SOHO中国(00410) - 2024 - 中期财报

Company Overview and Core Findings Performance Summary and Key Findings SOHO China's H1 2024 report reveals a net loss of 108 million yuan, a 2.7% revenue decline to 799 million yuan, and a 9.923 billion yuan net current liability, with the auditor issuing an "Emphasis of Matter" due to a 4.187 billion yuan cross-default risk from Land Appreciation Tax arrears Key Financial Performance Summary | Metric | H1 2024 (hundred million yuan) | H1 2023 (hundred million yuan) | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 7.99 | 8.22 | -2.7% | | Gross Profit | 6.48 | 6.78 | -4.4% | | Net Profit Attributable to Owners of the Parent | -1.08 | 0.14 | Turned to Loss | | Loss Per Share | -0.02 yuan | 0.00 yuan | - | - The auditor issued an "Emphasis of Matter," highlighting that as of June 30, 2024, the Group's current liabilities exceeded current assets by 9.923 billion yuan, indicating significant uncertainty regarding its going concern ability[47] - Due to a subsidiary's arrears in Land Appreciation Tax and late payment surcharges, a total of 4.187 billion yuan in bank loan principal is at risk of cross-default and has been reclassified as current liabilities[57][58][91] Business Review and Market Outlook Market Review and Outlook In H1 2024, China's office leasing market experienced weak demand and a "price-for-volume" strategy, with significant new supply expected in H2 for Beijing and Shanghai, while SOHO China plans to deepen cost control, implement customized fit-out deliveries, and advance ESG initiatives including SBTi validation - The office leasing market experienced weak demand and declining rental levels, with a widespread "price-for-volume" strategy adopted to maintain activity[5] - Beijing and Shanghai are projected to add approximately 425,000 and 709,000 square meters of Grade A office supply respectively in H2, indicating continued market pressure[5] - The company actively advanced its ESG strategy, achieving a 20% reduction in total energy consumption across 24 managed projects compared to national standards, resulting in 31,000 tons of carbon emission reduction, and obtaining SBTi validation for its science-based targets[6] Leasing Property Portfolio As of June 30, 2024, the Group's key investment property portfolio showed mixed occupancy rates, with most projects experiencing declines compared to end-2023, including a 4% drop for Bund SOHO Shanghai and 3% for Wangjing SOHO Beijing, while only Lize SOHO Beijing and Gubei SOHO Shanghai saw slight increases Key Investment Property Portfolio Performance | Project | H1 2024 Rental Income (RMB thousand) | Occupancy Rate as of June 30, 2024 | Occupancy Rate as of December 31, 2023 | | :--- | :--- | :--- | :--- | | Beijing | | | | | Qianmen Avenue Project | 48,118 | 63% | 67% | | Wangjing SOHO | 99,084 | 57% | 60% | | Guanghualu SOHO II | 96,346 | 83% | 85% | | Lize SOHO | 87,491 | 89% | 88% | | Galaxy SOHO & 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% | Key Projects The company holds a portfolio of landmark commercial real estate projects in core areas of Beijing and Shanghai, including Wangjing SOHO, Guanghualu SOHO II, Qianmen Avenue Project, and Lize SOHO in Beijing, and SOHO Fuxing Plaza, Bund SOHO, SOHO Tianshan Plaza, and Gubei SOHO in Shanghai, which collectively form the company's primary rental income sources - The Beijing project portfolio includes properties located in core areas such as Wangjing, CBD, Qianmen, and Lize Financial Business District[10][11][12][13] - The Shanghai project portfolio includes properties located in core business districts such as Huaihai Middle Road, The Bund, and Hongqiao Foreign Trade Center[14][15][16][17] Management Discussion and Analysis Financial Review In H1 2024, influenced by weak leasing market demand, the Group's operating revenue decreased by 2.7% to 799 million yuan, gross profit declined by 4.39% to 648 million yuan, and gross margin slightly decreased from 83% to 82%, while administrative expenses decreased, but income tax expense increased by 37.4% to 125 million yuan Key Financial Performance Indicators | Financial Metric | H1 2024 (RMB hundred million) | H1 2023 (RMB hundred million) | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 7.99 | 8.22 | -2.70% | | Gross Profit | 6.48 | 6.78 | -4.39% | | Leasing Business Gross Margin | 82% | 83% | -1 ppt | | Administrative Expenses | 0.50 | 0.66 | -24.2% | | Finance Costs | 3.67 | 3.87 | -5.2% | | Income Tax Expense | 1.25 | 0.91 | +37.4% | Liquidity and Capital Resources As of June 30, 2024, the Group's total borrowings were 15.691 billion yuan, with 7.749 billion yuan due within one year, while the net gearing ratio remained at 41%, average financing cost decreased from 4.7% to 4.5%, and foreign currency debt remained low, indicating manageable exchange rate risk - Total borrowings amounted to approximately 15.691 billion yuan, with approximately 7.749 billion yuan (49.4%) repayable within one year[21] - The net gearing ratio was approximately 41%, consistent with the end of 2023[21] - The average financing cost decreased from 4.7% at the end of 2023 to 4.5%[22] Other Information Dividends and Share Capital The Board resolved not to declare an interim dividend for 2024, consistent with H1 2023, and as of June 30, 2024, the company's total shares in issue remained unchanged at 5,199,524,031 shares - The Board resolved not to declare an interim dividend for 2024[27] Directors' and Major Shareholders' Interests As of June 30, 2024, Mr. Pan Shiyi and Ms. Pan Zhangxin jointly held approximately 63.93% of the company's shares through trusts and holding companies, remaining the ultimate controlling shareholders, with the ownership structure remaining stable Major Shareholders' Interests | Shareholder | Capacity | Number of Shares Held (L) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Pan Shiyi | Director/Controlling Shareholder | 3,324,100,000 | 63.9309% | | Pan Zhangxin | Director/Controlling Shareholder | 3,324,100,000 | 63.9309% | Corporate Governance The company complied with the Corporate Governance Code under the Listing Rules during the reporting period, with a Board comprising four executive and three independent non-executive directors responsible for leadership and oversight, and liability insurance purchased for directors and officers, while the interim results were unaudited but reviewed by PricewaterhouseCoopers - The company has consistently complied with the code provisions of the Corporate Governance Code during the period[38] - The interim results were unaudited but reviewed by PricewaterhouseCoopers, the auditor, and also reviewed by the company's Audit Committee[40] Unaudited Interim Financial Report Auditor's Review Report PricewaterhouseCoopers issued a review report on the interim financial information, including an "Emphasis of Matter" paragraph highlighting that as of June 30, 2024, the Group's current liabilities exceeded current assets by 9.923 billion yuan, indicating significant uncertainty regarding its going concern ability, without modifying the auditor's conclusion - The auditor included an "Emphasis of Matter" in the review report, pointing out significant uncertainties that may cast substantial doubt on the Group's ability to continue as a going concern[47] - The core content of the Emphasis of Matter is that as of June 30, 2024, the Group's current liabilities exceeded its current assets by 9.923 billion yuan[47] Key Financial Statements Summary The financial statements show the company shifted from profit to a net loss of 109 million yuan in H1 2024, with total assets and equity slightly decreasing, while current liabilities significantly increased, resulting in a net current liability of 9.923 billion yuan, and net cash flow from operating activities decreased by 67% to 110 million yuan Statement of Profit or Loss Summary | Statement of Profit or Loss Summary (RMB thousand) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Operating Revenue | 799,362 | 821,503 | | Operating Profit | 380,332 | 490,220 | | Net (Loss)/Profit for the Period | (109,169) | 14,700 | Statement of Financial Position Summary | Statement of Financial Position Summary (RMB thousand) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | 68,191,601 | 68,617,556 | | Total Liabilities | 31,120,093 | 31,422,532 | | Total Current Assets | 3,017,847 | 3,081,267 | | Total Current Liabilities | 12,941,140 | 10,451,535 | | Total Equity | 37,071,508 | 37,195,024 | - Net cash flow from operating activities was 110 million yuan, a significant 67% decrease from 334 million yuan in the prior year period[54] Notes to the Financial Statements (Selected) The financial notes detail key matters significantly impacting the company's financial position, with Note 2 re-emphasizing going concern uncertainties, including 9.923 billion yuan in net current liabilities and 4.187 billion yuan in cross-default risk from Land Appreciation Tax arrears, while Note 15 details bank loans and cross-default amounts, and Note 18 discloses significant related party transactions and balances - Note 2 (Basis of preparation) indicates that due to arrears in Land Appreciation Tax and late payment surcharges, a total of 4.187 billion yuan in bank loan principal may be subject to cross-default, and there is significant uncertainty regarding management's ability to successfully execute its response plan[57][58][60] - Note 11 (Investment properties) shows that the fair value of investment properties decreased by 88.09 million yuan during the period[82] - Note 15 (Bank loans) reconfirms that due to Land Appreciation Tax arrears, a total of 4.187 billion yuan in bank loan principal is at risk of cross-default and has been reclassified as current liabilities[91] - Note 18 (Related party transactions) discloses that as of the period end, amounts due to related parties (primarily advances from non-controlling shareholders) were 813 million yuan, and amounts due from SOHO China Foundation were 24.74 million yuan[96][97]