A-Share Real Estate Leader "Wanjin" Net Profit Decline?

      The mid-2021 performance of Vanke and Jindi, two real estate leaders in a share market, is not very good, which is a footnote for the real estate industry from high tide to low point.

Vanke and jinditong released the mid year report on August 30, 2021. The main keynote of these two financial reports can be summarized as "increasing income but not increasing profit". While Vanke recorded a year-on-year increase of 14.2% to 167.11 billion yuan, the net profit attributable to the parent company was only 11.05 billion yuan, a year-on-year decrease of 11.7%; During the reporting period, Jindi achieved a revenue of 34.274 billion yuan, up 72.45% year-on-year. At the same time, it recorded a net profit of 1.825 billion yuan, a decrease of 38.79% year-on-year.

Although the industry generally holds a negative attitude towards this situation, it is also a sign that the industry has been reshaped from the market reaction of Jindi's stock price soaring for two consecutive days. In the new cycle, the real estate industry after a round of reshuffle, the new industry structure seems to be gradually forming.

A noteworthy phenomenon is that "Zhaobao Wanjin" has gathered in the top ten after many years. When the high leverage and high debt are no longer available, the prudent and prudent real estate enterprises have ushered in their spring. The main melody of the industry has changed.

Settlement of labor pains

In the past few years, the entire real estate industry is also sprint sales scale. However, with the rise of land prices, most of the real estate enterprises can not jump out of the trap of "increasing income but not increasing profits", such as Vanke and Jindi group.

In the first half of 2021, Jindi group realized 34.274 billion yuan of operating revenue, up 72.45% year on year; In terms of profit level, the gross settlement margin of real estate business within the group was 14.25%, which was about 25% lower than that of 39.6% in the same period of 2020. The net profit attributable to shareholders of listed companies was 1.825 billion yuan, a decrease of 38.79% year-on-year.

Wei Chuanjun, director, senior vice president and chief financial officer of Jindi group, explained that the decline of the company's overall gross profit margin in half a year was related to the increase in the proportion of land price in house price in recent years, and on the other hand, it was related to the current carry over structure. The centralized delivery and settlement of some low gross profit projects affected the overall gross profit margin“ Seven projects located in Hangzhou, Tianjin, Hefei and other low gross profit areas are carried forward in this period, accounting for more than 50% of the real estate development carried forward income, and the carrying gross profit rate of these projects is only 8.7%

In the context of the industry where real estate profit space is generally compressed, the management emphasizes that the decrease of gross profit and net profit of Jindi group is significantly lower than that of other companies in the industry.

The decline of profit margin is the main theme. AI Zhenqiang, chief researcher of Mingyuan stock real estate, analyzed in an interview with 21st century economic reporter that a large part of the reason is that there were too many high prices in 2017 and 2018, which led to the current settlement data not very good“ However, this is temporary. With the elimination of these negative factors, the future profit margin will rise on the existing basis, because the high land prices are almost digested. In 2019 and 2020, the proportion of land price in housing prices has decreased compared with the previous period. "

"But on the whole, the gross profit margin of the whole industry will be between 20% and 25% in the future, and the net profit will be about 10%. This can only be achieved if it is relatively excellent." AI Zhenqiang pointed out.

As the industry leader of A-share, Jindi group's share price this year is in line with the market, which can't satisfy investors. At the performance meeting, when asked about market value management, Gemdale management said that it would actively communicate with the capital market. When asked whether there was a buyback plan and a future dividend plan, the Gemdale group did not give a direct reply.

However, after the release of the mid year report of Jindi, the stock price of Jindi has obviously rebounded. By the end of September 1, the stock price of Gemdale group was 11.48 yuan / share, touching the limit board, with a total market value of 51.83 billion yuan.

In terms of sales performance, Jindi also recorded a good growth in the first half of this year. During the reporting period, Jindi group achieved contract sales of about 162.83 billion yuan, with a year-on-year growth of 60.2%, which was 22.4 percentage points higher than the average growth rate of 37.8% in the first half of 2021; The contracted sales area reached 7.53 million square meters, up 55.3% year on year. After a big increase in sales, Jindi finally returned to the top ten after many years.

Reshape the industry pattern

In addition to Jindi group's counter attack on the sales list, another member of "Zhaobao Wanjin" who once fell behind, China Merchants Shekou has also returned to the list.

According to the report of China Merchants Shekou in 2021, in the first half of the year, the actual sales amount was 176.98 billion yuan, up 59.9% year-on-year. According to the data of Kerry Research Institute, the full caliber amount of China Merchants Shekou ranked seventh in the industry in the first half of the year. From 18th at the beginning of 2019 to 11th at the beginning of 2020 and now to the 7th, China Merchants Shekou has made steady progress on the sales list and has the momentum of regaining its former position.

At this point, "Zhaobao Wanjin" once again gathered in the top ten. According to the sales data of real estate enterprises in the first half of 2021 released by kerrui research, Vanke Group, poly development, China Merchants Shekou and Jindi group ranked third, fifth, seventh and tenth respectively in the industry.

One obvious feature of these real estate enterprises is that they are all conservative in operation and prudent in land acquisition strategies. In the past few years, many real estate enterprises relying on debt expansion have become black horses, gradually squeezing out the status of "Zhaobao Wanjin". Now the return of the king may mean that the real estate pattern is undergoing a new round of reshuffle.

"Since this year, Zhaobao Wanjin has once again gathered in the top ten of real estate sales, with the background of state-owned investment and Jindi developing rapidly. The current pattern of the real estate industry and the future development trend, there is indeed a trend of rapid concentration of real estate enterprises with the background of state-owned enterprises and those with better liquidity. " Bai Wenxi, IPG's chief economist in China, told the 21st century economic reporter.

Judging from the land acquisition scale of these real estate enterprises in the first half of this year, these real estate enterprises are indeed very calm in the land market because of their low financing cost and large amount of cash on hand, and they also have the strength of counter cyclical expansion.

Take Jindi as an example. In the first half of this year, there were 81 newly acquired land, with a total area of about 12.47 million square meters, of which the equity reserve was about 5.31 million square meters, the total investment was about 92.4 billion yuan, and the equity investment was about 41.1 billion yuan. According to the contract amount and the total land investment amount, the land sales ratio of Jindi group reached 56.75% in the first half of this year.

In the first half of 2021, Vanke, poly, Jindi and zhaoshang Shekou ranked second, third, 10th and 11th respectively in the land acquisition area of China's real estate enterprises.

In the new round of reshuffle, the balance of the real estate industry has gradually tilted.

AI Zhenqiang pointed out that for real estate enterprises, improving profits is nothing more than reducing costs. Land acquisition costs are affected by the environment, while financing costs depend on their own abilities. Real estate enterprises with state-owned assets obviously have inherent advantages in this respect“ The financing interest rate of state-owned central enterprises is several points lower. Enterprises with state-owned assets such as Jindi and Vanke still have great advantages. "