Redsun Properties Group Limited (HKG:1996), a leading comprehensive property developer in Mainland China, announced its annual results for the year ended 31 December 2020. The Group has maintained a solid financial position with enhanced credit. With revenue hit a record high, steady profit growth, stable growth in scale of assets, and continuous optimization of debt structures, the Group entered into the green tier at the “Three Red Lines” assessment.
2020 Results Highlights:
- Contracted sales reached RMB86.50 billion, representing a year-on-year increase of 32.8%. The average contracted selling price increased by 10.0% to RMB14,622 per sq.m.
- Total revenue amounted to RMB20.2 billion, representing an increase of 32.9% compared with the 2019 level. Revenue from property business up 33.3% to RMB19.6 billion, while commercial and hotel operations increased by 20.3% to RMB542.8 million
- Gross profit and gross profit margin were RMB4,507.7 million and 22.4% respectively
- Net profit amounted to RMB1,854.9 million, representing an increase of 13.4% compared with the 2019 level. Net profit margin reached 9.2%
- Net profit attributable to owners of the parent increased by 13.2% to RMB1,661.0 million
- Core net profit attributable to owners of the parent reached RMB1,313.1 million, representing an increase of 10.7% as compared with the 2019 level (2019: RMB1,185.8 million)
- As of 31 December, 2020, the “Three Red Lines” indications of the Group were in green lights, with a gearing ratio (excluding unearned revenue) of 69.4%, net gearing ratio of 50.3%, cash to short-term debt ratio of 1.62 times
- The Board recommended payment of a final dividend of HK14.5 cents (equivalent to RMB12.2 cents) per share
Stable sales with high-quality growth
During the year, the Group achieved contracted sales of approximately RMB86.50 billion, representing an increase of 32.8% compared with last year’s level. The Group’s contracted sales in gross floor area was approximately 5.9 million sq.m., achieving a record high and representing an increase of 20.6%, while the average contracted selling price increased to RMB14,622 per sq.m. The collection rate of contracted sales stood at 88% in 2020, which remains at the top level of the industry. Revenue amounted to approximately RMB20.2 billion, representing an increase of 32.9%. Core net profit attributable to owners of the parent reached RMB1,313.1 million, representing an increase of 10.7%.
Property sales increased to approximately RMB19.6 billion, up 33.3% year-on-year. Rental income of commercial operations increased 22.8% to approximately RMB505.2 million, mainly due to the additional contributions from Pavilion C2 and C3 of the Nanjing Hong Yang Plaza’s opening in August 2019.
Proven efficacy in commercial/residential linkage, resulting in successful acquisition of commercial and residential plots of land
Implementation of the new model of land acquisition by way of commercial/residential linkage continued to show its effectiveness. Subsequent to Changzhou Tian Xia Jin project, the city-property integration model enabled the Group to expand its presence. The Group secured the Anqing commercial and residential complex project and the Wuhan Supply and Marketing Cooperative project. Going forward, it will continue to step up efforts in land acquisition for more asset-heavy commercial property projects. As of 31 December 2020, the Group’s aggregate land bank gross floor area was approximately 20.1 million sq.m. (gross floor area attributable to the Group was approximately 9.7 million sq.m.), representing an increase of 18.5% compared to 16.9 million sq.m. as of 31 December 2019, which provides ample support for the future development. In terms of regions, 71% of the Group’s land bank is located in the Yangtze River Delta region, mainly in Jiangsu, and the rest are located in key cities in the Greater Bay Area and Chengyu. In 2020, the Group acquired 50 new pieces of land with a gross floor area of approximately 6.9 million sq.m. Among them, 35% of new projects were invested through multiple channels and acquired land through mergers and acquisitions or commercial-residential cooperation, which can effectively control costs.
During the year, the Group continued to strengthen its foothold in Nanjing, and whilst promoting the Hong Yang Plaza brand, it successfully launched Yanjiao Hong Yang Plaza, Yangzhou Hong Yang Plaza, and Hengyang Hong Yang Plaza. The Group is also preparing the opening of nine more Hong Yang Plazas in Hefei, Xuzhou, Jining, Fushan in Yantai, Lekai in Yantai, Dacheng in Changzhou, Fenghuangdong in Changzhou, Anqing, and Jinan Hongyang Plaza under leasing and entrusted management, extending its brand to other cities and enhancing its influence in the industry.
Maintain sound financial position and gain wide recognition of the capital market
As of 31 December 2020, the Group’s net gearing ratio improved from 70.4% to 50.3% and cash on hand rose 10.0% to RMB18.5 billion. Hence, it had sufficient working capital and a sound financial position. In January 2021, the Group made a breakthrough by successfully issuing senior notes at a coupon rate of 7.3% for a term of 4 years with an aggregate principal amount of US$350 million, which realized the US$-denominated senior notes of the largest amount, lowest coupon rate and longest-term issued by the Group on a single basis in its history, laying a sound foundation in the capital market.
Future strategy: Take a profit-driven approach to achieve quality and stable growth in scale
Looking ahead, Redsun Properties will press further with its real estate developments, employing as core strategy “penetrating the Greater Jiangsu Region, strengthening foothold in major metropolitan areas and expanding into core cities”, and it will constantly foster the nationwide strategic layout. In particular, a comprehensive layout will be implemented in Jiangsu Province so as to achieve economies of scale. Its foothold will be strengthened in regions that are currently more mature and which offer greater potential. Regarding its operation, the Group will persist in being operation- and customer-oriented to make ends meet and it will constantly keep an eye on the safety of cash flow. The Group will set up ecological and duplicable project production lines and create core competitive edges for products through lean control of the entire value chain. On commercial development, the Group will stress the importance of both expansions of scale and enhancement of operational efficiency. As the Group constantly optimizes and upgrades its business portfolio, it will create benchmark commercial property projects. Following its creation of an online platform that features offline integration, the Group will set up a digital member service system to enhance its operational capabilities using information, thereby generating better returns on assets from its commercial real estate business.
Redsun Properties Group Limited is a leading comprehensive developer in China, focusing on the 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.
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.
Redsun Properties is a constituent of the MSCI China Small Cap Index, Hang Seng Composite Index, and Hang Seng Stock Connect Hong Kong Index.