The Mainland economy is facing challenges in 2019
The property market regulation and market financing have tightened, but Country Garden (2007) still recorded good results. The sales and profit growth in the first half of the fiscal year was considerable. The Group strictly controlled the debt level and maintained financial health. Maintain a competitive advantage in the face of drastic industry changes and seize the opportunity of China’s urbanization in the next 20 years.
In the past 10 years, Country Garden has become a Fortune Global 500 company. On July 22, the 2019 Fortune Global 500 was announced. Country Garden was on the list for the third year, ranking 177, an increase of 176 from 353 in the previous year. Among the selected companies, the ranking rose the most. In addition to the Fortune Global 500, Country Garden has also become a constituent stock of the Hang Seng Index for many years and has become a driving force for Hong Kong stocks.
In June last year, the Group’s spin-off of residential property management service provider Country Garden Service (6098) was listed on the main board by introduction. Each share of 8.7 Country Garden holdings was issued one Country Garden service. The property management stocks were hot this year.
Under the dual role of policies and the market, competition in China’s real estate industry has become increasingly fierce. The top ten rankings have seen unexpected changes in the industry, but the status of individual housing companies remains stable. According to the January-December 2019 sales performance announcement issued by Country Garden Group on January 6, 2020, Country Garden’s equity sales in 2019 reached a new high on the basis of 501.88 billion yuan in 2018, reaching 552.2 billion yuan, a steady increase of 10.03. %.
Operating efficiency reaches new heights
In the first half of 2019, Country Garden’s total revenue was 202.01 billion yuan, a year-on-year increase of 53.2%. The sales scale has been increasing year by year, and the unsold and unsold income excluding VAT has reached 735.2 billion yuan. It is expected to be gradually released in the next one to two years, locking in future room for revenue growth for a longer period of time.
The Group improved the level of internal refinement management. The gross profit margin increased by 0.7 percentage point to 27.2% on the basis of 26.5% in mid-2018, and the net profit margin reached 11.4%. Gross profit was approximately 54.86 billion yuan, an increase of 56.9% year-on-year; net profit was approximately 23.06 billion yuan, an increase of 41.3% year-on-year.
The Mainland economy is facing the challenge of the Sino-US trade war this year. The real estate market is tightly regulated and financing channels are tightened. Country Garden management foresaw the situation as early as 2018. With a high credit rating in the capital market, it completed a number of low-interest bonds. Issuance to replace existing debt and ensure the stability of the company’s cash flow.
At the same time, keep sales buoyant and actively withdraw cash. In the first half of the year, cash from real estate equity sales collected approximately RMB 265.94 billion, and the equity sales recovery rate was as high as 94.3%. As of June 30, the company had a cash balance of 222.84 billion, accounting for 12.8% of total assets. RMB 313.30 billion. Up to now, Country Garden has achieved a positive net cash flow from operating activities for 4 consecutive years.
Debt level is lower than peers
Since 2018, China’s real estate industry has been in the cold winter, and small and medium-sized real estate companies have gone bankrupt and liquidated. Since this year, hundreds of real estate companies have gone bankrupt due to the collapse of the capital chain. Among them, there are no fewer than 100 former real estate companies. Cycle, even if the overall leverage of the industry is improved, but always adhere to the established safety red line.
In the first half of the year, the net borrowing ratio was only 58.5%, a year-on-year decrease of 0.5 percentage point. The cash balance covered twice the short-term interest-bearing debt, and it had a strong financial security moat.
Country Garden has maintained its net borrowing ratio below 70% for many years, which is extremely rare among domestic real estate companies. Wind data shows that in 2018, the average net debt ratio of 30 sample A-share real estate companies reached 148.16%, and the average net debt ratio of 30 sample H-share real estate companies reached 115.32%. Country Garden, as a leading real estate enterprise, keeps its net debt ratio low while its scale continues to increase.