SOHO中国(00410) - 2024 - 中期业绩

Performance Summary Key Performance Indicators In H1 2024, SOHO China's revenue slightly decreased to RMB 799 million, leading to a net loss attributable to owners of the parent of RMB 108 million, despite stable gross margins and net gearing Key Performance Indicators | Indicator | H1 2024 | | :--- | :--- | | Revenue | Approx. RMB 799 million | | Gross Profit Margin from Leasing Business | Approx. 82% | | Average Occupancy Rate of Investment Properties | Approx. 76% | | Net Loss Attributable to Owners of the Parent | Approx. RMB 108 million | | Net Gearing Ratio | Approx. 41% | | Average Borrowing Cost | Approx. 4.5% | - The company's performance shifted from profit to loss, with a net loss attributable to owners of the parent of RMB 108 million in H1 2024, compared to a net profit of RMB 13.61 million in the same period of 2023[4] Financial Statements and Notes Consolidated Income Statement Analysis In H1 2024, revenue decreased by 2.7% to RMB 799 million, with gross profit at RMB 648 million and a stable 82% gross margin, but expanded fair value losses on investment properties and increased income tax expenses led to a net loss of RMB 109 million, a shift from profit in the prior year Consolidated Income Statement | Item (RMB in thousands) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue | 799,362 | 821,503 | | Gross Profit | 648,418 | 678,214 | | Fair Value Changes of Investment Properties | (88,086) | (48,997) | | Operating Profit | 380,332 | 490,220 | | Net (Loss)/Profit for the Period | (109,169) | 14,700 | | Net (Loss)/Profit Attributable to Owners of the Parent | (107,546) | 13,613 | - The decrease in revenue is primarily due to weak demand in the office and commercial property leasing market[42] Consolidated Balance Sheet Analysis As of June 30, 2024, total assets were RMB 68.19 billion and total liabilities were RMB 31.12 billion, with the net gearing ratio stable at 41%, but the company faces significant short-term repayment pressure due to RMB 9.92 billion in net current liabilities and potential cross-default risks from unpaid land appreciation tax Consolidated Balance Sheet | Item (RMB in thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | 68,191,601 | 68,617,556 | | Total Liabilities | 31,120,093 | 31,422,532 | | Total Equity | 37,071,508 | 37,195,024 | | Total Current Liabilities | 12,941,140 | 10,451,535 | | Net Current Liabilities | 9,923,293 | - | - The net gearing ratio is approximately 41%, consistent with December 31, 2023[46] - Total borrowings are approximately RMB 15.691 billion, with the current portion due within one year being approximately RMB 7.749 billion[46] Material Uncertainty Related to Going Concern The company faces severe going concern challenges due to a subsidiary's unpaid land appreciation tax and surcharges totaling RMB 2.17 billion, which triggers potential cross-defaults on RMB 4.19 billion in bank borrowings, resulting in RMB 9.92 billion in net current liabilities and significant doubt about the group's ability to continue as a going concern - A subsidiary has approximately RMB 2.17 billion in unpaid land appreciation tax and related surcharges[9] - The unpaid taxes could lead to cross-defaults on approximately RMB 4.19 billion in bank borrowings, which have been reclassified as current liabilities[9][27] - As of June 30, 2024, the group's net current liabilities were RMB 9.92 billion, with cash and cash equivalents of only RMB 768 million, indicating significant liquidity pressure[9] - Management is taking measures to mitigate liquidity pressure, including ongoing communication with tax authorities on repayment plans, disposal of commercial properties, negotiation with financial institutions for repayment adjustments, and cost control[11] - The ability to continue as a going concern depends on tax authorities not taking enforcement actions, banks not demanding early repayment, successful financing restructuring, and improved operating cash flow, all of which involve significant uncertainty[13] Operations and Business Review Market Review and Outlook In H1 2024, China's commercial leasing market remained under pressure with weak demand and declining rents, primarily adopting a "price-for-volume" strategy, and the outlook for H2 anticipates increased vacancy rates due to significant new supply in Beijing and Shanghai Grade A office markets - In H1 2024, the office and commercial leasing market experienced weak demand and declining rents, with a continued "price-for-volume" leasing strategy[31] - Beijing and Shanghai Grade A office markets are expected to see approximately 425,000 sqm and 709,000 sqm of new supply respectively in H2, which will further increase vacancy rates and maintain market pressure[31] Business Strategy and Progress SOHO China maintains prudent operations, focusing on cost control and risk management, implementing differentiated strategies like customized fit-out services, strengthening safety production, and advancing ESG practices with SBTi-approved science-based carbon targets - The company implements a differentiated strategy of customized fit-out delivery, offering "ready-to-move-in" office spaces to address client pain points[31] - The company prioritizes safety in daily management, establishing a safety management committee and enhancing emergency response capabilities[32] - The company continues to promote ESG development, achieving a 20% energy saving rate across 24 managed properties, and its submitted science-based carbon targets have been approved by SBTi[32] Leasing Property Portfolio Performance As of June 30, 2024, the group's average occupancy rate for investment properties remained stable at approximately 76%, with varying performance across core projects in Beijing and Shanghai, where Gubei SOHO achieved the highest occupancy at 91% - As of June 30, 2024, the group's average occupancy rate for investment properties remained stable at approximately 76%[3] Leasing Property Portfolio Performance | Project | H1 2024 Rental Income (RMB in thousands) | Occupancy Rate as of June 30, 2024 | Occupancy Rate as of December 31, 2023 | | :--- | :--- | :--- | :--- | | Beijing | | | | | Qianmen Avenue | 48,118 | 63% | 67% | | Wangjing SOHO | 99,084 | 57% | 60% | | Guanghualu SOHO II | 96,346 | 83% | 85% | | Lize SOHO | 87,491 | 89% | 88% | | Galaxy and Chaoyangmen SOHO | 23,379 | 54% | 56% | | Shanghai | | | | | SOHO Fuxing Plaza | 111,129 | 85% | 87% | | Bund SOHO | 93,903 | 80% | 84% | | SOHO Tianshan Plaza | 85,205 | 79% | 79% | | Gubei SOHO | 120,691 | 91% | 89% | Other Important Information Dividends and Share Capital The Board resolved not to declare an interim dividend for 2024, and as of the reporting period end, the total number of issued shares remained unchanged with no purchases, sales, or redemptions of listed securities during the period - The Board resolved not to declare an interim dividend for the current period[30][49] - As of June 30, 2024, the total number of issued shares was 5,199,524,031, consistent with the end of 2023, with no share repurchases or sales during the period[49][50] Auditor's Review Opinion PricewaterhouseCoopers issued a review report on the interim financial information, highlighting a "material uncertainty related to going concern" due to the group's net current liabilities, substantial borrowings, and tax-related cross-default risks, without modifying their conclusion on this matter - The auditor's review report includes a section on "material uncertainty related to going concern," raising significant doubt about the company's ability to continue as a going concern[52] - The auditor noted the group's current liabilities exceeding current assets by RMB 9.92 billion, substantial borrowings, and low cash levels, but their review conclusion was not modified on this basis[52]