xuhui management: the new home market in core first- and second-tier cities is expected to stabilize
2024-08-31
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the property market is still recovering and real estate companies' performance continues to decline.
on august 30, xuhui holdings group (00884.hk) released its 2024 interim results showing that as of the end of june, the company achieved operating income of 20.21 billion yuan, a year-on-year decrease of more than 35%; gross profit was approximately 4.964 billion yuan, a year-on-year decrease of more than 45%; and gross profit margin fell to 13.4%.
however, due to the significant reduction in sales and marketing expenses, administrative expenses, income tax expenses, etc., during the reporting period, xinhui achieved a net loss attributable to shareholders of 4.94 billion yuan, a reduction of 4.03 billion yuan from the same period last year, and the loss margin continued to narrow.
specifically, xuhui’s core businesses mainly include property sales, investment property leasing, and property services.
among them, investment property leasing and other service income was about 790 million yuan, a year-on-year increase of 10%; this income mainly came from shanghai lcm zhihui xuhui plaza, shanghai hengji xuhui tiandi, shanghai xuhui enterprise building, beijing wukesong sports center and shanghai yangpu powerlong xuhui plaza. as of the end of june, 27 of the 32 investment properties held by xuhui have been leased out.
xinhui's property division yongsheng service (01995.hk) also maintained its growth momentum, achieving operating revenue of 3.37 billion yuan, a year-on-year increase of 5.9%, and net profit attributable to shareholders of the parent company of 270 million yuan, a year-on-year increase of 10.3%.
the property sales revenue, which is the major part of cifi's operating income, has shrunk significantly during the reporting period. as of the end of june, cifi's property sales revenue was about 15.84 billion yuan, a year-on-year decrease of 41.6%, accounting for more than 78% of the total revenue.
judging from the current industry trends, the property sales business will continue to drag down xuhui’s performance for some time to come.
in its performance report, xinhui management said that in the first half of 2024, the overall real estate market continued to recover weakly, market sentiment generally took a wait-and-see attitude, and the growth momentum of the real estate market weakened significantly. during the period, the cumulative year-on-year decrease in new home transactions in key cities was 39%, and the cumulative year-on-year decrease in second-hand housing transaction area was 8%.
affected by the general trend of the industry, the overall sales performance of real estate companies continues to decline. according to a research report by changjiang securities, from january to july 2024, the sales of the top 100 real estate companies fell by 39.7% year-on-year, of which private real estate companies fell by 50.8% year-on-year. xinhui's sales are also facing considerable pressure. in the first seven months of this year, it achieved full-caliber sales of 22.18 billion yuan, a year-on-year decrease of 52.4%.
despite continued pressure on sales, xinhui has made effective progress in the two tasks of ensuring delivery and resolving debt.
in terms of delivery guarantee, since 2024, xuhui has delivered a total of 35,000 new homes, and more than 245,000 new homes have been delivered since 2022. at the same time, as an important guarantee for delivery guarantee, xuhui is also actively seeking financing for "white list" projects. as of august 30, 72 projects across the country have been shortlisted for the "white list" of real estate projects, of which 45 projects have improved project cash flow through financing replacement, extension and interest rate reduction, etc.; another 5 projects have obtained approval for additional financing quotas of 610 million yuan.
in terms of domestic bonds, xuhui has completed the three-year extension of 5 domestic bonds, and no domestic bonds have matured this year; the total domestic extension since 2023 is about 14.1 billion yuan. among them, 4 domestic bond extensions were completed in 2023, with a total extension amount of about 7.18 billion yuan; from 2024 to date, the company has completed 5 domestic bonds, with a total amount of 6.948 billion yuan.
in terms of offshore debt restructuring, at the end of april, xinhui's comprehensive offshore debt proposal received the principle agreement of the bondholder group; in late may, consultations with the offshore bank syndicate coordination committee made further progress, and the two parties have agreed to move to the next stage. the lending banks that make up the coordination committee collectively hold approximately 59% of the offshore loan financing principal amount under xinhui's applicable debt.
in addition, through measures such as debt repayment, cifi will reduce its interest-bearing liabilities to 88.6 billion yuan, a decrease of 13.66 billion yuan from the end of june 2023, a year-on-year decrease of more than 13%. as of the end of the reporting period, cifi's total assets were 282.8 billion yuan and its net assets were 57.2 billion yuan; in terms of land reserves, cifi's total unsold goods were worth about 276 billion yuan, and it also held property assets worth about 46 billion yuan in core cities such as beijing and shanghai.
however, whether it is delivery or debt restructuring, the improvement in operations brought about by improved sales is more decisive for real estate companies and the industry. since the beginning of this year, in order to achieve stable development of the real estate market, the regulatory authorities have continued to release favorable policies. after the "517 new policy", the resident credit policy has ushered in favorable conditions, with the down payment ratio as low as 15%, the lower limit of mortgage interest rates cancelled, and the four first-tier cities successively adjusted purchase restrictions and credit policies.
while restrictive policies on housing purchases continue to be relaxed, regulators are also ensuring project delivery and boosting buyers' confidence through a real estate financing coordination mechanism and a white list system. they are also supporting local state-owned enterprises in purchasing completed, unsold commercial housing at reasonable prices for use as allocated or rented affordable housing.
"driven by a series of policies, key cities are showing signs of stopping the decline and stabilizing. the market is still in a cycle of releasing existing demand. in addition, current supply and transactions have basically dropped to a temporary low. there is a high probability that the stabilizing trend will continue in the later period." xinhui management believes.
looking ahead to the second half of the year, the management of cifi expects that the central government will introduce more policies to reduce inventory and stabilize the market, and local governments will continue to increase their efforts to stabilize the market from both the supply and demand sides. the boosting effect of these policies will continue to ferment, driving the transaction volume to steadily recover. new home transactions in core first- and second-tier cities are expected to stabilize, and the share of second-hand home transactions will continue to expand. the stabilization of transactions in core first- and second-tier cities will drive the decline in commercial housing sales nationwide to further narrow.
"however, affected by factors such as the industry downturn, cash flow pressure caused by sluggish sales and financing, real estate development investment will remain at a low level and is in the bottoming out stage," said xinhui management.
(this article comes from china business network)
