Author | Anjou Cao

Editor | Zhou Zhiyu

After many days of “falling and falling” in stock prices, Poly Development finally swept away the decline. The stock price soared, and the market value returned to 100 billion dollars.

Following an 8% surge on April 26, Poly Development's stock price rose more than 7% on April 29, and stabilized its market value of 100 billion dollars as a result. By the close of trading on April 29, the total market value of Poly Development had reached 111.086 billion yuan.

Previously, Poly Development's stock price continued to fall since the end of March. On April 10, it fell to 8.13 yuan/share, a new low since 2016. The total market capitalization fell below 100 billion yuan to 97.320 billion yuan, evaporating 263.3 billion yuan from the historical high.

Today, with changes in market expectations for real estate and the performance of Poly Development in project sales and development expectations, this “real estate brother” has also returned to a market value of 100 billion dollars.

At the 2023 annual results briefing, in response to investors' concerns about the decline in the company's gross profit margin and net profit in recent years, the management of Poly Development explained that high-priced land has entered the carry-over cycle one after another, compounding factors such as declining sales prices and accrued impairment, which has led to a decline in net interest rates.

Management revealed that currently, the gross margin of the incremental poly development project is high (for example, the gross margin of gross sales obtained in 2022 exceeds 20%), and the share of inventory is gradually increasing, which can drive the company's overall gross margin to stabilize or even rise.

Poly Development also offered real money and made frequent moves to save stock prices.

Since 2023, Poly Development has spent 1 billion yuan to buy back the company's shares, and the actual controller Poly Group increased its total holdings by 250 million yuan. At the beginning of the year, it also revised its shareholder return plan, and the cash dividend ratio for the next three years will increase dramatically to 40%. Among them, in 2023, it plans to distribute 4.10 yuan (tax included) to all shareholders for every 10 shares.

At the performance meeting, management also stated that it will maintain smooth communication with the market, continue to actively pay attention to investor returns, and increase market value management as needed.

This gave investors a “reassurance pill.” Some investors said that after watching the results briefing, they resolved their inner concerns. In a context where Poly's fundamentals are safe and there are expectations for improvement, in combination with dividends of no less than 40%, Poly's stock price can also rise steadily.

In an environment where sales are sluggish, Poly's relatively good 2023 report card is the foundation for it to return to 100 billion dollars.

Financial reports show that in 2023, Poly Development achieved revenue of 346.828 billion yuan, a year-on-year increase of 23.42%; net profit to mother was about 12.067 billion yuan, a year-on-year decrease of 34.13%; and by the end of 2023, the monetary fund balance was 148 billion yuan.

On the sales side, Poly Development achieved full-caliber sales of 424.6 billion yuan, rising one place against the market, replacing Country Garden and becoming the “real estate boss”.

As for the debt repayment and tight cash flow problems that plague many housing enterprises, Poly Development is not worried.

The management revealed at the performance meeting that the company is currently under no pressure to repay its debts. All overseas bonds have been settled, and domestic bonds, etc. have all been paid with interest as scheduled. Various financing channels are uninterrupted, with additional financing of 137.1 billion yuan in 2023. The comprehensive cost is only 3.14%, and it is declining month by month.

Bank of China Securities pointed out that with its strong resource moat and the financing advantages of central enterprises, all kinds of capital and land resources have gathered at the company. As a state-owned enterprise with good land acquisition and sales fundamentals, the leading position in the industry will be further consolidated, and at the same time, it will continue to benefit from easing policies and industry pattern optimization.

Looking horizontally, as the market capitalization returned to 100 billion dollars, Poly Development also became the only A-share housing enterprise with a market capitalization of 100 billion dollars.

Although it is incomparable to the golden age of 2016, when Poly Development, Vanke A, China Merchants Shekou, and Greenland Holdings all ranked as A-share housing enterprise clubs with a market capitalization of 100 billion dollars, it also represents investors' confidence in A-share real estate companies and the long-term investment value of the real estate market to a certain extent.

This is also an affirmation of Poly Development's management for actively managing market value, improving operations, and the recent popularity of Poly Expo Tianyue.

Of course, to completely win the market capitalization defense war and achieve steady progress in market capitalization, the most fundamental thing is to improve sales and performance.

Management confessed at the performance meeting that the overall market is still bottoming out, and there is pressure to eliminate sales. However, it is expected that with the gradual stabilization of the economy and the continued withdrawal of restrictive industry policies, customer confidence will gradually recover, and demand will rise accordingly.

As a real estate agent of a central enterprise and a real estate company, even Poly Development has to participate in the market capitalization defense battle, which cannot but make people feel sad and helpless. In fact, in recent years, insurance, weak recovery in sales, and falling gross margins are common problems with housing companies' sluggish market capitalization, and some housing enterprises have even been delisted at face value.

However, the housing enterprises that survived are also expected to return to a reasonable level as their performance recovers and their operating capacity improves, after the waves are swept away and the risks in the industry have been cleared. This is also considered a relief for housing enterprises to clench their teeth and move forward.