core business. In terms of cultural and creative industry project development, the Group launched the Beijing Yongyuan Project, a first-of-its-kind ICH themed park in China, which joins the Group’s Langyuan Vintage Project as another benchmark development that promotes Chinese culture and creativity in Beijing. Leveraging its deep experienced garnered from the two iconic projects in the cultural and creative industries, the Group successfully replicated its brand management expertise by developing 9 cultural and creative industrial parks across the country. The synergies between the cultural and creative endeavors and the Group’s core business also enabled it to access and lock down seed projects. On the technology side, the Group launched “Beijing Capital Park”, a high-tech industrial property service platform, and established strategic cooperation agreements with the Chinese Academy of Sciences and Tsinghua University among other leading scientific and technological research institutions. Leveraging the synergies generated by the Group’s core businesses, the platform also enables expanded access to premium resources and the ability to secure potential seed projects in Chongqing, Xiamen and Ningbo and other cities. With respect to rental housing, the Group’s Fangshan Hé Yuan Project in Beijing is now at full occupancy and the Shuanggang Hé Yuan Yu Project in Tianjin registered close to full occupancy, effectively revitalizing the inventory. The Shibalidian Project, the largest rental housing project developed on collectively-owned land in Beijing, also began construction and covers a total construction area of over 410,000 sq.m. which will eventually hold over 10,000 rental housing units.
Mostly achieved the strategic goal of deploying outlet projects in “Twenty Cities in Five Years”, with improved quality and efficiency through lean operations
-In 2019, the Group expanded its outlets business by adding Beijing Fangshan Capital Outlets Phase 2, the Jinan Capital Outlets, Chongqing Capital Outlets, and Xi’an Capital Outlets. By the end of 2019, the Group has developed outlet projects in 17 cities, bringing the total number of outlet projects that are open for business to 12. The Group remains No. 1 nationwide in terms of the number of outlet projects both developed and open for business which allowed it to achieve its strategic goal of deploying outlet projects in “Twenty Cities in Five Years”.
-During the year, the Group’s outlets business strategy transitioned from an investment-led expansion towards a leaner operations and management structure for projects to further optimize Capital Grand’s brand structure, innovate new marketing model and accelerate improvements in process of quality. The Group signed a strategic cooperation agreement with Alibaba Cloud to strengthen digital operations and big data analytics capabilities, and developed innovative and highly-targeted marketing models which will enhance brand influence and operational efficiency. During the year, the Group’s outlets in operation generated an annual turnover of RMB7.83 billion, up 53% year-over-year, and customer traffic hit 41.29 million, representing an increase of 32% year-over-year.
Promoting the establishment of a well-rounded financial platform and achieving breakthroughs in equity financing
-In 2019, the Group actively began promoting a rights issue plan and successfully completed the issuance in January 2020 which created a new key breakthrough in equity financing. The issuance has optimized BCL’s capital structure. Furthermore, the issuance also helps to boost the Group’s stock liquidity and market value in preparation for full H-share circulation and entry into the Shenzhen-Hong Kong Stock Connect, as well as its future capital operations. The subscription rate of the newly issued H-shares among some existing shareholders was as high as 97%, while the remaining shares were fully subscribed by third-party investors, which reflects growing recognition the Group is receiving from capital markets.
-During the year, despite a tight financing environment in the real estate sector, the Group leveraged its solid financial performance and sound credit advantage and advanced research for precise determination to successfully secure stable funding through diversified channels, including bond issuance, insurer investment, asset securitization and supply chain finance. As of early January 2020, the Group successfully issued a 5+N-year perpetual subordinated security for an aggregate nominal amount of USD500 million with a coupon rate of 5.75%, and a 5.5-year senior notes for an aggregate nominal amount of USD450 million with a coupon rate of 3.85%. The former was the first real estate perpetual subordinated security issued under new regulations set by the Ministry of Finance which has created a new benchmark for trades of this kind. In addition, the Group successfully issued RMB8.09 billion of domestic private corporate bonds. The Group was able to secure record low coupon rates compared with other similar issuances, 4.26% at the lowest. The Group also raised RMB1 billion in equity financing with the completion of its first debt for equity swap. As of the end of 2019, the weighted average cost of the Company’s outstanding debt was merely 5.39%, standing firmly in the lower band of the industry.
-During the year, Prime Golden Capital, the fast-growing financial arm of BCL, focused on enhancing the real estate financing value chain and gradually developed into a platform that combines real estate investment and financial innovation. By integrating external and internal resources, the platform efficiently drives business development and facilitates the strategic transformation of the Group. Specifically, Prime Golden Capital invested in 11 projects during the year, including residential properties, integrated commercial complexes, cultural and creative parks and rental housing on collectively owned land, among others. In total, the total assets developed and operated by the platform exceeded RMB30.0 billion.
Looking ahead to 2020, the Group will actively respond to the evolving global and domestic environment as well as various risks and challenges and adhere to its core mission of driving “quality growth”. Following a prudent strategy, the Group will seek progress and changes amid stability. The Group will adhere to a “fast turnover” strategy and further execute the “369 project construction standards” to further improve the pace of launch and delivery of new projects and accelerate destocking. Leveraging the Group’s in-house salesforce as a core driver to significantly improve sell-through rates and accelerate destocking, BCL expects to hit its annual sales target of more than RMB80 billion. It will also accelerate cash collection by enhancing its performance evaluation system and increase incentives for cash collection from cooperative projects.
Additionally, the Group will further enhance resource acquisition in a non-competitive and differentiated manner, develop further synergies between its business segments and focus on land resource acquisition for strategic, core and major projects. The Group will precisely address the needs of a new generation consumers, fully upgrade the "BCL Intelligently Made 2025" strategy and build core competency for its products. It will also leverage its strong credit position and advantage in access to capital markets and take advantage of its well-rounded financing system to proactively expand its access to high-quality financial resources, improve its risk resistance capability, and drive sustainable growth. The Group will forge ahead with H-share full circulation and various funding operations to protect shareholder benefits and enhance value.