Core ideas:
Time China Holdings achieved 32.57 billion yuan in sales in the first half of 2020, nearly 90 percent of which was concentrated in Guangdong. Although the company intends to expand the Yangtze River Delta, it still has only the Hangzhou project and has yet to contribute sales. The company's soil storage is mainly distributed in Guangzhou, Foshan, Qingyuan and other cities, in which Qingyuan area accounts for the most, but the proportion of long-term and sales contribution is not equal. The road of hundreds of billions still has a long way to go.
First, both revenue and profit have fallen, and the room for improvement in the future is limited.
The company's gross profit margin has declined significantly, on the one hand, because the property management services with high gross margins have been split, and on the other hand, with the slowing down of the market heat and stricter price restrictions and higher land prices in first-and second-tier cities, the gross profit margin of the real estate development business is also declining. However, we found that the small increase in the company's net profit margin was mainly due to a substantial increase in revenue from other income of 1.19 billion yuan, mainly from non-recurrent gains and losses such as changes in fair value.
Second, Guangdong accounts for nearly 90% of sales, and the 100 billion road has a long way to go. Sales are mainly concentrated in Pearl River Delta cities such as Guangzhou and Foshan, and a small number are distributed in Changsha and Chengdu. Among them, the sum of sales in Guangzhou and Foshan accounts for more than half of the total sales, while Guangdong Province accounts for 86.9% of the total sales. The company is still a regional housing enterprise dominated by Guangdong layout. The total soil storage is also mainly distributed in the Pearl River Delta, of which Qingyuan accounts for the first place all the year round, but from the point of view of the contributed sales area, it is not much, and the long-term backlog of inventory is a drag on the development of the company to a certain extent. In addition, Hangzhou, Wuhan and other cities have been laid out in 2019, but sales have not been contributed for more than a year. The road of hundreds of billions has a long way to go.
Third, the intensity of investment has dropped sharply, and the solvency is still declining.
The company's solvency continued to decline. By the end of June 2020, the company's net debt ratio and cash-to-short debt ratio were 71.0% and 1.36 respectively, an increase of 3.8 percentage points and a decrease of 0.21 compared with the end of 2019, but remained at a reasonable level on the whole. Did not touch the "three red lines".
It must be noted, however, that solvency continued to decline despite a sharp decline in corporate investment in the first half of 2020. In the future, with the continuous collection of real estate financing, China Holdings achieved sales of 32.57 billion yuan in the first half of 2020, of which nearly 90% were concentrated in Guangdong. Although the company intends to expand the Yangtze River Delta, it still has only the Hangzhou project and has not contributed sales. The company's soil storage is mainly distributed in Guangzhou, Foshan, Qingyuan and other cities, in which Qingyuan area accounts for the most, but the proportion of long-term and sales contribution is not equal. The road of hundreds of billions still has a long way to go.
First, both revenue and profit have fallen, and the room for improvement in the future is limited.
In the first half of 2020, the operating income of time China Holdings (hereinafter referred to as "the company") was 14.92 billion yuan, down 6.4% from the same period last year. Gross profit and net profit were 4.02 billion yuan and 1.81 billion yuan respectively, with year-on-year growth rates of-22.5% and 6.5% respectively.
Gross profit margin and net profit margin were 26.9% and 12.1% respectively, with changes of-5.6 percentage points and + 1.5 percentage points respectively compared with the same period in 2019.
From the perspective of business income structure, the decline of business income is mainly due to the disappearance of income from urban renewal services and property management services, with a total income of about 1 billion yuan, of which property management services have been split into independent listing of the times. Secondly, due to the impact of the epidemic, the overall delivery pace slowed down, as well as the poor performance and slow growth of the commercial leasing business. The carry-over of development projects and commercial leasing income were 14.71 billion yuan and 210 million yuan respectively, down 0.3% and 3.4% respectively from the same period last year.
In addition, the company's gross profit margin has declined significantly, on the one hand, because the property management services with high gross margins have been split, and on the other hand, with the slowing down of the market heat and stricter price restrictions and higher land prices in first-and second-tier cities, the gross profit margin of the real estate development business is also declining. However, we found that the small increase in the company's net profit margin was mainly due to a substantial increase in revenue from other income of 1.19 billion yuan, mainly from non-recurrent gains and losses such as changes in fair value.
In the second half of 2020, with the improvement of the epidemic, there is still room for improvement in carry-over income, but with the slowdown in overall sales, there is limited room for improvement in carry-over income and profits in the future.
Second, sales in Guangdong account for nearly 90%, and there is a long way to go in terms of sales. In the first half of 2020, the company realized contract sales of 32.57 billion yuan and 2.342 million square meters respectively, an increase of 4.3% and 13.5% respectively over the same period last year. Among them, the area growth rate is higher than the amount growth rate, and the average sales price has declined to a certain extent. From the point of view of the cities where the average price has declined, the average price of sales in the cities with relatively high sales has dropped significantly, and the data performance is not optimistic.
From the perspective of sales contribution cities, they are mainly concentrated in Guangzhou, Foshan and other Pearl River Delta cities, and a small number of them are distributed in Changsha and Chengdu.
Among them, the sales volume of Guangzhou and Foshan accounted for 25.6% and 29.0% respectively, and the total sales of the two major cities accounted for more than half of the total sales; the total sales amount of Guangdong Province was 28.3 billion yuan, accounting for 86.9% of the total sales; compared with 2019, Shanwei and Heyuan are the cities that contribute new sales, but the amount is lower, less than 1%. The company is still a regional housing enterprise based on the layout of Guangdong.
In terms of land reserve, as of June 30, 2020, the company's total land reserve was about 2180 square meters, down 5.2% from the end of 2019. This is also the first time that the company's total land reserve has declined in recent years. Mainly because the company significantly reduced the intensity of land acquisition in the first half of 2020, only seven new land reserves were added in the first half of the year, with a construction area of 548,000 square meters, and the total price was 4.26 billion yuan, which was significantly lower than the total additional land reserves of 5.171 million square meters and 18.76 billion yuan in the same period in 2019. Only buy land in Foshan, Changsha and Dongguan. But on the whole, the total land storage can still maintain the development of the company for 4-5 years in the future.
From the distribution of land reserves, the company's total land reserves are mainly distributed in the Pearl River Delta, in which Guangzhou, Foshan and Qingyuan account for the largest proportion, accounting for 19.1%, 12.6% and 23.8%, respectively. Among them, Qingyuan ranks first all the year round, but from the point of view of the contributed sales area, it is not equal, and the long-term backlog of inventory is a drag on the development of the company to a certain extent. In addition, the company has laid out Hangzhou, Wuhan and other cities in 2019, but has not contributed sales for more than a year.
In terms of urban renewal, by the end of June 2020, the company had more than 150 urban renewal projects with a potential total construction area of 5200 square meters, mainly concentrated in Guangzhou, Foshan and Dongguan, reaching 2781.9 million square meters, 922.7 million square meters and 668.9 square meters respectively. And successfully transformed into four urban renewal projects in June 2020, with a total floor area of 1.37 million square meters and an estimated value of 42.5 billion yuan.
Overall, the company's land reserve is still focused on Guangdong, although continue to increase positions in Changsha, Hangzhou, but the scale is small.
It is expected that before hundreds of billions of yuan, the company will still be dominated by Guangdong. From the perspective of the company's development strategy, it is worth looking forward to whether the company intends to settle in markets such as the Yangtze River Delta and whether it can help enterprises succeed in the hundreds of billions.
Third, the intensity of investment has dropped sharply, and the solvency is still declining.
In the financial aspect, the company's solvency continues to decline, and the data mainly shows the increase of net debt ratio and the decrease of cash-to-short debt ratio. By the end of June 2020, the company's net debt ratio and cash-to-short debt ratio were 71.0% and 1.36 respectively, an increase of 3.8 percentage points and a decrease of 0.21 compared with the end of 2019, mainly due to the decline in net assets and the increase in interest-bearing liabilities. however, on the whole, it remains at a reasonable level and has not reached the "three red lines".
It must be noted, however, that solvency continued to decline despite a sharp decline in corporate investment in the first half of 2020.
In the future, with the continued tightening of real estate financing, it may further affect the company's asset structure.