Company Overview - The year 2019 marked the first full financial year since the company's shares were listed on the Main Board of the Stock Exchange on November 12, 2018[13]. - The Group achieved steady progress and laid a solid foundation for future rapid development through hard work and bold adjustments[13]. - "Hengda" has become one of the leading real estate development companies in Xuchang City, Henan Province, after 27 years of development[14]. - The Group focused on enhancing market share in the local region while exploring suitable development opportunities in other areas of the province[15]. Financial Performance - For the year ended December 31, 2019, the Group's total revenue was approximately RMB 1,974.1 million, representing an increase of approximately 4.8% from RMB 1,883.6 million for the year ended December 31, 2018[22][26]. - The net profit for the year ended December 31, 2019, was approximately RMB 290.8 million, reflecting an increase of approximately 26.5% from RMB 229.9 million for the year ended December 31, 2018[22][26]. - The Group's contracted sales of commercial housing in 2019 was approximately RMB 2.5 billion, a year-on-year increase of approximately 1.9%[40][42]. - Contracted sales for residential units reached RMB2,260.5 million in 2019, an increase of 15.7% from RMB1,954.5 million in 2018[70]. - Total revenue for the year ended December 31, 2019, was approximately RMB1,974.1 million, representing an increase of 4.8% from RMB1,883.6 million in 2018[76]. - Gross profit increased by approximately RMB135.4 million, or 21.5%, to RMB765.3 million in 2019, with a gross profit margin of 38.8% compared to 33.4% in 2018[76]. - Profit for the year increased by approximately RMB60.9 million, or 26.5%, to RMB290.8 million in 2019 from RMB229.9 million in 2018[76]. - Sales of properties accounted for approximately 99.8% of total revenue in 2019, with residential sales contributing RMB1,710.974 million[79]. Market Conditions - The real estate industry in 2020 is expected to face challenges due to the COVID-19 outbreak, with a potential short-term shrinkage in transaction volume but an increase in inelastic housing demand post-epidemic[24][28]. - The approval of national and local strategies, such as the "Rise of Central China" initiative, is expected to benefit Henan Province and stabilize the real estate market[25][28]. - The overall development level of Xuchang City has been improving, with stable employment and increasing income levels, providing a strong foundation for the property market[48]. - The "Integration of Zhengzhou and Xuchang" has provided new opportunities for Xuchang City, contributing to its rising development ranking in China and supporting the stable growth of the local real estate industry[48]. Land Acquisition and Development - In 2019, the Group acquired approximately 248,854 square meters of land, with 124,213 square meters in Xuchang City, 57,200 square meters in Yuzhou City, and 25,533 square meters in Changge City[51]. - The Group's total land reserves as of December 31, 2019, amounted to approximately 3.9 million square meters, with 1,615,586 square meters under development and 2,084,665 square meters planned for future development[57]. Operational Strategy - The Group plans to enhance marketing efforts to accelerate fund recovery and minimize impacts during the epidemic[31]. - The Group aims to improve operational management to achieve a balance between plan and progress amid operational efficiency[31]. - The Group will focus on talent training and adjusting staff structure to build core competitiveness[31]. - The Group intends to seek cooperation, mergers and acquisitions, and investment opportunities to promote healthy and stable development[31]. Employee and Management Insights - The Group's total workforce increased to 483 employees as of December 31, 2019, compared to 426 employees in 2018[147]. - The Group's executive management includes individuals with over 11 years of experience in strategic planning and operational management in the property development sector[159][164]. - The company has a strong leadership team with qualifications in accounting, law, and engineering, enhancing its operational capabilities[171]. - The management team has been involved in significant corporate governance roles, ensuring compliance and effective administration[167]. Financial Position - As of 31 December 2019, cash and cash equivalents amounted to approximately RMB245.2 million, down from RMB419.5 million as of 31 December 2018[109]. - Total borrowings amounted to approximately RMB1,066.1 million as of 31 December 2019, slightly down from RMB1,070.5 million as of 31 December 2018[111]. - Current assets increased to approximately RMB6,266.8 million as of 31 December 2019, compared to RMB5,030.7 million as of 31 December 2018[117]. - Total assets increased to approximately RMB6,526.4 million as of 31 December 2019, up from RMB5,204.5 million as of 31 December 2018[117]. - Total liabilities increased to approximately RMB5,292.9 million as of 31 December 2019, compared to RMB4,207.0 million as of 31 December 2018[117]. - Net assets increased from approximately RMB997.5 million as of 31 December 2018 to approximately RMB1,233.5 million as of 31 December 2019[117]. Compliance and Governance - The Group has maintained compliance with relevant laws and regulations, with no significant violations reported during the year[200]. - The Group's commitment to high standards of integrity is reflected in its internal control measures and training across all business units[200]. - The financial performance indicators for the year ended December 31, 2019, are discussed in detail in the "Management Discussion and Analysis" section[197]. Future Outlook - The Group plans to leverage local market advantages and national strategies to capitalize on market opportunities in the real estate sector[157]. - The construction of high-specification systems is expected to be completed by 2020, promoting sustainable development in real estate[157]. - The Group's future business development may face various risks and uncertainties, which are discussed in the annual report[196].

Real Estate Investment and Market Trends - In the first half of 2019, investment in Henan's real estate amounted to approximately RMB 326.11 billion, representing an increase of 4.1% year-on-year[12]. - Residential investment in Henan reached approximately RMB 263.19 billion, reflecting an increase of 11.3%[12]. - The total area of housing construction in Henan was 497,335,000 sq.m., which represented a year-on-year increase of 7.3%[12]. - The area of newly-built housing in Henan was 80,989,500 sq.m., showing a significant increase of 20.3%[12]. - The sales area of commercial housing in Henan was 57,474,800 sq.m., an increase of 7.7% year-on-year[12]. - The total sales value of commercial housing in Henan amounted to approximately RMB 368.34 billion, marking a 20.0% increase[12]. - The Chinese real estate market, particularly in Henan, is projected to maintain stable growth, supported by a large population and low urbanization rate[14]. Company Developments and Land Acquisitions - The Group established Xuchang Yuanda Property Company Limited, holding 70% equity interests, and acquired approximately 25,533 sq.m. of land in January 2019[18]. - The Group also established Yanling County Henghui Property Company Limited, holding 40% equity interests, acquiring approximately 119,575 sq.m. of land in January 2019[18]. - Co-development projects are expected to effectively reduce the Group's investment costs and increase land reserves for sustainable development[18]. - As of June 30, 2019, the total gross floor area of the Group's land reserves was approximately 3.8 million sq.m., with additional land acquisitions of approximately 145,108 sq.m. during the six months ended June 30, 2019[23]. Financial Performance - The Group's total revenue for the six months ended June 30, 2019, was approximately RMB 359.7 million, a decrease of 3.9% from RMB 374.3 million in the same period last year[28]. - Gross profit for the same period was approximately RMB 107.1 million, reflecting a decrease of 20.0% from RMB 134.0 million year-on-year, with a gross profit margin of 29.8%[28]. - Profit for the period decreased by approximately RMB 1.9 million, or 7.6%, from RMB 25.4 million to RMB 23.5 million[28]. - Contracted sales for residential units reached RMB 1,108.5 million, representing a 70.7% increase compared to RMB 649.5 million in the previous year, while commercial units saw a decrease of 52.7% to RMB 117.0 million[26]. - Property sales accounted for approximately 99.6% of total revenue for the six months ended June 30, 2019, compared to 99.7% for the same period in 2018[37]. Cost and Expense Management - Selling and marketing expenses increased by approximately 81.7% from RMB 15.9 million to RMB 28.8 million for the six months ended June 30, 2019[48]. - Administrative expenses increased by approximately 13.1% from RMB 36.2 million to RMB 40.9 million for the six months ended June 30, 2019[48]. - Finance costs increased by approximately 12.2% from RMB 7.9 million to RMB 8.9 million for the six months ended June 30, 2019[48]. Assets and Liabilities - Total assets as of June 30, 2019, were approximately RMB 5,964.8 million, up from RMB 5,204.5 million as of December 31, 2018[60]. - Total liabilities increased to approximately RMB 4,998.6 million as of June 30, 2019, compared to RMB 4,207.0 million as of December 31, 2018[60]. - The Group's net current assets decreased from approximately RMB 1,446.1 million as of December 31, 2018, to approximately RMB 1,268.3 million as of June 30, 2019[59]. Shareholder Information and Corporate Governance - Mr. LI Xiaobing holds 855,000,000 ordinary shares, accounting for 71.25% of the company's total shares[138]. - Ever Enhancement Enterprise Company Limited, a corporate controlling shareholder, holds 855,000,000 ordinary shares, also representing 71.25%[146]. - The Company has adopted the Model Code for securities transactions by Directors, and all Directors confirmed compliance during the six months ended June 30, 2019[113]. - The Company is committed to achieving a high standard of corporate governance to improve its corporate image and results[112]. Cash Flow and Dividends - The net cash generated from operating activities for the six months ended June 30, 2019, was RMB 112,162, a significant decrease of 79.5% compared to RMB 548,240 for the same period in 2018[177]. - The company paid dividends amounting to RMB 62,315 during the six months ended June 30, 2019, with no dividends paid in the same period of 2018[179]. Accounting Policies and Financial Reporting - The interim financial report has been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 – Interim Financial Reporting, and was authorized for issue on August 21, 2019[185]. - The Group adopted several new accounting standards, including HKFRS 16 – Lease, which may impact the financial statements[192]. - The financial statements have been prepared under the historical cost convention, with certain financial assets measured at fair value[190].

Company Overview - The Group was successfully listed on the Stock Exchange on November 12, 2018, becoming the fourth real estate company in Henan Province listed in Hong Kong[16]. - "Hengda" has developed into one of the leading real estate development companies in Xuchang City, Henan Province, after 26 years of development[16]. - The listing is viewed as a significant milestone that brings new opportunities and challenges for the Group's development[16]. - The Group aims to enhance brand awareness and influence, consolidating its industry position and improving corporate governance[16]. - The Company plans to leverage the strength of the international capital market for better and faster development[16]. Financial Performance - For the year ended December 31, 2018, the Group's total revenue was approximately RMB1,883.6 million, representing an increase of approximately 21.5% from RMB1,549.9 million for the year ended December 31, 2017[20]. - The net profit for the year ended December 31, 2018, was approximately RMB229.9 million, reflecting an increase of approximately 53.9% from RMB149.4 million for the year ended December 31, 2017[20]. - The Group's contracted sales of commercial housing in 2018 amounted to approximately RMB2.51 billion, representing an increase of approximately 14.9% compared to the previous year[26]. - The total contracted sales for the year amounted to RMB2,658.0 million, reflecting a 17.5% increase from RMB2,261.7 million in 2017[52]. - The average selling price (ASP) per square meter of saleable GFA increased by 32.1% to approximately RMB6,578 in 2018[53]. - Gross profit increased by approximately RMB225.0 million, or approximately 55.6%, to approximately RMB629.9 million in 2018, with a gross profit margin of approximately 33.4%[58]. - Profit for the year increased by approximately RMB80.5 million, or 53.9%, from approximately RMB149.4 million in 2017 to approximately RMB229.9 million in 2018[59]. - Sales of properties accounted for approximately 99.9% of total revenue for the year ended December 31, 2018, primarily from residential and commercial properties, storage, and car parking spaces[68]. Sales and Market Trends - The sales area of commercial housing in Henan Province was approximately 139.905 million square meters, an increase of approximately 5.1% from the previous year[26]. - The Group recorded a decrease in contracted sales area of commercial housing in 2018 of approximately 13.0% compared to the previous year, despite a growth in contracted sales[26]. - The increase in residential property sales contributed approximately RMB138.8 million to the revenue growth for the year ended December 31, 2018[71]. - The increase in commercial property sales contributed approximately RMB195.5 million to the revenue growth for the year ended December 31, 2018[71]. - The fourth quarter of 2018 exceeded expectations, attributed to unexpected growth in property contracted sales and early delivery of property units[73]. Operational Strategy - The Group plans to expand its business through mergers, acquisitions, investments, and joint ventures with real estate developers[20]. - The Group aims to ensure project quality by prioritizing the quality control of raw materials and effective project management[20]. - The Group's business growth is supported by a strong brand reputation and the growth potential of the real estate market in Xuchang City[20]. - The company plans to expand its business in Henan Province, focusing on prime locations in Xuchang City, which are expected to enhance future sales performance[162][165]. - The company is focused on capturing development opportunities in response to the rapid urbanization trends in the region[165][166]. Governance and Management - The company has a strong leadership team with over 10 years of experience in accounting, audit, corporate finance, and financial management[186]. - The company has been actively involved in corporate governance, with multiple committees in place, including the Audit Committee and the Remuneration Committee[186]. - The board of directors includes members with diverse backgrounds in finance and law, contributing to comprehensive corporate governance[186]. - The company emphasizes the importance of compliance and legal oversight, as evidenced by the presence of a Legal Compliance Committee[186]. - Mr. Wang Quan has extensive experience in operational management and corporate administration, having served as deputy chief executive officer since April 2005 and general manager since August 2012[183]. - Ms. Qi Chunfeng has rich experience in financial supervision and operational management within the property development sector in China, having joined the finance department in November 1993[179]. Financial Position - As of 31 December 2018, cash and cash equivalents amounted to approximately RMB419.5 million, an increase from RMB165.0 million as of 31 December 2017[96]. - Total borrowings amounted to approximately RMB1,070.5 million as of 31 December 2018, down from RMB1,861.5 million as of 31 December 2017[102]. - Current assets were approximately RMB5,030.7 million as of 31 December 2018, compared to RMB4,534.4 million as of 31 December 2017[105]. - Total assets increased to approximately RMB5,204.5 million as of 31 December 2018 from RMB4,689.3 million as of 31 December 2017[110]. - Net assets or total equity rose from approximately RMB457.8 million as of 31 December 2017 to approximately RMB997.5 million as of 31 December 2018[110]. Challenges and Future Outlook - Management expects local government to tighten environmental control measures, potentially impacting delivery schedules[77]. - The gradual improvement of real estate tax policies is believed to contribute to a more rational and mature real estate market in the future[160]. - The company is committed to overcoming future challenges while seizing current opportunities in the real estate development sector[162][166].