In recent years, "housing without speculation" has always been the main tone of real estate policy, the national supervision over the industry has been continuously strengthened, the operating environment of real estate enterprises is facing deep changes, and the traditional real estate development model has encountered severe challenges. the industry has ushered in a new round of adjustment and reform.
With the arrival of 2022, under the policy setting, "stability" and "virtuous circle" have become an important direction for the development of the real estate industry in the future. This also means that a series of changes in the external industry environment will continue to force housing enterprises to actively change their own development model, on the one hand, the development of the main business to continue to strengthen operational management, achieve cost reduction and efficiency, mining management dividends. On the other hand, develop diversified business, expand their own development boundaries, and seek sustainable development.
At this point, you might as well review the operating performance of Hongyang Real Estate (01996.HK) for nearly a year and explore its investment highlights and opportunities.
First, the sales performance of the industry is steady during the headwind period, and the anti-risk ability is continuously strengthened.
Over the past year, under the influence of financial supervision and regulation policies such as the "three red lines", the new rules on housing loans, and the "two centralization" of land supply, real estate enterprises are facing sales pressure. Judging from the annual sales of the real estate industry, Carey statistics show that the cumulative performance growth of the top 100 real estate enterprises continued to slow in 2021, and the cumulative sales volume by the end of December was 3.5% lower than that in 2020 compared with the same period in 2020.
In terms of Hongyang Real Estate, in the headwind stage of the industry, the company's sales were also affected to a certain extent, but the overall performance was sound. Its cumulative contract sales in 2021 were 87.22 billion yuan, a slight increase of 0.83% over the same period last year in 2020. Overall, in the context of the continuous slowdown in the growth rate of the industry, the company's sales volume can still achieve a small growth, which proves to some extent that the company's operation is anti-cyclical.
Stable sales performance is a strong support for the company's good financial fundamentals. Concerned about the financial part of the company, the profitability of Hongyang Real Estate has always maintained a sound level. The first half of the year performance data showed that the company's income was about 12.965 billion yuan, an increase of 34.7% over the same period last year, and the gross profit was about 2.73 billion yuan, an increase of 12.1% over the same period last year. At the same time, the company is among the green housing enterprises, with a net debt ratio of 53.9% in mid-2021. Excluding accounts received in advance, the asset-liability ratio is 69.4%, and the cash short-debt ratio is 1.7 times. The data all reflect the soundness of Hongyang real estate in financial management, the continuous enhancement of management ability and the outstanding anti-risk ability.
Second, the territory of soil storage continues to expand, and the two-wheel drive strategy has achieved remarkable results.
Land storage is an important asset reserve of housing enterprises. Through the land acquisition strategy, it is not only helpful to understand the future development of housing enterprises, but also the core element to consider their potential growth space. From the perspective of past development, Hongyang Real Estate can achieve great-leap-forward development, an important factor behind the company's forward-looking strategic layout.
From the perspective of regional distribution, in 2020, the company proposed to adhere to the layout strategy of "expanding Jiangsu, deeply ploughing the metropolitan area and strengthening the central city", and continue to promote the process of national layout, while strengthening Jiangsu, deep ploughing will be carried out in key areas such as the Yangtze River Delta region (except Jiangsu), Dawan area and Chengdu-Chongqing area.
By mid-2021, Nantong, Changzhou, Xuzhou and other cities in southern Jiangsu, central Jiangsu and northern Jiangsu have developed more than 10 projects. Among the other high-quality cities in the metropolitan area, more than 4 projects have been developed in key cities such as Changsha, Chongqing, Chengdu, Hefei and Foshan. In the future, as the company continues to promote strategic layout, expand a number of key urban areas, and gradually speed up the process of nationalization, and high-quality land storage layout is also expected to provide strong support for the future performance growth of Hongyang Real Estate.
It is worth mentioning that before the listing, Hongyang Real Estate has put forward the "commercial + real estate" two-wheel drive strategy to form differentiated competitiveness. At present, the company's "Commercial + Real Estate" project has achieved remarkable results, and the differentiated business model promotes the rapid expansion of the territory of Hongyang Real Estate. For Hongyang Real Estate, real estate and business form a synergistic effect. On the one hand, the commercial sector can add momentum to real estate, increase the premium of residential products, and stabilize the basic market of the company's real estate development. On the other hand, real estate can drain the business, prosper the business ecology, further create a unique business model, and effectively enhance the comprehensive competitiveness of the company.
We should know that due to the factors of large-scale acquisition of land and high cost of land acquisition, the gross profit margin of some real estate enterprises is gradually eroding, while the scale of Hongyang real estate has maintained steady growth in recent years, its profitability is also sound, which has a lot to do with the contribution of the commercial sector and the ability of the real estate sector. According to the company's announcement, thanks to the continuous increase in rental income from many projects such as Nanjing Hongyang Square and Hefei Hongyang Square, the company's commercial business sales income achieved good results in the first half of 2021, reaching 292 million yuan, an increase of 37.1% over the same period last year.
In recent years, the commercial competitiveness of Hongyang Real Estate has been continuously improved. The company ranked 12th on the list of China's top 100 commercial real estate enterprises in 2021, and was awarded the title of "Outstanding Enterprise of the year in Commercial Real Estate". Huh? By the middle of 2021, Nanjing (Nanjing Hongyang Square), Changzhou (Wu Hongyang Square in Changzhou) and other places have started business, while Changzhou Hongyang 1936, Anqing Hongyang Square and other commercial projects are expected to open this year. In addition, in August 2021, Hongyang acquired about 900000 square meters of commercial and residential complex projects in the center of Weifang, including about 100000 square meters of commercial scale.
Third, fine operation, multi-dimensional promotion of product soft power
Over the past 20 years, China's real estate market has generally maintained the momentum of rapid growth and has become one of the most important pillars of China's economic growth. Under the great adjustment of the industry, the previous model of "high debt, high leverage and high turnover" will gradually transition to the development model of "improving quality and emphasizing service". In view of this change, Hongyang Real Estate went deep into the customer circle by virtue of the "customer-centered" development strategy, took the initiative to understand customer needs, and formed the time system, Xinyue system, Honghui system and Hongzhi.Department of the four main product lines, to achieve the effective improvement of product strength and service power.
Specifically, the company will actively optimize products and enhance details according to different customer needs and suggestions, so as to enhance customer satisfaction in many areas of life, such as entertainment, fitness, interaction, and so on. For example, the Xin Yuefu project in Bishan, Chongqing in the western region optimizes the use function of the overhead floor according to the moving line of customers' life; Changzhou Longyun Tiancheng project in southern Jiangsu uses rich plants with river beach stones, so that residents have a very powerful visual presentation. According to the official website, Hongyang Real Estate delivered about 40,000 units in 2021, with an overall delivery rate of 94.3% and a service satisfaction score of 88 points, an increase of 14 points over a three-year period, which is enough to prove that the company's service system continues to win the trust and recognition of users.
At the same time, the company adheres to the operation strategy of "business-centered and customer-centered", pursues high-quality customer service and strict quality control standards, and released Hongxin Service 2.0 young service system in 2020, which matches the full-cycle service of customer home ownership around the four key words "considerate, science and technology, satisfaction and splendor".
In the same year, the company built Hongxin service integration platform and Hongyang customer service CRM platform based on Hongxin service system. Among them, the Hongxin service integration platform can digitally empower customers' life scenes and experience a number of intelligent and convenient services, such as housing maintenance, property services, community life, and so on. Hongyang customer service CRM platform pays more attention to risk control, mobile room inspection, customer service and real-time evaluation, providing full-cycle service to customers, further ensuring that the company's products meet market demand, realizing product innovation, construction upgrading and service upgrading, so as to win the trust and recognition of customers.
With high-quality service and unique product power, Hongyang Real Estate has reaped many honors, such as "Top 50 Brand value of 2021 Chinese Real Estate Development Enterprises", "Top 30 customer satisfaction of 2021 Chinese Real Estate Enterprises", "2021 leading Enterprise of Chinese Real Estate customer Service system" and so on. It has realized the virtuous circle of realizing the brand value with the product strength and witnessing the enterprise strength with the steady growth performance.
IV. Summary
In the current uncertain economic environment, the development logic of the real estate industry has ushered in deep changes. How to maintain sound management and achieve high-quality sustainable development has become a key issue for a large number of real estate enterprises to consider. With the arrival of the new year, the policy side gradually released a positive signal, most institutions believe that the industry is currently at the bottom of valuation, after the risk is cleared, the real estate sector is expected to repair.
It has been observed that since December, Hong Kong's inner housing stocks have also begun to show signs of recovery, and accordingly, Hongyang Real Estate has also shown an obvious bottom rebound, opening a new round of rising market. Combined with the valuation, the company is also in the valuation depression stage, and it is expected that the follow-up performance is still worth looking forward to in the future as the policy margin is relaxed and the company's performance continues to release potential to consolidate financial fundamentals.