上实城市开发(00563) - 2024 - 中期财报

Company Information This section provides core company governance and operational data, including executive directors, independent non-executive directors, committee members, registered office, principal place of business, principal bankers, and auditors - Board and committee changes: Lou Jun resigned as executive director, Zhou Yadong appointed as executive director; Qiao Zhigang resigned as independent non-executive director, Dr. Chen Haohua appointed as independent non-executive director[1] - The company's auditor is Deloitte Touche Tohmatsu[1] Financial Highlights During the reporting period, the company's revenue significantly increased by 65.8% year-on-year, while loss attributable to shareholders narrowed to HK$232 million; net debt to total equity ratio rose to 65.1%, and current ratio slightly decreased to 1.3 Financial Performance Summary | Indicator | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | | :--- | :--- | :--- | | Revenue (HK$ Thousand) | 2,980,833 | 1,797,834 | | Loss attributable to owners of the Company (HK$ Thousand) | (231,564) | (302,936) | | Basic loss per share (HK Cents) | (4.84) | (6.32) | Financial Ratios | Financial Ratio | As at June 30, 2024 | As at December 31, 2023 | | :--- | :--- | :--- | | Net debt to total equity ratio (%) | 65.1% | 58.4% | | Current ratio | 1.3 | 1.4 | - As of June 30, 2024, proceeds from pre-sale of properties received were HK$8.227 billion, largely consistent with HK$8.256 billion at the end of 2023[3] Chairman's Statement Facing a complex macroeconomic environment and a real estate market in adjustment, the company adhered to a "seeking progress while maintaining stability" strategy, focusing on quality projects in core cities, with successful project deliveries and steady contract sales in the first half - Macro environment: In H1 2024, China's GDP grew by 5.0% YoY, but the real estate market remained in adjustment, with property development investment down 10.1% YoY; government policies shifted towards "destocking" and "stabilizing the market"[6] - Operating strategy and performance: The company maintained a "seeking progress while maintaining stability, pragmatic and forward-looking" approach, with projects like Shanghai Qingpu SIUD Cloudland, Yantai SIUD Yunlu, and Xi'an Natureland completed delivery during the period; contract sales for projects such as Xi'an Natureland and Tianjin SIUD Yangshan progressed steadily[6] - Investment properties: Actively developed rental housing business, with long-term rental projects like Shanghai Chenkai Xin Community and Chenkai Hui Community contributing stable rental income, and Chenkai Chuang Community expected to be completed in H2[6] - Future outlook: Real estate market activity is expected to rebound in H2; the Group will continue its strategic positioning as a "core urban industrial-city integrated developer," focusing on developing and operating high-quality core assets, with Shanghai as its core, and deepening its presence in first- and second-tier cities[7] Management Discussion and Analysis In H1 2024, amidst a slow but pressured real estate market recovery, the Group's revenue grew 65.8% YoY to HK$2.98 billion, driven by increased property deliveries, though contract sales declined 54.4% YoY to RMB2.28 billion and gross profit margin fell to 20.8%, narrowing the loss to HK$188 million Real Estate Market Environment In H1 2024, China's real estate market continued its slow recovery but faced downward pressure from conservative investment confidence and weak new home sales; policy focus shifted to "destocking" and "market stabilization," though property developers still faced significant financing and debt repayment challenges - Policy direction: The Central Political Bureau meeting set the tone for real estate policy, proposing "coordinated research on digesting existing housing stock and optimizing incremental housing," with policy focus shifting to "destocking" and "stabilizing the market"[8] - Developer financing challenges: In H1, real estate enterprise bond financing totaled approximately RMB282.29 billion, a 26.1% YoY decrease; simultaneously, maturing bonds reached RMB279.9 billion, indicating significant financial pressure on developers[8] Business Review In the first half, the Group maintained its "seeking progress while maintaining stability" strategy, achieving contract sales of RMB2.28 billion, a 54.4% YoY decrease, primarily from second-tier city projects; 9 projects were under construction, with 78,600 square meters delivered, and investment properties generated stable rental income from 1.126 million square meters Contract Sales Performance | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Contract Sales (RMB) | 2.284 billion | 5.010 billion | -54.4% | | Contract Sales Area (Square Meters) | 98,000 | - | -42.0% | | Average Selling Price (RMB/Square Meter) | Approx. 23,300 | - | Decrease | - Key sales projects: Xi'an Natureland, Tianjin SIUD Yangshan, Yantai SIUD Yunlu, and Shanghai SIUD Wanghai were the main sales contributors, accounting for 39.7%, 35.9%, 6.8%, and 6.4% of total contract sales, respectively[10] - Investment property rental income increased by 1.5% YoY to HK$381 million; long-term rental projects like Shanghai Chenkai Xin Community achieved an occupancy rate of 97%[12] - Land reserves are distributed across 10 key mainland cities, with future saleable planned GFA of approximately 3.406 million square meters, sufficient for 3 to 5 years of development[13] - During the period, 9,368,000 shares were repurchased, involving HK$3.318 million, representing 0.20% of issued shares[14] Financial Performance Total revenue in the first half increased by 65.8% YoY to HK$2.98 billion, driven by project deliveries like Shanghai SIUD Yunrui; property sales remained the primary revenue source at 82.3%, but gross profit declined 19.6% and gross profit margin fell to 20.8% due to product mix and price adjustments, resulting in a narrowed loss attributable to shareholders of HK$232 million Financial Performance Indicators | Financial Indicator | H1 2024 (Unaudited) (HK$ Thousand) | H1 2023 (Unaudited) (HK$ Thousand) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 2,980,833 | 1,797,834 | +65.8% | | - Property Sales Revenue | 2,453,892 | 1,271,776 | +93.0% | | - Rental Income | 381,338 | 375,736 | +1.5% | | Gross Profit | 620,521 | 772,063 | -19.6% | | Gross Profit Margin | 20.8% | 42.9% | -22.1 percentage points | | Loss for the Period | (188,301) | (323,180) | -41.7% | | Loss attributable to owners of the Company | (231,564) | (302,936) | -23.6% | - Revenue growth was primarily due to the delivery of multiple projects, with Shanghai SIUD Yunrui contributing approximately HK$1.57 billion in revenue[15] - A net impairment loss on revaluation of investment properties of approximately HK$210 million was recorded, mainly due to a decrease in the fair value of Shanghai World Trade Centre and Chenkai International Plaza[17] Liquidity and Financial Resources As of June 30, 2024, the Group held HK$5.36 billion in bank balances and cash; the net debt to total equity ratio increased to 65.1% from 58.4% at year-end, and the current ratio was 1.3 times, with total loans of approximately HK$18.23 billion, largely stable from year-end Liquidity and Financial Resources | Indicator | As at June 30, 2024 | As at December 31, 2023 | | :--- | :--- | :--- | | Bank Balances and Cash (HK$ Thousand) | 5,362,707 | 5,985,911 | | Total Loans (HK$ Thousand) | 18,229,744 | 18,002,416 | | Net Debt to Total Equity Ratio | 65.1% | 58.4% | | Current Ratio | 1.3 times | 1.4 times | Outlook For the second half, despite ongoing market adjustment pressures, central government policies aimed at "destocking" and "market stabilization" are expected to boost industry confidence; the Group will continue to deepen its presence in Shanghai and core first- and second-tier cities, prudently increasing quality land reserves and investment projects - Market expectations: The Third Plenary Session of the 20th Central Committee provided direction for real estate development, reiterating a loose policy stance and emphasizing the construction of a new development model; the market anticipates further "destocking" and "market stabilization" policies to stimulate a steady market recovery[25] - Company strategy: The company will firmly maintain development confidence, continue to focus on the Shanghai metropolitan area, deepen its presence in the Yangtze River Delta and other core first- and second-tier cities, prudently explore investments, and strive for stable business development[25] Project Portfolio Analysis As of June 30, 2024, the Group owned 28 real estate projects across 10 major Chinese cities, encompassing mid-to-high-end residential, commercial, office, and serviced apartment properties; future saleable land reserves totaled approximately 3.41 million square meters, with the Yangtze River Delta region accounting for 53.7%, and investment properties totaling about 1.126 million square meters Project Information Overview As of June 30, 2024, the Group owned 28 projects across 10 cities, with a total planned GFA of approximately 12.69 million square meters, of which future saleable area is about 3.41 million square meters and under-construction area is about 1.58 million square meters; the Yangtze River Delta region is the primary distribution area for future saleable area, accounting for 53.7% Project Area Summary | Indicator | Area (Square Meters) | | :--- | :--- | | Total Planned GFA | 12,687,998 | | Total Saleable GFA | 10,296,895 | | Future Saleable Area | 3,406,698 | | Under-Construction Area | 1,579,951 | - Future saleable GFA is primarily distributed in the Yangtze River Delta region (53.7%), followed by Xi'an (14.5%) and Wuhan (12.0%)[32] Key Investment Properties The Group's key investment properties have a total planned GFA of approximately 1.126 million square meters, distributed across 7 key cities including Shanghai, Beijing, Chongqing, and Shenzhen, comprising commercial centers, office buildings, exhibition halls, and affordable rental housing, providing stable rental income - Total investment property area is approximately 1,125,879 square meters[30][31] - Core investment properties include Shanghai World Trade Centre (285,000 square meters), Chenkai International Plaza (45,000 square meters), and Chengshangcheng (317,000 square meters)[30] Introduction to Key Projects in China This section details the Group's key projects in core cities like Shanghai, Yantai, Wuhan, Beijing, Tianjin, Shenyang, Wuxi, and Xi'an, showcasing diverse project types including large residential communities, TOD complexes, high-end villas, commercial office complexes, and large ecological residential projects, reflecting the Group's diversified product development capabilities and strategic focus on core cities - Projects in the Shanghai region hold significant importance, covering various formats such as residential, commercial, TOD, and long-term rental apartments, including Wanyuan City, TODTOWN Tianhui, and SIUD Tinghai[33][35][56] - The Group has strategically positioned landmark or regionally influential projects in other core cities, such as Beijing's Xidiaoyutai Royal Mansion, Tianjin's SIUD Yangshan, and Xi'an's Natureland and SIUD Qiyuan[62][63][68][69] Other Information and Corporate Governance This section covers important disclosures including dividends, share repurchases, corporate governance, connected transactions, and director information; the Board recommended no interim dividend, the company repurchased 9.368 million shares, complied with corporate governance codes, disclosed loan agreements with controlling shareholder covenants, and updated director and major shareholder information Dividends and Share Repurchases The Board did not recommend any interim dividend for the six months ended June 30, 2024; during the period, the company repurchased a total of 9,368,000 ordinary shares on the Stock Exchange for approximately HK$3.318 million, which were cancelled on March 26, 2024 - The Board did not recommend an interim dividend for 2024[70] Share Repurchase Summary | Share Repurchase Summary | | | :--- | :--- | | Number of Ordinary Shares Repurchased | 9,368,000 shares | | Total Consideration Paid (HK$) | 3,317,670 | Corporate Governance and Compliance During the reporting period, the company consistently complied with the Corporate Governance Code; it disclosed three loan agreements requiring the controlling shareholder (SIIC Group) to maintain a minimum shareholding of not less than 51% and effective control, with any breach constituting an event of default; the Audit Committee reviewed the unaudited interim financial statements - The company complied with the Corporate Governance Code in Appendix C1 of the Listing Rules[74] - The company has three loan agreements requiring the controlling shareholder, SIIC Group, to maintain not less than 51% equity interest and effective control; as of June 30, 2024, SIIC Group beneficially owned approximately 70.52% of the company's share capital[76][77] - The Audit Committee, comprising three independent non-executive directors, reviewed the interim financial statements, and external auditor Deloitte conducted a review in accordance with Hong Kong Standard on Review Engagements 2410[78] Directors' and Shareholders' Interests As of June 30, 2024, Director Mr. Tang Jun held 178,000 company ordinary shares and 65,000 ordinary shares of associated corporation SIIC Holdings; major shareholders SIIC Holdings and SIIC Group were deemed to hold 44.16% and 70.52% equity interests respectively; post-reporting period, Mr. Lou Jun resigned, and Ms. Zhou Yadong and Dr. Chen Haohua were appointed as executive and independent non-executive directors - Director Mr. Tang Jun held 178,000 company shares[79] Major Shareholders | Major Shareholder | Capacity | Shareholding Percentage | | :--- | :--- | :--- | | SIIC Holdings | Held by controlled corporations | 44.16% | | SIIC Group | Held by controlled corporations | 70.52% | - Changes in director information: Mr. Lou Jun resigned as executive director, Ms. Zhou Yadong was appointed as executive director, and Dr. Chen Haohua was appointed as independent non-executive director, all effective July 15, 2024[86] Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for the six months ended June 30, 2024, reviewed by Deloitte Touche Tohmatsu, showing total revenue of HK$2.98 billion, a loss for the period of HK$188 million, total assets of HK$56.53 billion, and equity attributable to owners of the Company of HK$13.29 billion, with detailed notes explaining key accounting policies and transactions Review Report The Group's external auditor, Deloitte Touche Tohmatsu, reviewed these interim financial statements in accordance with Hong Kong Standard on Review Engagements 2410, concluding that they found no matters leading them to believe the condensed consolidated financial statements were not prepared in all material respects in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" - Auditor Deloitte Touche Tohmatsu issued an unmodified review conclusion, stating that the financial statements materially comply with the requirements of Hong Kong Accounting Standard 34[89][90] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the Group's total revenue was HK$2.98 billion, a 65.8% YoY increase, while gross profit was HK$621 million, a 19.6% YoY decrease; due to factors like fair value loss on investment properties and finance costs, a loss for the period of HK$188 million was recorded, significantly narrowed from HK$323 million in the prior year, with loss attributable to owners of the Company at HK$232 million Statement of Profit or Loss and Other Comprehensive Income | Item (HK$ Thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Total Revenue | 2,980,833 | 1,797,834 | | Gross Profit | 620,521 | 772,063 | | Loss Before Tax | (65,932) | 57,341 (Profit) | | Loss for the Period | (188,301) | (323,180) | | Loss attributable to owners of the Company | (231,564) | (302,936) | | Basic Loss Per Share (HK Cents) | (4.84) | (6.32) | Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group's total assets were HK$56.53 billion, a decrease from HK$59.02 billion at the end of 2023; total liabilities were HK$36.85 billion, and equity attributable to owners of the Company was HK$13.29 billion, with investment properties being the largest non-current asset at HK$21.28 billion and properties under development for sale and properties held for sale at HK$21.09 billion in current assets Statement of Financial Position | Item (HK$ Thousand) | As at June 30, 2024 (Unaudited) | As at December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Assets | 56,529,184 | 59,016,220 | | Non-Current Assets | 28,486,589 | 28,773,636 | | Current Assets | 28,042,595 | 30,242,584 | | Total Liabilities | 36,854,648 | 38,507,726 | | Current Liabilities | 20,858,767 | 20,957,780 | | Non-Current Liabilities | 15,995,881 | 17,549,946 | | Total Equity | 19,674,536 | 20,508,494 | | Equity attributable to owners of the Company | 13,293,915 | 14,010,969 | Condensed Consolidated Statement of Changes in Equity As of June 30, 2024, equity attributable to owners of the Company decreased from HK$14.01 billion at the beginning of the year to HK$13.29 billion, primarily due to a loss for the period of HK$232 million, a decrease in reserves of HK$343 million from exchange differences, and dividends paid of HK$139 million, with share capital and share premium also reduced by share repurchases and cancellations - Equity attributable to owners of the Company decreased by approximately HK$717 million, from HK$14,010,968 thousand at the beginning of the period to HK$13,293,915 thousand at the end of the period[95] - Key items contributing to the decrease in equity include: total comprehensive expense for the period of HK$574 million (including loss for the period and exchange differences), and dividends recognized as distribution of HK$139 million[95] Condensed Consolidated Cash Flow Statement In H1 2024, the Group experienced a net cash outflow from operating activities of HK$166 million, compared to a net inflow of HK$1.727 billion in the prior year, mainly due to changes in working capital; net cash outflow from investing activities was HK$375 million, while net cash inflow from financing activities was HK$63 million, resulting in a decrease in cash and cash equivalents from HK$5.99 billion at the beginning of the period to HK$5.36 billion at period-end Cash Flow Statement Summary | Item (HK$ Thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net Cash from Operating Activities | (165,868) | 1,727,131 | | Net Cash Used in Investing Activities | (374,511) | (267,981) | | Net Cash from Financing Activities | 63,036 | 453,328 | | Net Decrease in Cash and Cash Equivalents | (477,343) | 1,912,478 (Increase) | | Cash and Cash Equivalents at End of Period | 5,362,707 | 6,131,301 | Summary of Notes to the Financial Statements The notes to the financial statements provide detailed explanations of the financial data; revenue primarily derived from property sales in China, with no segment reporting required due to a single business segment; a fair value loss of HK$210 million on investment properties was recognized due to market changes; related party transactions and balances involved controlling shareholders, joint ventures, and non-controlling shareholders; the company provided financial guarantees for property buyers and a joint venture - Revenue recognition: Property sales revenue is recognized at a point in time, amounting to HK$2.45 billion in H1 2024; hotel operations and property management revenue are recognized over time[102] - Changes in investment properties: A net fair value decrease of approximately HK$210 million was recognized in profit or loss; there were also transfers of properties held for sale and owner-occupied properties to investment properties[109] - Financial guarantees: The Group provided mortgage loan guarantees of HK$861 million for property buyers and HK$106 million for bank financing of a joint venture[125] - Dividends: Final dividend and special dividend for 2023, totaling HK$139 million, were declared and recognized during the period; the Board did not recommend an interim dividend for 2024[136][137]