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the release of the interim reports of real estate companies has come to an end, and market pressure is also reflected in the financial statements of major real estate companies. as representatives of the top real estate companies, the three central enterprises of poly development, china resources land, and china overseas land and investment have all experienced varying degrees of decline in the past six months. in the first half of 2024, china resources land and china overseas land and investment still maintained a profit performance of over 10 billion yuan, but compared with the same period last year, both shrank by 3 billion yuan. after briefly occupying the throne of "profit king" for two years, china resources land was once again overtaken by china overseas land and investment, with profits slightly lagging behind china overseas land and investment by 0.61 billion yuan. poly development has the lowest profit performance among the three real estate companies, only 7.42 billion yuan, a sharp decline of 39.29%, and has not broken through the 10 billion yuan mark. in terms of revenue, poly has successfully reversed the situation of bottom-line profits, and has remained stable at the level of 100 billion yuan for three consecutive years, far ahead of china overseas land and investment and china resources land. the two new and old "profit kings" of china overseas land and investment and china resources land have maintained revenues of around 80 billion yuan respectively.

revenue: poly has the lowest growth rate, and china overseas has experienced negative growth for three consecutive years

in the first half of 2024, poly achieved total operating revenue of 139.2 billion yuan, a year-on-year increase of 1.6%. although it still maintained steady growth, the growth rate was much lower than the same period in previous years. in the same period from 2021 to 2023, poly's revenue growth rate remained above 20%, at 22.07%, 23.11% and 23.71% respectively.

poly's ability to maintain a 100 billion yuan level is closely related to its abundant "bread" reserves. as of the end of june 2024, poly development's land reserves are expected to be 146 million square meters, far higher than the land reserves of china overseas land and investment and china resources land. this also allows poly development to maintain total revenue growth even when sales prices are lower than expected.

although it is not as big as poly, china resources land's revenue performance has not declined significantly in the past two years, and its growth rate has also accelerated year by year, making it the most outstanding among the three real estate companies. in the first half of 2024, china resources land's total revenue was 79.127 billion yuan, an increase of 8.44% compared with 72.971 billion yuan in the same period of 2023.

judging from the revenue performance of the three real estate companies, china overseas land & investment performed the worst, with revenue ranking last for three consecutive years. in the first half of 2024, china overseas land & investment's revenue was 86.935 billion yuan, a year-on-year decrease of 2.5%, and negative growth for three consecutive years. although china overseas land & investment's revenue scale is still higher than that of china resources land, the gap between the two is narrowing year by year. in the first half of 2021, china overseas land & investment's revenue was 107.879 billion yuan, and china resources land's was 73.742 billion yuan, leading by more than 30 billion yuan. by the first half of 2024, the gap between the two had narrowed to less than 10 billion yuan.

profit: china overseas regained the title of "profit king", while poly's profit dropped by nearly 40%

in the first half of 2024, profit decline has become one of the important labels of the real estate industry, and china overseas land & investment, poly developments & investment, and china resources land are no exception. according to the financial reports, in the first half of 2024, the profits attributable to the parent companies of the three real estate companies were 10.314 billion yuan, 7.42 billion yuan, and 10.253 billion yuan, respectively, all of which declined to varying degrees.

among them, poly development ranked first with a year-on-year decrease of 39.29%. the slowdown in revenue growth and the increase in sales costs also made poly development's profit performance far lower than that of china overseas land and investment and china resources land. in the first half of 2024, poly's sales costs were 116.941 billion yuan, an increase of 8.42% year-on-year compared with 107.856 billion yuan in the same period of 2023, while the revenue growth rate was only 1.6%, resulting in a mismatch between income and expenditure.

the profits attributable to shareholders of china overseas land & investment and china resources land also fell by more than 20%. it is worth mentioning that the decline of china overseas land & investment was 1.83 percentage points lower than that of china resources land, thus taking away the title of "profit king" from china resources land, which it had held for two years.

judging from the financial report data, although china overseas land & investment's revenue is larger than that of china resources land, its gross profit margin and net profit margin are not as good as those of china resources land. the main reason why china overseas land & investment can take the title of "profit king" is that minority shareholders take less money. in the first half of 2024, minority shareholders of china overseas land & investment took 1.218 billion yuan, while minority shareholders of china resources land took 2.303 billion yuan.

with profits almost the same, the minority shareholders of china resources land took away nearly half more than china overseas land & investment, which allowed china overseas land & investment to overtake again.

as for the decline in profits, the three real estate companies gave a very consistent reason: the gross profit margin of the project carried forward has declined. it is not difficult to see that as representatives of the leading real estate companies, the deep adjustment of the real estate market has had the most serious impact on them. the plots of land that were once won at a high premium have become the norm to maintain normal operations when sales are lower than expected.

in the first half of 2024, the gross profit margins of china overseas land & investment, poly developments and china resources land were 22.06%, 16.02% and 22.28% respectively. among them, poly developments was the only real estate company among the three with an increase in gross profit margin, up 2.84 percentage points, while china overseas land & investment and china resources land decreased by 0.5 percentage points and 3.38 percentage points respectively.

xie yifeng, director of the china urban real estate research institute, said that in recent years, major real estate companies have been reducing costs and increasing efficiency. in this regard, central state-owned enterprises have always performed well. they usually adopt low land prices or cooperative forms to develop projects, so even if the gross profit margin has declined, the overall profit performance is still good.

the second track: china resources' revenue contribution exceeds 20%, while china overseas' is less than 5%

revenue and profit are the present, while land reserves are the future. for real estate companies, the amount of "bread" is one of the important indicators to measure their future development direction. with the deep adjustment of the real estate market in recent years, some real estate companies have also chosen to give up some "bread" and seek a second growth curve.

china overseas land & investment and china resources land have actively invested in new tracks, choosing commercial property operation businesses such as property leasing and hotels, increasing their share in total revenue, and becoming the second growth point for stable revenue.

in the first half of 2024, china resources land's shopping center rental income was 9.48 billion yuan, its 82 operating shopping centers achieved retail sales of 91.62 billion yuan, and china resources vanke achieved operating income of 7.96 billion yuan. operating real estate business and light asset management business accounted for 21.95% of total revenue, the highest proportion among the three real estate companies.

the development of the second track of china overseas real estate is relatively slow. in the first half of 2024, the proportion of china overseas property leasing and commercial property operation in total revenue was 4.07%, an increase of 1.34 percentage points over the same period last year. in the first half of 2024, china overseas' commercial property revenue was 3.54 billion yuan, up 19.8% year-on-year, of which office building revenue was 1.76 billion yuan, shopping center revenue was 1.11 billion yuan, long-term rental apartment revenue was 120 million yuan, and hotel and other commercial property revenue was 550 million yuan. the shopping center business maintained rapid growth, with revenue increasing significantly by 57.6% year-on-year.

guo yi, chief analyst of heshuo institution, said that for china overseas and china resources land, china resources has a very mature commercial operation brand, and china overseas also has its own business management team. they have very advanced experience in the operation and management of office buildings. in addition, they started their operation business relatively early and can enjoy the benefits of urban growth and asset growth. in addition, at the operational level, the long-tail effect will be more obvious.

in terms of revenue contribution, real estate development is still the main business of the three central enterprises, and poly development still relies on its own land reserve advantages. the proportion of real estate development business in total revenue has increased slightly by 0.12% compared with the same period in 2023.

yan yuejin, deputy director of the e-house research institute, said that the strategic goal of the leading real estate companies is very clear. while ensuring delivery and profits in the real estate main business, they are actively exploring the second growth curve. this is a very important strategy for them. in addition, central enterprises have the convenience of financing, which also provides financial support for the development of the second growth curve.

beijing business daily reporter wang yinhao and li han