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the decline in profits in the real estate industry has become a common phenomenon among major real estate companies, and the newly crowned "profit king" china resources land is no exception. on august 28, china resources land disclosed its performance report for the first half of 2024. the financial report shows that in the first half of 2024, china resources land's operating income continued to grow, recording a total revenue of 79.13 billion yuan, an increase of 8.4% compared with 72.97 billion yuan in the same period of 2023. however, behind the revenue growth, a fact that cannot be ignored is that china resources land's profitability is gradually weakening.

the financial report shows that in the first half of 2024, china resources land achieved a gross profit of 17.63 billion yuan, a year-on-year decrease of 5.85%; the comprehensive gross profit margin was 22.3%, a decrease of 3.4 percentage points from the same period last year.

the decline in comprehensive gross profit margin was mainly affected by the decline in gross profit margin of development and sales business. in the first half of 2024, the gross profit margin of china resources land's development and sales business was only 12.4%, a decrease of 4.6 percentage points compared with 17% in the same period of 2023.

in fact, in recent years, china resources land's gross profit margin has been gradually declining. the interim reports for 2020-2023 show that china resources land's comprehensive gross profit margins were 33.53%, 31.34%, 26.94% and 25.66% respectively.

the management of china resources land had publicly expressed the business strategy of "profitable revenue growth and cash flow-generating profits", but the actual performance was not as expected.

in the first half of 2024, the profit attributable to shareholders of china resources land was 10.253 billion yuan, a sharp year-on-year decrease of 25.37%. this is also the worst profit performance recorded by china resources land in five years since 2020.

guo yi, chief analyst of heshuo institution, said that due to the deep adjustment of the real estate industry, the era of high profits in real estate development has ended and it is time to return to normal. reasonable layout, lean investment and meticulous operation of real estate companies are the fundamentals.

in terms of revenue contribution, development and sales business is still the core business of china resources land, but this business is currently experiencing market challenges. in the first half of 2024, china resources land achieved a contract value of 124.7 billion yuan, a year-on-year decrease of 26.7%; the contract area was 5.21 million square meters, a year-on-year decrease of 25.7%.

in order to fight against the counter-cyclical situation, china resources land has also actively created a "second growth curve" in recent years. in the first half of 2024, china resources land's shopping center rental income reached 9.48 billion yuan, a year-on-year increase of 9.7%. china resources land's 82 operating shopping centers achieved retail sales of 91.62 billion yuan, a year-on-year increase of 21.9%. china resources vanke achieved operating income of 7.96 billion yuan, a year-on-year increase of 17.1%; and achieved core net profit of 1.77 billion yuan, a year-on-year increase of 24.2%.

as of june 30, 2024, china resources land's investment property land reserves amounted to 9.28 million square meters, with an equity area of ​​6.51 million square meters. among them, commercial land reserves amounted to 6.79 million square meters, accounting for 73.2%, and there were 46 shopping centers under construction and planning.

correspondingly, in terms of investment in land acquisition, china resources land chose to "shrink". in the first half of 2024, china resources land increased its holdings of 11 land reserves at a total land price of 25.6 billion yuan (equity land price of 18.33 billion yuan), with a total additional gross floor area of ​​2.02 million square meters. in the same period of 2023, china resources land increased its holdings of 35 land reserves at a total land price of 102.3 billion yuan (equity land price of 70.5 billion yuan), with a total additional gross floor area of ​​7.97 million square meters.

the low financing cost has given china resources land the label of "counter-trend expansion" in the past two years, but large-scale expansion has also put a lot of debt pressure on china resources land. as of june 30, 2024, china resources land had a total loan of 251.13 billion yuan, bank balances and cash of 118.33 billion yuan, equity attributable to shareholders of the company of 266.52 billion yuan, a net interest-bearing debt ratio of 33.6%, and a weighted average debt financing cost of 3.24%. of the total interest-bearing debt, about 26% of the interest-bearing debt will mature within one year.

beijing business daily reporter wang yinhao and li han