Hongtai Development: Do not engage in real estate to focus on industrial parks

The mainland has continued to promote new urbanization in recent years and has become one of the important driving forces for local real estate development. Wang Jianjun, Chairman and President of China Hongtai Development (6166), said in an exclusive interview that the Group’s business caters to the country’s new urbanization development strategy, but it is not engaged in real estate, but instead concentrates on industrial parks, drives industrial transformation and upgrading, and realizes the integration of production and city. New urbanization emphasizes that the company is not affected by the property market cycle.

China Hongtai Development is one of the leading enterprises in the development of real estate towns. Its industrial park headquarters is located in Langfang City, Hebei Province, near Beijing. It also benefits from the national new urbanization development strategy and the coordinated development strategy of Beijing-Tianjin-Hebei.

Main industry town development

The Group’s three major businesses include industrial town development, property development and property leasing. Wang Jianjun said that the industrial town development business contributed about 80% of the group’s profits. The business is mainly to cooperate with the government to provide the government with plans to develop industrial parks and provide one-stop services ranging from planning to design, industrial positioning, land consolidation, infrastructure construction, investment attraction, and even operational management for the park enterprises. Etc., the group collects service fees from it as income.

For example, when a local government auctions an industrial park land, the group can obtain a one-time income according to a certain percentage of the transaction price, and at the same time, it can also obtain a continuous service fee income according to a certain proportion of the tax amount of the park enterprise. Wang Jianjun revealed that the group is located in the Longhe High-tech Industrial Park in Langfang. Last year, the total tax payment of the park enterprises reached RMB 2.7 billion. In addition, the sales of supporting residential and commercial projects in the industrial park is also one of the Group’s revenue sources.

Wang Jianjun pointed out that the Group’s business model is unique. The land of the industrial park is entrusted to develop according to the long-term agreement with the government. The group can enjoy the benefits of land appreciation without large-scale financing to purchase land. The debt ratio of the group can be maintained below 65%. In addition, the Group has deeped its efforts in Langfang and has taken root in Beijing-Tianjin-Hebei. It has 13 years of experience in attracting investment and operating management in the park, and has good relations with the local government and has become a core competitive advantage of the Group.