Interface News Reporter | Wang Yuhan
The challenges facing the real estate industry in 2023 will still exist, and the market sentiment has not improved significantly due to the stimulation of various favorable policies.
On the evening of March 28, Vanke released its 2023 annual report, judging from the annual report data, the in-depth adjustment of the real estate industry has also brought pressure to Vanke's operation, but fortunately, Vanke has kept the bottom line of safety.
The real estate industry is still in the process of adjustment, and Yu Liang, chairman of the board of directors of Vanke, said at the results conference on March 29 that it is not enough to have business capabilities, and it is necessary to strengthen bottom-line thinking, do a good job in stress testing under extreme conditions, and make the most adequate and adequate preparations.
As for the next industry trend, Yu Liang insisted that the view of "the market is over-falling" has not changed, "it is difficult for the industry to return to the past highs, but the prospects are still broad."
In the annual report, Vanke also pointed out that with the recent strengthening of city-specific policy support, potential demand will be effectively stimulated, and through its own redoubled efforts for a period of time, Vanke is confident that it will be able to digest the historical burden, improve its operating real estate transaction and financing capabilities, better ensure the company's safety, and support long-term development.
Facing the future, Yu Liang said that the company will go all out to take action and resolutely not lie down, and Vanke has full confidence to overcome difficulties, cross this threshold, and continue to become an excellent company in the new stage of industry development.
In terms of revenue data, in 2023, Vanke will achieve operating income of about 465.739 billion yuan, a year-on-year decrease of 7.56%, and the net profit attributable to shareholders of listed companies will be about 12.163 billion yuan, deducting non-net profit of about 9.794 billion yuan. Basic earnings per share was RMB1.03, and fully diluted return on equity was 4.8%, down 4.47 percentage points from 2022.
As for the main reason, Vanke explained that it was due to the decline in the settlement scale and gross profit margin of the development business, and the impairment of some development projects. During the period, impairment was made for the company's consolidated projects, and the asset impairment loss in 2023 was 3.49 billion yuan, which was 3.04 billion yuan more than that in 2022.
On the crucial financial front, Vanke's fundamentals remain safe, and even under sales pressure, Vanke has achieved positive cash flow.
As of the end of 2023, Vanke has had positive operating cash flow for 15 consecutive years, with 99.81 billion yuan of monetary funds on hand, which can cover interest-bearing liabilities due within one year, and the asset-liability ratio excluding pre-collected housing payments was 65.5%, down from a high of 76% in 2018 for five consecutive years.
The debt structure was further optimized, with total interest-bearing liabilities of 320.05 billion yuan, the proportion of overseas liabilities dropped to less than 20%, the proportion of short-term debts fell to 19.5%, a decrease from the beginning of the year, the debt maturity was extended from 4.79 years at the end of 22 years to 5.14 years, and the comprehensive cost of new domestic financing was 3.61%, a record low.
In a letter to shareholders, Vanke explained that due to the overly optimistic judgment of some investments during the period of rapid expansion, it took time for the project to digest, and second, there were difficulties in the operation of the service business, which had a long capital recovery cycle and large pressure, which could only be fully resolved after the relevant financing mechanism matured.
Specifically, Vanke maintained strong resilience in its development business, and its sales continued to outperform the market. By the end of 2023, Vanke's development business has achieved a sales area of 24.66 million square meters and a sales amount of 376.1 billion yuan, ranking second in the industry in terms of sales, and the year-on-year decline is lower than the annual decline of the top 100 real estate companies.
Nearly 67% of the newly launched projects were delisted on the first day of opening, of which 13 projects had an 80% de-listing rate. At the same time, it continuously improved product quality and delivery services, delivered 289,000 sets with high quality, and achieved 97% immediate satisfaction and 97% customer after-sales satisfaction.
In 2023, Vanke continued to adhere to the principle of "simultaneous rental and purchase", and Vanke continued to rank first in the industry in terms of scale and efficiency, and achieved overall profitability under the accounting measurement method of cost method.
As the largest centralized apartment provider in China, Vanke Boyu operates and manages a total of 230,000 rental housing units, with a total of 180,000 units opened, covering 31 cities across the country, with an annual occupancy rate of 96%, and more than 60% of customers choose to renew their leases. In order to actively respond to the national affordable rental housing policy, Park Apartment also has 147 projects in 23 cities across the country, involving 100,000 houses.
At the same time, with the continuous deepening of the pilot of public REITs in 2023, Vanke's operating business has ushered in new opportunities.
According to the financial report, in 2023, Vanke's commercial business will achieve revenue of 9.11 billion yuan, a year-on-year increase of 4.6%, with a total of 203 commercial projects opened, and the layout of commercial projects under management and operation will account for more than 90% in first- and second-tier cities;
Before the launch of consumer infrastructure REITs, commercial real estate financing channels such as shopping malls have been relatively single and scarce, mainly relying on short-term loans. REITs can help operating real estate companies close the loop of business models and promote the transformation of real estate companies from developers to real estate developers.
Vanke is expected to become the only company in the industry to achieve a breakthrough in three types of operating REITs.
Previously, the CICC SCPG REIT released by Vanke's SCPG Group has officially entered the inquiry stage, Wanwei Logistics REIT has been officially released on the exchange, and the long-term rental apartment REIT is currently actively declared.
According to industry insiders, the breakthrough of REITs in the operating business will help Vanke open up the closed loop of the business model of "investment, financing, management and withdrawal" of operating real estate, realize more efficient and benign operation of assets and funds, and Vanke's ability advantages in operating business are also expected to be further revealed.
Guojin Securities Research pointed out that based on the financial report data, it is expected that under the contraction of Vanke's future development business, the contribution of the operating service business will increase steadily, which is conducive to stabilizing the fundamentals.
In addition, in addition to Vanke's own all-out efforts, it is also inseparable from the support and support of Shenzhen Railway, a major shareholder of state-owned assets.
Since Shenzhen Railway became a shareholder of Vanke in 2017, Shenzhen State-owned Assets and Vanke have cooperated in many fields. In May 2023, the Shenzhen Bay Ruiyin RAIL IN project cooperated by Vanke and Shenzhen Railway was officially opened at the Shenzhen Bay Super Headquarters Base.
In November last year, when Vanke encountered a short-selling crisis, the Shenzhen State-owned Assets Supervision and Administration Commission (SASAC) gave a positive statement, which played a key role in stabilizing market confidence.
Xin Jie, chairman of Shenzhen Metro, said at the time, "Behind Vanke is Shenzhen Metro, and behind Shenzhen Metro is Shenzhen State-owned Assets." He also said that it will release Vanke in an orderly manner according to market conditions, including undertaking some of Vanke's urban renewal projects in Shenzhen in a market-oriented and law-based manner, helping Vanke revitalize its bulk assets and injecting new liquidity into Vanke, with a transaction amount of more than 10 billion yuan.
After entering 2024, the support of major shareholders is also increasing. First, in January, Shenzhen Investment Holdings, an investment platform under Shenzhen State-owned Assets, invested in the acquisition of a 6.16% stake in Shenzhen High-tech Investment from a subsidiary of Vanke.
Then, in March, according to the SCPG REIT inquiry announcement, Shenzhen Railway Group planned to subscribe to CICC SCPG Consumer REIT through strategic placement, with a subscription share of 29.8% of the total shares raised by the fund, with a subscription amount of about 1 billion yuan.
In addition to the support of major shareholders, Vanke has also won the trust and support of major financial institutions under the significant contraction of the overall financing of the industry, and in 2023, it will obtain a total of nearly 90 billion yuan of new financing at home and abroad, of which 76.6 billion yuan will be newly raised in China, and the comprehensive cost of new financing will be 3.61%.
In 2024, how to promote the company's smooth transformation of the model, Vanke proposed to focus on the following three aspects:
1. Ensure the bottom line of safety. On the sales side, we will stick to the goal of outperforming the general trend and maintain positive cash flow at the operating level. The uncertainty that may occur in the future is more fully estimated, and the "reservoir" is cashed out through bulk assets and equity transactions, and the safety cushion is thickened on a large scale, and the transaction collection will be no less than 30 billion yuan in 2024.
2. Firmly reduce leverage. In the next two years, we will reduce interest-paying debts by more than 100 billion yuan, and actively promote the transformation of financing models.
3. Provide good products and services for the society on the basis of "guaranteed delivery" to achieve sustainable endogenous development.
In addition to these three major actions, in order to ensure that Vanke "survives" as much as possible, the financial report also pointed out that since the day of the annual report, Yu Liang, chairman of the board of directors of Vanke, Zhu Jiusheng, president, and Xie Leng of the board of supervisors, voluntarily received a monthly salary of 10,000 yuan before tax and carried out a collective salary reduction.