In the past 2023, the real estate industry was still undergoing deep adjustments. The entire industry is not only facing major changes in the supply and demand relationship, but also breaking away from the old model and transforming and exploring new models of high-quality development. It has also become an industry consensus and a direction for major housing enterprises to actively develop layout plans.

Earlier, Minister of Housing and Urban-Rural Development Ni Hong said that the central government has made a series of important arrangements and proposed the construction of a new model for real estate development. This is a cure for solving the problems of real estate development and promoting the steady and healthy development of the real estate market.

The exploration of how to speed up the construction of a new model for real estate development is leading companies in the industry, and it is incumbent upon them. Recently, China Resources Land, which handed over its financial report, showed the outside world the positive results it has achieved on this topic.

1. Continued consolidation of management quality and submission of resilience reports

Looking through China Resources Land's performance reports, various core performance indicators are progressing steadily.

Financial data shows that in the past year, China Resources Land achieved a turnover of RMB 251.14 billion, up 21.3% year on year, core net profit of RMB 27.77 billion, up 2.9% year on year, and dividend of RMB 1.441 per share for the whole year, up 2.9% year on year.

On the one hand, the company's revenue and profit grew steadily, the basic market continued to stabilize, and all major businesses went hand in hand.

Looking at the development and sales business alone, core competitiveness continues to improve. Financial reports show that in the past year, China Resources Land achieved a contract value of 307.03 billion yuan, an increase of 1.9% over the previous year, and ranked fourth in the industry.

On the other hand, driven by good operations, the company's operating cash flow is sufficient, and its balance sheet continues to be stable.

Financial reports show that by the end of 23, the company's net interest-bearing debt ratio was 32.6%, down 6.2 percentage points from the same period in 2022, and is low in the industry. Furthermore, the company's weighted financing costs were only 3.56%, down 19 basis points from the same period last year, and remained at the lowest level in the industry.

The company maintained sufficient cash on hand. As of the end of '23, China Resources Land's cash and bank balances reached RMB 114.34 billion.

2. Under a diversified business layout, China Resources Land takes priority

It is easy to see that behind a series of excellent data is a vivid manifestation of China Resources Land's acceleration of evolution and moving towards a new growth order.

Judging from several key highlights in the financial report, China Resources Land's future growth path has become more and more clear.

On the one hand, the company's revenue stream continues to expand.China Resources LandIt is no longer limited to traditional development and sales businesses, but in operational real estateBusiness with asset management, asset-light managementaffairesIt has also achieved remarkable results in terms of ecosystem factor-based businessesWritten byincrease in performance.

It can be said that this diversified revenue source not only increased the company's profit opportunities, but also improved its resilience to risks. As the second half of the real estate industry arrived, it further consolidated its competitive advantage in the market.

More specifically at the data level. Looking at the development and sales business, with a steady development attitude, China Resources Land has locked down a large number of properties to be settled and developed, providing a reliable guarantee for future performance growth. Financial reports show that by the end of '23, China Resources Land had sold unsettled development properties with a turnover of RMB 284.15 billion. Among them, according to the construction and delivery plan, it is estimated that 193.86 billion yuan will be settled this year. It is worth mentioning that at the end of 2023, China Resources Land also officially released the new “High Quality Nine Views” product standard. The core competitiveness of the product was further enhanced, and the leading effect of industry demonstration continued to expand.

Furthermore, the recurring business aspect consists of operational real estate business, asset-light management business, and ecosystem element business. In the past year, China Resources Land's recurring business revenue reached 39.1 billion yuan, up 26.4% year on year, achieving core net profit of 9.6 billion yuan, a sharp increase of 47.6% year on year; the share of revenue contribution increased 0.7 percentage points to 15.6% year on year, and profit contribution increased 10.4 percentage points to 34.4% year on year. Recurring operating income covers dividends and interest multiples of 1.9.

Looking further, in terms of operational real estate business, the performance of the company's shopping malls, office buildings, and hotels all showed a good growth trend, fully demonstrating the company's steady performance in this field.

According to the data, the turnover of China Resources Land's operating real estate business reached RMB 22.23 billion in '23, an increase of 30.6% over the previous year. Among them, the shopping center achieved sales volume of RMB 17.85 billion, an increase of 29.7% over the previous year, and the occupancy rate was 96.5%. The office achieved a turnover of RMB 2.06 billion, an increase of 10.2% over the previous year, and the office occupancy rate was 81.8%. The hotel achieved a turnover of 2.32 billion yuan, an increase of 66.3% year on year, and the average hotel occupancy rate increased by 21.6 percentage points year on year.

In addition, the asset-light management business segment has also achieved rapid development, and the revenue contribution of China Resources Vientiane Life's asset-light management business has increased markedly. Financial reports show that in 2023, China Resources Land's asset-light management business segment achieved a turnover of RMB 10.64 billion. During the year, China Resources Vientiane Life achieved a turnover of 14.77 billion yuan, an increase of 22.9% over the previous year. As of December 2023, China Resources Vientiane Life Management has 101 shopping malls in operation, including 13 luxury shopping centers and 83 reserve projects. Its comprehensive strength remains number one in the commercial management channel. In the property management channel, China Resources Vientiane Life also continues to maintain its position in the first tier of the industry, and the scale and quality of market-based expansion continues to improve.

Finally, in terms of ecosystem element business, China Resources Land continues to maintain qualitative scale growth. The market position and brand influence of the proxy construction and operation business, long-term rental apartments, cultural and sports business, and urban operation business continue to grow. In 2023, the business segment achieved a turnover of RMB 6.19 billion. Among them, the construction business achieved a turnover of 3.04 billion yuan, while contract construction and long-term rental apartments achieved a turnover of 1.74 billion yuan and 400 million yuan respectively.

On the other hand, China Resources Land is actively promoting the development of assets in a “light” direction, focusing on increasing the scale of asset management and building commercial REITs platforms.

By the end of 2023, China Resources Land's asset management scale reached RMB 427.46 billion, an increase of 19.2% over the previous year, with shopping malls accounting for 63.3%.

As domestic demand for REITs becomes more urgent, the country has successively introduced a series of policies to strongly support the REITs industry. In this context, China Resources Land also identified commercial REITs platform construction as an important strategic direction for the company, and successfully completed the listing of the first batch of consumer infrastructure REITs projects in 2023, driving the company to accelerate its transformation into a major asset management business.

At present, China Resources Land has built an asset-light management platform and two public REITs platforms, including China Resources Vientiane Life, China Resources Commercial REIT, and China Resources Youchao REIT. With the establishment of a closed loop system for investment, finance, construction and management of China Resources Land, the company was able to achieve a full range of closed-loop management from capital investment to asset management to capital return, effectively improving the company's asset management efficiency and operational efficiency, and was able to further seize the integration opportunities of high-quality asset mergers and acquisitions, providing a more stable foundation and greater development space for its future development.

Figure: In 2024, Huaxia Huarun Commercial REIT was listed on the Shenzhen Stock Exchange

3. Transition to a new real estate development model and show the leading role of demonstration

With fiscal year 2023 as the new time point, it is easy to see that China Resources Land has begun to fully move towards a new development model, which indicates that the company is moving towards a healthier revenue structure, a better profit status, a more stable operating foundation, and more sustainable development momentum.

First, under the new development model, the company is fully aware that the traditional real estate development and sales model is no longer adapted to the current market environment and future development trends.By expanding new business segments such as operational real estate business, asset-light management business, and ecosystem factor-based business, the company is gradually diversifying its business and diversifying revenue, reducing its dependence on development and sales business, reducing the impact of market fluctuations on the company's operations, and improving the sustainability of profits.

Second, this transformation also shows that China Resources Land responds positively to national policy guidelines and actively caters to the needs of economic development in the new era.As China's economy shifts from a stage of rapid growth to a stage of high-quality development, the government proposed the strategic goal of constructing a new model of real estate development, emphasizing that the real estate industry should serve the real economy and promote the sustainable development of the city. China Resources Land has responded positively to and implemented national policies. Through the transformation to a new development model, China Resources Land has shown a leading role model and set a good example for the industry.

Picture: China Resources Shenzhen Bay

Furthermore, the transition to a new development model also means that the company will pay more attention to sustainable development and social responsibility.In the field of operational real estate, the company focuses on building eco-friendly commercial real estate to promote sustainable urban development. In the field of asset-light management service platforms, the company is committed to improving service quality and efficiency to provide customers with a more convenient and intelligent life experience. In the ecosystem element business field, the company actively promotes the development of green buildings and renewable energy, making positive contributions to environmental protection and energy saving and emission reduction.

In summary,China Resources Land's transition to a new development model is not only of great significance to the company's own development, but also has a positive impact on the development of the industry and the sustainable development of society, demonstrating the important role of leading housing enterprises in leading the development of the industry and promoting economic and social progress.

In the future, as the company continues to push forward strategic transformation and deepening reforms, I believe China Resources Land will continue to “shine brightly” and make greater contributions to the healthy development of the entire real estate industry. Based on this, under various layouts, the company's value restructuring is already underway. I believe the company's future performance in the capital market will also be exciting.

In response, CICC released a report stating that China Resources Land has maintained steady profits and structural improvements in profits over the past year by applying all-round advantages such as resources, models, and corporate governance. The bank believes that by taking a first look at China Resources Land's long-term picture, increasing revenue sources and making a capital lighter model, the company is expected to take the lead in running through the new model of housing enterprises.