YUEXIU PROPERTY goes all out to strive for 147 billion

Author | Huang Yu

Editor | Liu Baodan

Faced with a deep adjustment in the real estate industry, stable development is now the best outcome for real estate companies.

On August 28, Guangzhou state-owned enterprise Yuexiu Property released its interim performance report. In the first half of the year, it achieved operating income of approximately 35.34 billion yuan, a year-on-year increase of 10.1%; net profit attributable to shareholders was approximately 1.83 billion yuan, with core net profit of about 1.74 billion yuan.

In terms of sales, in the first half of the year, Yuexiu Property achieved a contract sales amount of approximately 55.4 billion yuan. Despite significant industry downward pressure, Yuexiu Property has set a sales target of 147 billion yuan for the year, representing a 3.5% year-on-year growth. However, the completion rate in the first half of the year was less than 40%.

During the performance release conference on that day, Lin Zhaoyuan, Chairman and Executive Director of Yuexiu Property, admitted that there is a certain gap between current sales performance and plans. However, in the market environment of deep adjustment, the company's performance within the industry is actually improving.

Yuexiu Property remains a "top student" in the industry. According to data from CRIC, in the first half of this year, based on contracted sales amount (full caliber), Yuexiu Property's ranking in the industry rose from twelfth to ninth place.

Lin Zhaoyuan stated, "Facing the challenging market at present, even though there are certain difficulties and pressures, the company has decided to maintain the unchanged annual sales target of 147 billion yuan."

It is reported that internally, Yuexiu Property will use this target to motivate and assess the team, adhere to the spirit of never giving up, and make every effort to sprint.

In the current market environment facing severe challenges, this greatly tests the operational and investment land acquisition capabilities of real estate companies.

In the first half of the year, Yuexiu Property continued to adapt to changes, implementing a "tailored strategy for each project" in marketing and pricing strategies, further consolidating its leading position in the Greater Bay Area market and the number one market share in Guangzhou.

Data shows that in the first half of the year, Yuexiu Property achieved a contract sales amount of approximately 26.11 billion yuan in the Greater Bay Area, accounting for about 47.1% of the total contract sales amount. In the East China region, the contract sales amount in the first half of the year was approximately 12.88 billion yuan, accounting for about 23.2% of the total contract sales amount.

Regarding the recent entry into the Beijing market, Yuexiu Property management revealed, "This year, the company's sales target for Beijing is 12 billion yuan. In the first half of the year, 5.6 billion yuan has already been completed. Currently, the company's deployment in Beijing is mainly in the northern part, and the sales are relatively good. We will continue to deepen our presence in this city."

In terms of investment in land acquisition, Yuexiu Property remains steadfast.

In the first half of the year, through the "6+1" diversified land acquisition model, Yuexiu Property added 12 plots of land in key cities such as Beijing, Shanghai, Guangzhou, Hangzhou, Chengdu, and Hefei, with a total construction area of approximately 1.72 million square meters.

At the same time, through acquisitions from its parent company Yuexiu Group, Yuexiu Property added approximately 580,000 square meters of TOD land reserve in the first half of the year.

Among the new land reserves in the first half of the year, land acquired through the diversified land acquisition model accounted for 66% of the new land reserves As of June 30, 2024, Yuexiu Property's total land reserve is approximately 25.03 million square meters, with 94% located in first-tier cities and key second-tier cities.

The management of Yuexiu Property stated: "In our investment strategy, we adhere to sales determining production, focusing more on core cities and core areas, continuously deepening our presence, with a key focus on the four first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen, as well as key second-tier provincial capital cities. In terms of investment projects, priority is given to profitability, focusing on projects with high income certainty and quick economic returns."

One of the key reasons Yuexiu Property can sustain its ammunition storage is its robust financial condition.

By the end of the first half of the year, Yuexiu Property's total cash, cash equivalents, and restricted cash amounted to approximately 48.14 billion yuan. Excluding advances received, the asset-liability ratio, net debt ratio, and cash-to-short-term debt ratio were 68.3%, 58.6%, and 1.53 times, respectively, with all three "three red lines" indicators maintaining a "green level" compliance.

At the same time, Yuexiu Property's average financing cost further decreased year-on-year. The weighted average borrowing annual interest rate in the first half of the year dropped by 41 basis points to 3.57%, and the year-end average borrowing cost further decreased to 3.47%.

In July, Yuexiu Property successfully issued corporate bonds domestically totaling 1.5 billion yuan, with a 5+2-year term bond with a face interest rate of 2.25% for 500 million yuan and a 10-year term bond with a face interest rate of 2.75% for 1 billion yuan. There should be further room for a decrease in financing rates throughout the year.

Regarding the future market trends, Yuexiu Property's Chairman Lin Zhaoyuan stated: "The new housing market is still in the process of seeking balance. In the future, good products and services will be the mainstream in the market. The higher the urban development level, the greater the market opportunities. Overall, as a pillar industry, the real estate market is expected to maintain a scale of 80 trillion yuan to 100 trillion yuan, which is promising."