news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

In the first half of this year, with the deep adjustment of the real estate industry, the overall performance of real estate companies remained relatively bleak. However, with the introduction of new policies, the increase in "guaranteed delivery" carry-over projects and the gradual recovery of the market, some real estate companies have turned losses into profits.

On July 18, according to Wind data statistics, the Beijing News reported that as of now, 75 A-share real estate companies (industry classification standard is WIND real estate) have released mid-term performance forecasts or performance reports for 2024. Among them, 47 real estate companies are expected to suffer losses in the first half of the year, and 28 are expected to make profits; at the same time, 10 of the 28 profitable companies have turned losses into profits.

28 companies are expected to make profits

In the first half of the year, among the above 28 real estate companies that are expected to make profits, Poly Development was the first to disclose its performance report, and it is also the only real estate company in the A-share market that has disclosed its performance report.

On July 11, Poly Development released a 2024 semi-annual performance interim announcement showing that its total operating revenue in the first half of the year was 139.269 billion yuan, an increase of 1.64% over the same period last year; the net profit attributable to shareholders of the listed company was 7.508 billion yuan, a year-on-year decrease of 38.57%; the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was 7.312 billion yuan, a year-on-year decrease of 37.64%.

Poly Development said that in the first half of this year, the company's operating income mainly came from the completion and delivery of real estate projects, and the revenue scale increased slightly by 1.64% compared with the same period last year. Affected by the market downturn and price pressure, the gross profit margin of project carryover decreased, and the company's operating profit decreased by 27.73% year-on-year. At the same time, the equity ratio of carryover projects in the first half of the year decreased, and the net profit attributable to shareholders of listed companies decreased by 38.57% year-on-year.

Among the leading A-share real estate companies, Greenland Holdings expects to achieve a net profit attributable to the parent company's owners of 200 million to 250 million yuan in the first half of 2024, which will be a decrease of 2.36 billion to 2.41 billion yuan compared with the same period last year, a year-on-year decrease of 90.4% to 92.3%.

The 28 profitable real estate companies also include Yunnan Urban Investment, Savills, Nandu Property, Shenzhen Property, Pudong Jinqiao, Hefei Urban Construction, etc., most of which are real estate, urban construction and property companies. However, the profits of these real estate companies also showed an "expected decrease" trend.

It is worth mentioning that ST Shuyuan is the only company with "expected increase", thanks to the recovery of some receivables for which impairment provisions were made, resulting in an estimated net profit of 73 million to 109 million yuan in the first half of the year. However, ST Shuyuan's main businesses currently include the research and sales of electronic information products, the development and operation of science and technology industrial parks, commodity trade, and real estate development. Its real estate business is mainly government-built (such as affordable housing, government public buildings, construction of shared-ownership housing projects, and industrial park construction), and its own development projects have been greatly reduced.

As the real estate industry is still in deep adjustment, the profitability of real estate companies has yet to be restored. Therefore, in the first half performance forecast, the performance of real estate companies still showed a downward trend, with 47 companies suffering losses.

Some leading real estate companies such as Vanke and Gemdale Group suffered losses for the first time. Vanke previously expected a loss of 7 billion to 9 billion yuan in the first half of the year, due to a significant decline in the settlement scale and gross profit margin of real estate development projects, the company's impairment provisions for some projects, losses on some non-core financial investments, and some large asset transactions and equity transactions at prices below book value.

In particular, regarding the decline in settlement scale and gross profit margin, Vanke explained that the profit from this settlement was mainly from the inventory of ready-to-move-in houses and nearly ready-to-move-in houses in 2022 and 2023. However, the land acquired during this period had a high land acquisition cost, and the market continued to decline in the subsequent sales stage. Both sales and gross profit margin were lower than investment expectations, resulting in a significant reduction in the total gross profit settled in the reporting period.

Regarding the first loss, Gemdale Group also stated that due to factors such as the pace of real estate project turnover, the company had fewer real estate projects to carry forward in the first half of the year, resulting in a decrease in carry-over income and gross profit margin, which led to a decrease in net profit.

In addition, among the leading real estate companies, Joy City and Rongsheng Group also suffered losses for the first time, while Shoukai Holdings, Financial Street, China Fortune Land Development, Gree Real Estate, and China Communications Construction Real Estate continued to suffer losses.

10 companies turned losses into profits in the first half of the year

It is worth noting that among the 28 profitable real estate companies, 10 real estate companies have turned losses into profits, including 155 Home Furnishing, Xinhualian, Nan Guo Real Estate, China Wuyi, Caixin Development, Shenzhen Shenfang, Sanxiang Impression, Haiyin Holdings, Asia Pacific Holdings and Huali Family.

Among them, the performance forecast released by I Love My Home on July 12 showed that it is expected to turn losses into profits in the first half of 2024, and the net profit attributable to shareholders of listed companies will be in the range of 24 million to 35 million yuan, compared with the loss of 48.8106 million yuan in the same period last year, achieving significant performance improvement.

555 said that the main reason for the change in the company's performance is that since the second quarter, the relaxation of relevant policies in the domestic real estate market has continued to increase, and the second-hand housing transaction volume in the core cities where the company's business is located (such as Beijing, Shanghai, Hangzhou, etc.) has shown a good recovery trend. From May to June, the company's second-hand housing transaction volume and viewing volume achieved a good year-on-year growth, which made a good positive contribution to the company's performance.

In addition, 51Home's turnaround benefited from the increase in non-recurring gains and losses. 51Home further stated that the company sold the assets related to the New Era Hotel in Kunming, Yunnan in the first quarter. According to preliminary estimates by the company's financial department, it is expected to have a positive impact on the company's net profit in the first half of 2024, with an impact of approximately RMB 80 million (the final impact amount is subject to the audit results of the annual review agency). This income is a non-recurring gain or loss.

At the same time, Xinhualian pointed out in its performance forecast released on July 13 that its net profit in the first half of the year was approximately 39 million yuan to 58 million yuan, compared with a loss of 1.222 billion yuan in the same period last year, an increase of 103.19% to 104.75% year-on-year.

Regarding the reasons for turning losses into profits, Xinhualian stated that, first, the carry-over income of Xinhualian's real estate projects in the first half of the year increased compared with the previous year, and the gross profit of real estate projects increased; second, the company completed bankruptcy reorganization, and interest-bearing liabilities were repaid in accordance with the reorganization plan, and financial expenses dropped significantly compared with the same period last year.

The turnaround of some real estate companies is also based on their own development. For example, China Wuyi achieved a turnaround from loss to profit in the first half of the year, and its net profit is expected to reach 170 million to 220 million yuan, a 247% increase compared with the loss of 150 million yuan in the same period last year. The main reason for China Wuyi's turnaround from loss to profit is the impact of the carryover of a single project, which is relatively special, that is, the carryover income and realized profits of its residential project in the western plot of Wuyi Garden South District, Beijing increased year-on-year, and the exchange rate fluctuations affected the exchange gains increased year-on-year.

According to public information, China Wuyi is a subsidiary of Fujian Construction Group and was listed on the Shenzhen Stock Exchange in 1997. Its main real estate project is Beijing Wuyi Garden. Last year, 90% of its revenue came from this project. In addition, the company also has international engineering contracting business.

Overall, through analyzing the "turnaround" of 10 real estate companies, the main reasons were the increase in carried-over projects and the increase in non-operating profits and losses.

Real estate companies' performance may enter a recovery period under the new policy

It is worth noting that with the introduction of the "May 17" new policy and the gradual recovery of markets in various regions, the performance of real estate companies will also usher in a period of recovery.

According to the data from the National Bureau of Statistics, the national real estate sales area in January-June this year decreased by 19.0% year-on-year, which was narrower than the 20.3% decrease in January-May. At the same time, the national real estate sales in January-June decreased by 25.0% year-on-year, which was also narrower than the 27.9% decrease in January-May. In addition, destocking has also achieved certain results. According to the data from the National Bureau of Statistics, as of the end of June 2024, the total construction area of ​​unsold houses was 738.9 million square meters, a decrease of 3.6 million square meters from the end of May 2024.

In this regard, analysts at Guotai Junan believe that the policy "east wind" after the "May 17" new real estate policy will continue until the third quarter of 2024, and it is expected that real estate sales will have a chance to continue to recover in the third quarter of 2024.

Beijing News reporter Xu Qian

Edited by Yang Juanjuan, Proofread by Chen Diyan