“Green file” top student, China Resources Land (1109.HK) long-termism

2022-05-11 0 By

2021 is sure to be an unforgettable year for Chinese real estate as a whole.This year, the haze of the epidemic is still shrouded, the real estate regulation and control policies continue to tighten, the belief that “housing prices only rise, not fall” is shaken, real estate enterprises are facing heavy pressure in the management level, the sound of thunder constantly.Prior to a number of real estate research institutions released a report showed that nearly 40% of the top 100 real estate enterprises performance year-on-year decline, most of the real estate enterprises did not achieve sales targets.With the arrival of the New Year, the real estate industry warm wind frequency, especially the recent high-level statement released positive signals, real estate plate ushered in a strong rebound, the industry fundamentals expected repair, injected a shot in the arm for the market.From the current point of view, the industry has passed the dark moment, the future with the real estate pattern is clear, the strength of the advantages of real estate enterprises will also become apparent.In this, the performance of China Resources land has attracted the attention of the author.On March 31, China Resources Land released its annual report card. In the past 2021, China Resources Land has become one of the few real estate enterprises in the market to achieve performance standards, and its performance in the secondary market is even more outstanding.Over the past year, the company has shrugged off weak market conditions and its share price has bucked the trend to post positive growth for the year.2022 has also recorded a rise of nearly 15%, significantly outperforming the market and the housing sector.The resonance between the performance of the capital market and the company’s fundamentals fully demonstrates the background of China Resources Land as a benchmark for value investment.Why not take a look at the results just released to discover the “gene” behind its high-quality growth?Through the annual report card of China Resources Land, steady performance growth and continuously improving shareholder returns have become the core highlights, showing the company’s high-quality development.Earnings data show that in 2021, China Resources Land achieved comprehensive revenue of 212.11 billion yuan, up 18.1% year on year;Consolidated gross margin 27%;Net profit for mothers was 32.4 billion yuan, up 8.7% year on year;Core net profit was 26.6 billion yuan, up 10.2% year on year.Earnings attributable to shareholders per share were 4.54 yuan, up 8.7% year on year.Meanwhile, China Resources Land, which has always been a bona fuses in shareholder returns, announced a final dividend of rmb1.207 per share and an interim dividend of Rmb0.173 per share, up 10.2% year on year to Rmb1.38 per share.It is not hard to see that under the general pressure in the industry, China Resources Land has delivered commendable results, showing a strong resilience through the cycle.Although some indicators follow the industry to adjust, but the company’s stable basic dish is still continued to highlight, sustainable development ability is also constantly strengthened.Facing the new situation of industry development, China Resources Land’s strong business resilience, healthy financial fundamentals and excellent strategic layout will support it to gain more market opportunities in the new competitive landscape of the industry.May wish to further observe in combination with financial statements:1, the business sector go hand in hand China resources land to build a predominantly residential, public development sales business, mainly to shopping centers, office buildings and hotels of profit-making business real estate, and with China resources all life as the core of asset management business, at the same time, the three main business type and ecosystem factors business integration development, organic linkage,In the past year, all major business segments have shown a good momentum of development.In terms of sales properties, China Resources Land successfully achieved the annual target in 2021, with the annual cumulative contract sales of about 315.76 billion yuan and the total contract sales floor area of about 16.649 million square meters, with annual growth of 10.8% and 17.4% respectively.The contract amount of the company’s development and sales business reached 315.8 billion yuan, up 10.8% year on year.In terms of operational real estate business, the three core businesses of shopping centers, office buildings and high-end hotels contributed about 17.4 billion yuan to the rental income of the company, of which shopping centers achieved 13.9 billion yuan, an increase of 38.1% year on year.Office rental income of 1.9 billion yuan, a year-on-year growth of 20%;The hotel achieved operating revenue of 1.6 billion yuan, up 43.9% year on year.By 2021, China Resources Land has 54 shopping centers in Vientiane and about 61 reserve projects, with its comprehensive strength ranking first in the industry.In terms of asset light management business, the growth of China Resources Vientiane Life has been further accelerated with its entry into the capital market. By the end of 2021, THE comprehensive revenue of China Resources Vientiane Life has reached 8.9 billion yuan, up 30.9% year on year.In terms of business scale, the total contract area under property management is 196 million square meters, and the area under management is 155 million square meters.In addition, as a synergistic main business common development of ecosphere element business also has good performance.In 2021, the business of ecosystem elements will achieve a turnover of 16.7 billion yuan (including the business within the group).Among them, with urban construction and operation as the core, China Resources Real Estate completed the construction of xi ‘an National Games and special Olympics stadium, and successfully completed the guarantee task of national Games and Special Olympics and other events.In the downward environment of the industry, more attention has been paid to the financial fundamentals of real estate companies. Their cash flow is better than that of real estate companies with high financial security, and their advantages will become more and more significant.As a top “green grade” student in the industry, China Resources Land’s excellent financial fundamentals continue to be verified.On the one hand, the company’s financial position is safe and sound.The annual report shows that China Resources Land has always adhered to sound financial management policies in the face of the test of tightening credit policies and increasing financial pressure in the industry in the past year, and the company’s debt ratio is at the lowest level in the industry.On the other hand, the company has a prominent advantage in financing. The weighted average cost of financing in the past year was about 3.71%, down 37 basis points from the same period last year, which is a significant advantage in the industry.The company has diversified financing channels, including internal borrowing, bank financing, non-debt financing, supply chain financing, asset securitization financing, bond issuance, etc. With the help of high-quality resources, the company has brought continuous low-cost funds and consolidated the company’s financial base.In September last year, Fitch confirmed China Resources Land’s long-term issuer rating of “BBB+” with a “stable” outlook. On February 17 this year, Moody’s also confirmed China Resources Land’s issuer rating of “Baa1” with a “stable” outlook.In an environment where many real estate companies in the industry have been downgraded by international rating agencies, China Resources Land’s good credit level has been continuously recognized.3. Continue to deepen the Value of Layout Facing the headwind environment of the industry, While maintaining steady development, China Resources Land also actively grasp the window period of land layout for future development.Taking advantage of the market downturn and its low leverage advantage, China Resources Land has actively replenished its land reserve in the past year. By the end of 2021, China Resources Land had developed 14.39 million square meters of new land storage capacity, bringing its total land storage area to 68.73 million square meters.Among them, the land storage area of property development is 57.78 million square meters, and that of investment property is 10.95 million square meters.By comparison, the average land sales ratio of 50 representative enterprises in 2021 was 24.0% according to the middle Finger Research Institute.Based on the calculation that the equity sales volume of China Resources Land in 2021 is about 217.4 billion yuan and the equity land acquisition amount in 2021 is 98.9 billion yuan, the land acquisition sales ratio of the company is 45.5%, showing a strong momentum of expansion against the trend.In addition, from the perspective of soil storage distribution, the company has basically completed the national layout. Under the background of deepening industrial regulation, this relatively regional balanced layout helps the company to resist the risks of a single regional market.At the same time, from the perspective of urban energy level distribution, of the 11.07 million square meters of newly added equity land reserves in the year, the investment in the first and second-tier core cities accounted for 90%, and the equity land price in the beijing-Tianjin-Hebei region, Chengdu-Chongqing Region, Yangtze River Delta region and Guangdong-Hong Kong-Macao region accounted for 76%.It can be seen that the company has excellent soil storage quality, laying a solid foundation for the follow-up sustainable high-quality development.Standing in the current market environment, financial control policies have begun to correct, so the focus of the market is more focused on whether the housing enterprises can operate steadily and steadily in the industry against the trend, showing the development through the cycle.In the author’s opinion, China Resources Land maintains a high degree of strategic focus, which is conducive to its long-term and stable development, embodied in the following three points:At the 2021 Central Economic Work Conference, the National Two Sessions and the Golden Commission of The State Council meeting on March 16, “exploring a new development mode” of real estate has been mentioned many times, and the direction and path of the new development mode of real estate has been clearly defined.So, what is the new development mode of real estate?In this regard, CITIC Securities put forward in its research report that the future of real estate enterprises mainly lies in the holding, operation and service of real estate space, including meeting the housing needs of new citizens, meeting the rental needs, meeting the renovation needs of old residential areas, and urban space service opportunities.In my opinion, China Resources Land’s business diversification development path is consistent with the above ideas, and may be a model worthy of reference in the industry.At present, China Resources Land has formed a “3+1” business model of organic linkage and integrated development of the three main businesses of development and sales of property, operational real estate business, and asset light management business (China Resources Vientiane Life) with ecosphere factor business.Among them, the operational real estate business, mainly shopping malls, office buildings and hotels, can provide long-term stable cash flow for China Resources Land.Asset-light management business can cooperate with the development and sales business to obtain resources and realize the value preservation and increase of assets.In addition, China Resources Land has also established ecosphere element businesses focusing on urban construction and operation, long-term rental apartments, health and entertainment.The business mentioned above not only provides a possible path for the realization of the new real estate development mode advocated by the current policy, but also lays a solid foundation for China Resources Land to promote the sustained growth of its performance in the era of real estate inventory.2) strengthen market competitive advantage, strengthen the long-term development of resilience in resolving housing risk under the guidance of enterprises, the part of low credit enterprise, or orderly exit or transition, and it provides funds, resource reallocation within the industry condition, profit steadily, anti-risk ability is strong, has the market competitive advantage of the high quality state-owned leading enterprise, is expected to become the object of this trend was the first to benefit.From the perspective of land acquisition, according to the Bank of China International Research Report, in the third batch of land auction at the end of 2021, state-owned enterprises still maintain the enthusiasm of the first two rounds of land acquisition, the amount of land acquisition slightly decreased to 63.2%, the total amount of land acquisition in the three batches of land auction accounted for 58.8%.Bank of China International pointed out that the trend of central and state-owned enterprises leading the land auction has been established.From the latest sales data in February, in the adverse market conditions, the operating data of all real estate enterprises have declined, but in contrast, the business resilience of central state-owned enterprises is significantly stronger.According to guotai Junan statistics, taking the top 50 real estate enterprises in 2021 as the benchmark sample, the sales finance proportion of central state-owned enterprises increased by 4.6 percentage points to 37.2% from 32.7% in the same period of 2021, while private enterprises decreased by 4.5 percentage points to 60.1% in the same period of 2021.In the author’s opinion, China Resources Land has significant advantages in project cooperation and land acquisition. In the past year, the company has been able to follow the market trend and acquire land in a flexible and rhythmic way. Moreover, the active layout of core high-quality land blocks has laid a solid foundation for further improving its profits.China Resources Land has been continuously improving its internal skills in investment, development and operation, and continuously improving its operational efficiency and organizational capacity. It not only strengthens its market leading and competitive advantages, but also makes great efforts for the development of the industry in the second half.On the whole, China Resources Land has excellent land reserve layout and structure, and obvious capital and credit advantages. It has a strong ability to withstand pressure in the short term. In the long run, its outstanding competitive advantages will provide a stronger guarantee for the subsequent development.3) Adhere to social responsibility, lead urban upgrading, social value and economic value win-win In the context of the booming global ESG, the capital market is paying more and more attention to enterprises’ non-financial risks and sustainable development ability.In the past year, China Resources Land has actively implemented THE ESG strategy, assumed the industrial and social responsibilities entrusted by the new era, and won high recognition from the market.It is reported that in 2021, China Resources Land was selected into the Hang Seng Sustainable Development Enterprise Index (30 stocks) and hang Seng ESG50 index, the MSCI Sustainable Development Index was upgraded to BBB level, and the COMPANY has been rated four-star by GRESB global Real estate Sustainable Development Evaluation index for five consecutive years.It has ranked first in the Real Estate Enterprise Social Responsibility Development Index of Chinese Academy of Social Sciences for eight consecutive years, was selected as the “ESG· Pioneer 50 Index” of central Enterprises, and won the honorary title of “State-owned Enterprise Corporate Governance Model Enterprise” of State-owned Assets Supervision and Administration Commission of the State Council.It is worth mentioning that according to the MSCI ESG rating report, China Resources Land has been comprehensively improved in green building, product safety and quality, employee health and safety, corporate governance and other rating dimensions, and has been rated as the industry leader in green building, product safety and quality.Among them, the green building score increased by 26% and the product health and safety score increased by 21% compared with the previous evaluation period.In addition, in the fight against COVID-19 in 2021, in the process of flood relief in Zhengzhou and Shanxi, China Resources Land’s local teams took the initiative to shoulder social responsibilities and actively participated in the anti-epidemic and disaster work, demonstrating China Resources Land’s social responsibility.At a time when the development logic of the real estate industry is undergoing profound changes, China Resources Land responds to the national goal of “dual carbon” and earnestly fulfills its responsibilities as a social citizen. The high-quality development demonstrated by China Resources Land will support its more sustainable and long-term stable development.As mentioned in the beginning, after months of losses, the real estate sector finally rebounded in several days in March.But this time is different from the past, after the Financial Commission meeting on March 16, the People’s Bank of China, the Banking and Insurance Regulatory Commission and the Ministry of Finance all from their respective perspectives to stabilize expectations.Such intensive high-level voices make the real estate industry under the current situation gradually have a more positive and stronger adjustment logic.As far as China Resources Land is concerned, in 2021, when the industry is undergoing profound adjustments and changes, it has steadily promoted its business activities, seized opportunities for development, and achieved its core strategic tasks and performance targets despite the inevitable market impact on its profitability, thus achieving a high-quality development result.Since the beginning of 2022, many investment institutions have expressed optimism about China Resources Land, the benchmark of central real estate enterprise, and banks and other financial institutions have voted positively with real money.On January 25, 2022, China Merchants Bank signed a cooperation agreement with China Resources Land, granting China Resources Land 20 billion yuan and China Resources Vientiane Life 3 billion yuan of m&a financing quota respectively.On March 1, China Resources Land announced that it entered into a loan financing agreement with a bank as a borrower for a total of 3 billion RMB loan financing…As the financing environment becomes more and more stringent, China Resources Land is swimming against the current, and its attitude of “seizing market opportunities and overtaking on curves” is becoming more and more clear and steady.The author thinks that, with the throes of accelerating the industry reshuffle clearing, will realize the reshaping of the real estate market pattern, combined with the boom of the current policy to improve the good time at the bottom of the overlay, China resources land such strong anti-risk ability, outstanding fundamental quality is good, the market competitiveness of high-quality enterprise, is expected to gain greater elasticity valuation of repair, worth investors to focus on.This article is from Gronhui