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Our reporters Guo Yangchen and Zhang Jiazhen reported from Shanghai

"Getting up early, but arriving late." The old real estate developer Crown Century (600067.SH) recently announced that it will completely divest its real estate development business and focus on the research and development, production and sales of electromagnetic wires. The industry classification will also be adjusted to electrical machinery and equipment manufacturing.

It is understood that Crown City Datong established the "de-real estate" transformation strategy very early and began to enter the new energy business in 2015. In addition, dragged down by the real estate business, Crown City Datong expects that the net profit attributable to shareholders of the listed company in the first half of 2024 will be -20 million to -30 million yuan.

Under the pressure of performance, Crown Castle decided to return to its "old business" of electromagnetic wire. On July 31, a staff member of the Secretary's Office of Crown Castle told a reporter from China Business News that the company is gradually withdrawing from the real estate industry, and the lithium battery sector is also accelerating the clearance of inventory. "We have been doing the electromagnetic wire business for a long time. As early as the 1980s, we had an electromagnetic wire factory. In fact, it was the earliest main business of Crown Castle. Now the company's strategy is to focus on the electromagnetic wire business and make it bigger and stronger."

Coincidentally, Xinhu Zhongbao (600208.SH), which has been continuously "de-real estate-oriented" in recent years, has introduced Quzhou State-owned Assets as a "white knight" on the one hand, and on the other hand has moved its registered address to Quzhou City and increased its investment in high-tech and advanced manufacturing fields. On August 1, Xinhu Zhongbao announced that it plans to change its company name to Quzhou Xin'an Development Co., Ltd. to further deepen its ties with Quzhou City.

For real estate companies seeking a path to transformation and development, whether it is equity investment or industrial development, entering a new industry or field is by no means an easy task. The transformation paths of Crown City Datong and Xinhu Zhongbao may bring experience and inspiration to the real estate industry.

Real estate business drags down performance

On July 10, Crown Castle released a performance forecast announcement for the first half of 2024, showing that Crown Castle expects the net profit attributable to shareholders of the listed company in the first half of 2024 to be between -20 million yuan and -30 million yuan; the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses in the first half of 2024 is expected to be between -28 million yuan and -38 million yuan.

Regarding the reasons for the loss, Crown Castle explained that the company is currently gradually withdrawing from the real estate industry, and there have been no new projects in the existing real estate business for many years. Most of the projects are in the final stages of trading, and the resources that can be carried forward have decreased. At the same time, affected by the development cycle of real estate projects, the settlement scale of high-gross-profit real estate projects in this period is relatively small.

In fact, at the recent 2023 Annual Shareholders' Meeting, Crown City Datong expressed its pessimism about the real estate industry: currently, homebuyers lack confidence and the overall market continues to be sluggish. The company implements refined management of existing stock real estate projects, and for projects in different regions and at different development stages, it adapts to changes in the market environment, integrates channel resources, adjusts marketing strategies, and implements "one project, one policy" to accelerate sales.

Annual report data shows that as of the end of 2023, the only projects under development by Crown Castle Datong are the Crown Castle Datong Baiwang Mansion and Xibeiwang New Village projects in Beijing, the Crown Castle Datong Blue Lake Court and Crown Castle Datong Huachen Court in Nanjing, and the Crown Castle Datong Yueshan County in Fuzhou.

The above-mentioned staff member of Guancheng Datong's secretary office told reporters that Guancheng Datong proposed the "de-real estate" strategy very early and has not acquired any land since 2019. Most of the remaining projects are in the final stage, with a value of several billion yuan.

Greenland Holdings (600606.SH) is also suffering from the performance drag of real estate business. On July 9, Greenland Holdings released its 2024 semi-annual performance forecast, predicting that the net profit attributable to the parent company's owners in the first half of 2024 will be 200 million to 250 million yuan, 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%; it is expected to achieve a net profit attributable to the parent company's owners after deducting non-recurring gains and losses of 60 million to 110 million yuan, which will be a decrease of 1.82 billion to 1.87 billion yuan compared with the same period last year, a year-on-year decrease of 94.3% to 96.9%.

Greenland Holdings analyzed that in the first half of this year, the overall downturn in the real estate and infrastructure industries has not been reversed, and the challenges faced by enterprises are still great. The net profit fell sharply, mainly because the company's real estate industry carry-over scale and infrastructure industry revenue scale both fell significantly year-on-year. At the same time, the transfer of subsidiary equity in the same period last year generated a large amount of investment income.

Accelerate the development of new tracks

At the 2023 Annual Shareholders' Meeting held recently, Greenland Holdings decided to "start a second business" and develop new businesses with strong synergy and driving force based on the existing business foundation and resource conditions. "We will firmly rely on the existing resource conditions to tap potential, do it in depth, and improve the old track and open up new tracks through resource reorganization, model reconstruction, team reshaping, and development restart, so as to continuously break through."

Vigorously developing medical industry-related businesses is an important measure for Greenland Holdings to accelerate its transformation and development. At the beginning of this year, Greenland Holdings signed a contract with Mindray Medical to carry out medical equipment trade with automatic external defibrillators (AEDs) as the entry point, and received the first order in early June. On July 1, Greenland Medical Industry Group was unveiled and established, and strategic cooperation agreements were signed with Jointown and United Imaging Healthcare.

Greenland Holdings said that Greenland Medical Industry Group will rely on the group's industry content, space scenes and supply chain, give full play to Greenland's unique institutional and mechanism advantages, accelerate the planning and implementation of projects such as hemodialysis centers, medical complexes, and medical and pharmaceutical industrial parks, and further improve the layout of medical industry business. At the same time, it will accelerate the establishment of the "Belt and Road" medical device overseas innovation display and training center in Shanghai, China and Astana, Kazakhstan.

Xinhu Zhongbao, a long-established Zhejiang-based real estate developer, also embarked on the road of transformation early on. In recent years, Xinhu Zhongbao has rarely acquired land in the open market. While proposing the "orderly exit and orderly replacement" strategy of "de-real estateization", it has accelerated its investment in high-tech companies and laid out high-end manufacturing.

The reporter noted that Xinhu Zhongbao's strategic equity investments are mainly concentrated in blockchain, artificial intelligence, high-end manufacturing, chip design, biomedicine and other sectors, and many investment targets have been listed. In 2023, Xinhu Zhongbao repurchased and disposed of its shares in Wind Information through the target company, and the transaction generated disposal income of 630 million yuan; in the same year, Xinhu Zhongbao also reduced its holdings in Honghua Digital Technology (688789.SH), Loongson Technology (688047.SH) and other listed companies.

In addition to equity investment, in 2021, Xinhu Zhongbao will change its registered address to Quzhou City, Zhejiang Province, relying on the industrial advantages of Quzhou City to focus on expanding the industrial chain of new energy battery negative electrode materials, fluorine chemicals and digital printing. In December 2022, Xinhu Zhongbao and Quzhou State-owned Assets Company jointly invested in the acquisition of 450 mu of land in Quzhou Intelligent Manufacturing New City, and after reaching full production, it will form an annual production capacity of 400,000 tons of new high-performance negative electrode materials.

Xinhu Zhongbao said that in recent years, the company has increased its layout in the fields of high-tech and advanced manufacturing, which has gradually formed a scale and system, opening up broad space for future development. "The company has strategically invested in a large number of high-tech enterprises with domestically produced independent and controllable technologies, which have been or are planned to be listed one after another, and have great room for appreciation."

Crown City Datong can be regarded as a pioneer in the transformation of real estate enterprises. As early as 2015, it accelerated the pace of strategic transformation and entered the lithium battery industry chain to enter the new energy track. At the end of 2017, the first phase of the new energy lithium battery project invested by Crown City Ruimin was officially put into production, with a planned production capacity of about 5.6GWh.

The transformation was not smooth and returned to the old business

However, after years of transformation, Crown City Datong has not been able to take advantage of the booming new energy vehicle industry to achieve soaring performance. Instead, it suffered its first loss in more than 20 years since its listing in 2021. This has also shaken the company's transformation strategy.

In 2023, Guancheng Ruimin accelerated the processing and sales of inventory battery cells. Financial report data showed that as of June of that year, Guancheng Ruimin's net profit was -25.5 million yuan, and its net assets were about -500 million yuan, and it had fallen into a state of "insolvency".

Due to poor performance, Xue Lixi, the actual controller and director of Guancheng Datong, did not submit a vote on the 2023 semi-annual report. Xue Lixi explained that the main reason was that the company's transformation strategy was not implemented firmly and measures were not in place in recent years, resulting in unsatisfactory operating performance and shrinking market value, which he did not approve of. In December 2023, Xue Lixi was given a regulatory warning by the Shanghai Stock Exchange for this reason.

The reporter learned from Crown Castle Maxus that Crown Castle Ruimin currently no longer produces battery cells, and only sells inventory battery cells and the production and sales of two-wheeled vehicle battery pack quick-change PACKs. Crown Castle Maxus plans to complete the liquidation or restructuring of its lithium battery business as soon as possible.

In fact, another major transformation business of Crown City Datong, electrolyte additives, is also on the decline and in a loss-making state. The financial report shows that in 2023, the business will achieve an output of 221.69 tons, a year-on-year decrease of 25.57%; sales of 198.96 tons, a year-on-year decrease of 29.43%; revenue of 40.581 million yuan, a year-on-year decrease of 48.48%; net profit of -12.7877 million yuan.

After careful consideration, on July 10, 2024, Crown City Datong announced that it intends to transfer the assets and liabilities related to the real estate development business held by the company to the controlling shareholder (or the affiliated company designated by the actual controller). After the transaction is completed, the company will no longer engage in real estate development business, but will concentrate human, material and financial resources to further expand and strengthen the electromagnetic wire business through various means such as expansion and mergers and acquisitions, and seek upstream and downstream and horizontal merger opportunities in the industry chain related to the existing business.

On July 22, Crown Castle announced that it had signed a share transfer framework agreement with the existing shareholders of Xiandeng Hi-Tech Electric Co., Ltd. (hereinafter referred to as "Xiandeng Hi-Tech"), intending to acquire 55% of Xiandeng Hi-Tech's shares to expand production capacity and strengthen its electromagnetic wire business.

According to reports, Xiandeng Hi-Tech was established in 2013. Its main production base is the Wuxing plant in Huzhou, Zhejiang, covering an area of ​​about 146 acres. Its leading product, the "Xiandeng" brand series of electromagnetic wires, has more than 40 models and over 1,000 specifications. As of the end of 2023, Xiandeng Hi-Tech's total assets were 1.626 billion yuan, and its owner's equity was 501 million yuan; its operating income in 2023 was 3.826 billion yuan, and its net profit was 12.3503 million yuan.

"This transaction is an important measure for the company to expand its layout in the electromagnetic wire industry, and it is in line with the company's strategic development direction and actual business needs." Crown Castle said that Xiandeng Hi-Tech currently has an electromagnetic wire production capacity of approximately 85,000 tons. If this transaction is completed, the company's total electromagnetic wire business capacity is expected to reach 175,000 tons, which can enhance the company's overall operational strength, consolidate the company's leading position in the electromagnetic wire industry, enhance the company's market competitiveness and profitability, and enhance the company's sustainable development capabilities.