Redsun Properties Group Limited (“Redsun Properties”, or the “Group”, stock code: 1996), a leading comprehensive property developer in Mainland China, announced its annual results for the year ended 31 December 2019. The Group maintained a healthy financial position under its “Property + Commercial” dual-driven strategy, which helped it realise synergies and build diversified competitiveness.
Results Highlights:
– Business continued to grow under the Group’s “Property + Commercial” dual-driven strategy. Contracted sales amounted to RMB65.15 billion in 2019, surging around 37.6%.
– Net profit strongly increased by 23.6% to RMB1.64 billion. Net profit margin was 10.8%
– Recommended the payment of a final dividend of RMB11.1 cents per share, a year-on-year growth of 22.0%
– Healthy financial position with net gearing ratio of approximately 70.4%. Cash and bank balances were approximately RMB16.84 billion, an increase of 35.2% when compared with the end of 2018.
– Land bank increased by 29.4% when compared with the end of 2018 to 16.93 million sq.m., supporting future development
– Rapid enhancement in brand and scale of commercial segment with year-on-year growth of 14.6% to RMB411.4 million in rental income from commercial operation. The growth was mainly attributable to the opening of three shopping centre projects during the year. In addition, the Group plans to open 11 new Hong Yang Plaza to promote the “Hong Yang Plaza” brand.
Highly efficient operation: Continuous growth in three key businesses
The Group maintained sustainable growth in 2019. Contracted sales amounted to RMB65.15 billion, representing a year-on-year surge of 37.6%. The contracted sales in gross floor area was approximately 4.905 million sq.m., with a year-on-year increase of 39.0%. Net profit was approximately RMB1.64 billion, climbing by 23.6% (2018: RMB1.32 billion), while net profit attributable to owners of the parent increased by approximately 3.9% to RMB1.47 billion (2018: RMB1.41 billion). Basic earnings per share were RMB0.44. The Board of Directors recommended the payment of a final dividend of RMB11.1 cents per share (2018: RMB9.1 cents).
The Group’s total assets amounted to approximately RMB95.4 billion, soaring nearly 40.5% when compared with 2018. Net profit margin was 10.8%, reflecting the continuously improving operation efficiency of the Group.
The Group’s three distinctive segments, namely property business, commercial property operations and hotel operations continued to grow. Revenue from property development which accounted for 97.0% of total revenue amounted to RMB14.72 billion, soared 66.4% mainly owing to the Group’s rapid expansion. Rental income from commercial operation and hotel operation was RMB411.4 million and RMB39.8 million respectively, representing a growth of 14.6% and 8.3% accordingly. The growth was mainly due to the grand opening of Pavilion C2 and C3 at Nanjing Hong Yang Plaza in August 2019, the increase in contribution from Changzhou Hong Yang Plaza as a result of an improved performance and the additional contribution from Yantai Hong Yang Plaza and Tengzhou Hong Yang Plaza after their openings. The increase in revenue from hotel operations was mainly attributable to the increase in contribution from Nanjing Hong Yang Hotel and Wuxi Hong Yang Lakefort Hotel as a result of the improvement of their performance.
“Penetrating the Greater Jiangsu Region, strengthening foothold in the Yangtze River Delta Region and expanding into major metropolitan areas”
During the reporting period, the Group’s land bank rose by 29.4% compared with same period last year to approximately 16.93 million sq.m. (2018: 13.08 million sq.m.). The Group strictly implemented the regional strategy of “penetrating the Greater Jiangsu region, strengthening foothold in the Yangtze River Delta region and expanding into major metropolitan areas”, focusing on the existing regions and expanding to dynamic hub cities. In 2019, it entered 17 cities including Jinan, Qingdao, Xi’an, Changsha, Wenzhou and Zhengzhou, while gearing up its strategic cooperation in acquiring land with proven results shown in commercial land acquisition. The Group also focused on implementing its dual-driven strategy, realising synergies through commercial/residential duel structure as well as enhancing quality and greater effectiveness in its operation.
Adhered to business operation model comprising both asset-light and asset-heavy elements in development
The Group adhered to the commercial operation model including both asset-light and asset-heavy elements in its development. Rental income from commercial operations increased 14.6% year-on-year to RMB411.4 million. Three of the Group’s shopping centre projects, namely Pavilion C Nanjing Hong Yang Plaza, Yantai Zhifu Hong Yang Plaza and Tengzhou Hong Yang Plaza were opened during the year. Up to now, the Group has opened four Hong Yang Plazas, located in Nanjing and Changzhou in Jiangsu, Yantai and Tengzhou in Shandong respectively. It is currently planning to expand the commercial operation business by taking advantage of the asset light model, thereby further promoting the “Hong Yang Plaza” brand.
Healthy financial position recognised by credit rating agencies
The Group has a healthy cash position with cash and bank balances surging notably by 35.2% year-on-year to approximately RMB16.84 billion (2018: RMB12.46 billion). Net gearing ratio was 70.4%. The Group successfully issued senior notes several times in 2019, which were subscribed by renowned international long-term funds. In January 2020, the Group, for the first time, secured a commercial bank club loan amounting to US$70 million, providing adequate funding for its future development. Fitch Ratings, an international rating agency, upgraded the Group’s corporate rating to “B+” with a stable outlook; while Moody’s assigned a “B2” corporate rating to the Group for the first time, with a positive outlook. The ratings from the two agencies reflected their recognition of the Group’s high-quality land bank and solid operation and financial performance.
Future strategies: “Dual-Driven” together with “Quality and Efficacy Enhancement”
The Group believes the impact of the outbreak and spread of coronavirus on the economy and the real estate market is temporary, and the epidemic will not have significant impact on the economy and real estate market in China in the medium- and long-term.
Looking ahead, the Group will continue to foster the “Dual-Driven” business strategy, while “Quality and Efficacy Enhancement” will become the main theme of its operation. For property development, under the guidance of the general strategic direction of “penetrating the Greater Jiangsu region, strengthening foothold in the Yangtze River Delta region and expanding into major metropolitan areas”, the Group will adhere to its nationwide strategy and further solidify its business development efforts in key regions in Jiangsu and Yangtze River Delta, as well as uplifting the quality of products and services and the quality and efficiency of operation. It will also strengthen its profitability and improve its risk management capability. As for commercial real estate, the Group will emphasize both expansion of scale and enhancement of operation quality. While exploring high-quality projects through diversified models such as entrusted management, leasing and self-holding, the Group will also continuously optimise and upgrade its business portfolio, foster innovation and enhance consumer experience so as to create benchmark commercial property projects and generate better returns on assets from its commercial real estate business.
About Redsun Properties Group Limited (“Redsun Properties”) (stock code: 1996)
Redsun Properties Group Limited (“Redsun Properties” or “The Group”) is a leading comprehensive developer in China, focusing on development of residential properties and the development, operation and management of commercial and comprehensive properties. The Group has established a steady regional leading position in Jiangsu Province by taking root in Nanjing, Jiangsu and Yangtze River Delta. Since the incorporation of Nanjing Redsun in 1999, Redsun Properties has worked in the sector of property development and sales for 20 years, established the Hong Yang brand and received widespread recognition for the development capacity and industry position. Redsun Properties has been ranked the 47th property developer in China in 2020.
While developing residential properties, Redsun Properties also operates commercial complexes covering shopping malls, amusement parks and community centers, hotels and office buildings. Most of the commercial property buildings are adjacent to the Group’s residential property projects, providing ancillary services for the residents and also increasing the value of the Group’s residential property projects.