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on the evening of september 2, china construction (sh601668, stock price 5.28 yuan, market value 219.7 billion yuan) held a 2024 interim performance briefing.

the interim report shows that in the first half of the year, china's construction and real estate business contract sales amounted to 191.5 billion yuan, a year-on-year decrease of 20.6%; and operating income was 116.4 billion yuan, a year-on-year decrease of 8.7%.

in response to questions about this year's budget allocation, wu bingqi, vice president and general legal counsel of china construction group, revealed that in the 2024 investment budget arrangement, the investment budget for real estate development projects accounts for approximately 3/4.

recently, many projects of china overseas land & investment have sparked heated discussions across the country. when introducing the performance, huang jie, the group's vice president and chief financial officer, also specifically mentioned that the shanghai shunchang jiuli project had daily sales of 19.6 billion yuan, setting a new national record for new launches.

“the company’s overall performance is good”

in the first half of this year, the contract sales of china's construction and real estate business was 191.5 billion yuan, a year-on-year decrease of 20.6%; the contract sales area was 6.55 million square meters, a year-on-year decrease of 33.2%; the operating income was 116.4 billion yuan, a year-on-year decrease of 8.7%; the gross profit was 22.6 billion yuan, a year-on-year decrease of 2.1%; the gross profit margin was 19.4%, an increase of 1.3 percentage points year-on-year.

during the reporting period, china construction purchased 28 new plots of land, with a land reserve of 86.31 million square meters at the end of the period, an additional land reserve of 3.41 million square meters, and a total land purchase amount of 51.7 billion yuan. all the new land reserves are located in first-tier cities such as beijing, shanghai, and shenzhen, or municipalities and provincial capitals.

among them, china overseas land & investment purchased 6 new land parcels, with an additional land reserve of 1.169 million square meters and a land purchase amount of 12.9 billion yuan; china construction real estate (brands such as china construction yipin, china construction dongfu, china construction zhidi, china construction jiuhe, and china construction xinhe) purchased 22 new land parcels, with an additional land reserve of 2.245 million square meters and a land purchase amount of 38.8 billion yuan, of which the land purchase amount in first-tier cities accounted for 74.7%.

in response to the question of accelerating the construction of a new model of real estate development, wu bingqi stated that the company has increased its investment and construction of affordable housing. since 2023, it has invested in 45 affordable housing projects with a total investment of 48.8 billion yuan, and will provide 39,000 residential units.

he also disclosed that in the 2024 investment budget arrangement, the investment budget for real estate development projects accounts for about 3/4.

in addition, according to the management of china construction, there are four main types of urban renewal projects invested by the company: one is the urban village renovation model represented by the shuangsha and wenchong donghuangbian village projects in guangzhou; the second is the urban village renovation model represented by the chongming project in shanghai; the third is the historical and cultural protection urban renewal project represented by the yangpu project in shanghai; and the fourth is the renovation project of old residential areas in beijing.

wu bingqi admitted that since 2024, the company has conducted in-depth research and responded to new changes in the real estate market.

as mentioned above, in the first half of this year, the cumulative sales contract value of china's construction and real estate business decreased by 20% year-on-year, but it was further narrowed from the year-on-year decline of 28.9% in the first five months. the sales volume in june was 55.69 billion yuan, up 15.1% year-on-year and 80% month-on-month.

wu bingqi said that according to data from the china index academy, the sales of the top 10 peers from january to june were 1,029.6 billion yuan, a year-on-year decrease of 33.2%. "it should be said that the company's overall performance is still good in the industry, and we are confident that the market will show a moderate recovery trend."

“there is still room for market development”

in the first half of this year, china construction set aside a total of 9.08 billion yuan in various impairment provisions, including 3.99 billion yuan in impairment provisions for accounts receivable, 2.28 billion yuan in impairment provisions for contract assets, 1.39 billion yuan in provisions for inventory, and 1.42 billion yuan in provisions for other assets.

"in fact, from the perspective of real estate inventory on hand, more than 90% are concentrated in the core areas of first- and second-tier cities. it should be said that overall, the asset quality is still relatively high, sales expectations are also good, and risks are controllable. in the first half of the year, we made provisions for impairment of real estate inventory, mainly for some third- and fourth-tier cities where the expected selling price is lower than the cost of existing real estate projects." huang jie said: "in the second half of the year, we will further increase the efforts to sell inventory, formulate sales plans for each project, closely follow up on policy changes in various places, and speed up sales collection."

"in recent years, the company has taken the initiative to reduce the scale of its residential business. in fact, the scale of our real residential business has been gradually declining in recent years, and we are actively promoting the resolution of our existing real estate corporate debts."

he further explained that the overall debt scale of risky real estate developers is already very low, and we have also fully provided for impairment. in the second half of the year, we will further strengthen the research and judgment of the real estate development situation, dynamically evaluate the development status of various types of enterprises, and improve the early warning mechanism for high-risk customers.

regarding the future situation, the management of china construction said that the current supply and demand relationship in the entire real estate market has undergone profound changes, and a new model of real estate development is gradually being constructed.

first, we should focus on high-quality locations in core cities and seize high-quality market opportunities; second, we should firmly implement relevant requirements for building good houses. there is still demand for improvement, and we should enhance our competitiveness with high-quality products and high-standard services; third, we should strengthen the exploration and research of segmented products and business formats, and constantly seek new growth points from the industrial value chain.

"we believe that with the advancement of new urbanization, the entire industry may be on a downward trend, but structural opportunities still exist and there is still room for market development."

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