Group 1 - The real estate market is experiencing a significant downturn, with individual homeowners facing substantial losses as property values plummet [2][4] - The number of second-hand homes listed for sale has surged, with over 7.3 million properties currently on the market, indicating a potential sales cycle exceeding five years [9][10] - The decline in property prices is not limited to China, as similar trends are observed globally, with significant drops in markets like Canada and specific regions in China [7][8] Group 2 - Three main factors are driving the current wave of property sales: a declining population, increasing mortgage pressures, and aggressive pricing strategies from real estate agents [8][10] - The average price of second-hand homes in key areas has dropped significantly, with some regions seeing reductions of over 30% from their peak values [9][11] - Despite the overall market decline, premium properties in core locations are still holding their value, indicating a bifurcation in the market [11] Group 3 - Homeowners are employing various strategies to attract buyers, including personalized marketing efforts and enhancing property appeal [12] - The decline in property values is leading to a substantial decrease in household wealth, with reports indicating an average loss of 600,000 yuan per household due to falling prices [13] - Local governments are responding to the crisis with measures such as housing subsidies and relaxed purchasing restrictions to stimulate the market [13] Group 4 - The ongoing price declines may represent a return to rationality in the real estate market, moving away from speculative investments towards a focus on housing as a necessity [14]

Summary of Poly Real Estate Conference Call Company Overview - **Company**: Poly Real Estate - **Industry**: Real Estate Development Key Points and Arguments Financial Performance - Poly Real Estate has a historically low PB ratio of approximately 0.15, yet demonstrates stable operational performance during industry downturns, with sales ranking significantly improving from outside the top 60 to 17th by 2024, and expected to reach 15th by year-end 2025 [2][4] - The company maintains a stable contracted sales amount between 50 billion to 60 billion, contrasting with the overall industry decline [4][8] - As of the end of 2024, the company has an unsold inventory value of approximately 190 billion, with about 50% located in first-tier cities [10] Governance Improvements - Recent years have seen significant governance improvements through internal equity structure adjustments and the introduction of a new management team, which has stabilized management and accelerated long-term development [5][6][7] Investment Strategy - The company has maintained a certain level of investment intensity, with land acquisition strategies increasingly focused on core cities, particularly first-tier and strong second-tier cities [9] - The expected land investment for the full year 2025 is projected to account for about 50% of sales receipts, approximately 17 billion to 18 billion [9] Asset and Debt Management - The company has seen a steady improvement in financial conditions, with interest-bearing debt decreasing from nearly 80 billion in 2020-2022 to around 70 billion currently [3][13] - The overall financing cost for 2024 is reported at 3.38%, indicating a favorable debt structure [13][14] Impairment and Risk Factors - The company faces impairment pressure primarily from older projects in Wuhan and the Southwest region, with potential additional impairments estimated at around 4 billion if housing prices decline by 10% [12] - Cumulative impairment provisions since 2021 amount to 1.6 billion, representing 1.3% of the inventory book value, which is considered reasonable within the industry [11] Future Outlook - Revenue is expected to stabilize around 40 billion, with gross margins anticipated to stabilize in 2025, but profit margin improvements may not be realized until 2027 [16] - The company’s valuation is projected to have room for improvement, with a suggested PB range of 0.3 to 0.4 based on relative valuation methods [17][20] Investment Implications - The company is viewed as a high-risk, high-reward investment opportunity, particularly suitable for smaller or flexible funds, with a target price set at 0.24 times PB, potentially increasing to 0.3 times PB with favorable market conditions [20] Additional Important Insights - The company’s non-residential business contributes approximately 2 billion to 2.1 billion annually, which has a minimal long-term impact on overall valuation [15] - The company’s ranking in the industry is expected to continue improving, potentially reaching 13th by 2026, which could attract market attention and support valuation recovery [18][19]

Core Viewpoint - The company reported a significant decline in revenue and profit for the first half of 2025, attributed to uneven project settlement and a cooling real estate market, while maintaining a conservative financial approach by adequately provisioning for asset impairments [1][2]. Group 1: Financial Performance - In the first half of 2025, the company achieved revenue of 53.37 billion yuan, a year-on-year decrease of 23.3%, and a net profit attributable to shareholders of 210 million yuan, down 89.7% year-on-year [1]. - The decline in revenue and profit was influenced by a 22.7% year-on-year drop in settlement area, alongside a provision of 1.93 billion yuan for asset impairments due to the challenging market environment [1]. Group 2: Sales and Market Position - The company recorded a sales area of 5.35 million square meters in the first half of 2025, a decrease of 9.5% year-on-year, with sales revenue of 122.2 billion yuan, down 3.4% year-on-year, ranking second in the industry during a downturn [2]. - The average selling price for self-invested projects reached 34,984 yuan per square meter, reflecting a year-on-year increase of 14.5%, with a collection rate of 96% [2]. - The company added 35 new projects in the first half of 2025, with a total construction area of approximately 3.55 million square meters and an estimated saleable value of about 90.7 billion yuan, focusing on core cities where 88% of the value is located [2]. Group 3: Financing and Debt Management - As of the end of the first half of 2025, the company's weighted average financing cost decreased to 3.4%, down from 3.9% in the same period last year, indicating a continued decline in financing costs [2]. - The company successfully issued 7.711 billion yuan in domestic financing, including 5 billion yuan in credit bonds and 2.211 billion yuan in asset-backed notes, while also completing an overseas debt swap of approximately 800 million USD and issuing about 500 million USD in senior notes [2]. - The overall debt structure remains stable, with the proportion of overseas debt at 15.3%, maintaining a reasonable level [2]. Group 4: Investment Outlook - Despite short-term performance pressures due to industry headwinds, the company is expected to maintain resilience in sales and focus on core urban areas, which is likely to attract market interest in the long term [3]. - Earnings per share (EPS) forecasts for 2025-2027 are projected at 0.74, 0.86, and 1.00 yuan per share, respectively, with a recommendation to "buy" based on the current low valuation [3].

Core Viewpoint - The company is experiencing short-term pressure on performance due to a decline in the real estate market, leading to decreased revenue and profit margins [1][2]. Group 1: Financial Performance - In H1 2025, the company achieved operating revenue of 14.5 billion yuan, a year-on-year decrease of 33% [1]. - The net profit attributable to shareholders was 280 million yuan, down 68% year-on-year, with a net profit margin of 2.0%, a decline of 2.1 percentage points [1]. - The gross margin decreased by 0.4 percentage points to 9.3%, while the sales expense ratio increased by 1.2 percentage points to 3.9% [1]. - The proportion of net profit attributable to shareholders was 74%, a decrease of 28 percentage points year-on-year [1]. Group 2: Sales and Market Activity - The company recorded a contracted sales figure of 16.6 billion yuan in H1 2025, a year-on-year decline of 13% [2]. - The equity sales amounted to 14.2 billion yuan, down 9% year-on-year, with equity sales accounting for 86% of total sales [2]. - The company continued to focus on lower-tier markets, ranking in the top 3 in sales in 19 cities, which accounted for 58% of its presence in 33 cities [2]. - New land reserves added in H1 2025 totaled 1.33 million square meters, exceeding the total for the entire year of 2024 [2]. Group 3: Financial Health and Cost Management - The company achieved sales collection of 16.9 billion yuan in H1 2025, with a collection rate of 102% [3]. - The net cash flow from operating activities was 1.2 billion yuan, remaining positive [3]. - As of the end of H1 2025, the company's net assets were 38.4 billion yuan, an increase of 1% year-on-year [3]. - The weighted average financing cost decreased to 3.5%, down 0.6 percentage points from the end of 2024 [3].

Investment Rating - The investment rating for the company is "Outperform the Market" [6][48]. Core Views - The company's performance is under pressure in the short term, with a significant decline in revenue and net profit due to the downturn in the real estate market since 2022. However, new land acquisitions are expected to improve profitability in the future [1][3][9]. - The company has maintained a healthy financial status, with a decrease in financing costs and a positive cash flow from operating activities [3][36][38]. Summary by Sections Financial Performance - In the first half of 2025, the company achieved revenue of 14.5 billion yuan, a year-on-year decrease of 33%. The net profit attributable to shareholders was 280 million yuan, down 68% year-on-year, with a net profit margin of 2.0%, a decline of 2.1 percentage points [1][9]. - The gross profit margin decreased by 0.4 percentage points to 9.3%, while the sales expense ratio increased by 1.2 percentage points to 3.9% [1][9]. Sales and Land Acquisition - The company reported a contracted sales amount of 16.6 billion yuan in the first half of 2025, a year-on-year decline of 13%. The equity sales accounted for 86% of total sales, with a sales area of 1.47 million square meters, down 11% year-on-year [2][20]. - The company actively acquired land, with new land reserves of 1.33 million square meters and a total land acquisition cost of 6.2 billion yuan, indicating a strong investment intensity of 37% [2][20]. Financial Health - As of the end of the first half of 2025, the company had a net asset value of 38.4 billion yuan, a year-on-year increase of 1%. The cash and cash equivalents amounted to 28.5 billion yuan, up 13% year-on-year [3][36]. - The weighted average financing cost was 3.5%, a decrease of 0.6 percentage points from the end of 2024, with domestic financing costs at 3.2% and overseas at 3.8% [3][38]. Earnings Forecast - The company’s revenue for 2025-2026 is revised down to 31.3 billion and 31.5 billion yuan, respectively, with net profits expected to be 360 million and 470 million yuan, leading to earnings per share of 0.10 and 0.13 yuan [3][48]. - The projected price-to-earnings ratios for 2025 and 2026 are 20.0 and 15.3 times, respectively [3][48].

Core Viewpoint - Greentown China has experienced a significant decline in revenue and profit in the first half of 2025, with a notable 89.7% drop in shareholder profit, marking the worst performance in nearly two years. Despite this, the company has aggressively expanded its project portfolio, ranking second in nationwide sales [2][3][4]. Financial Performance - In the first half of 2025, Greentown China reported revenue of 53.368 billion yuan, a decrease of 23.3% from 69.562 billion yuan in the same period of 2024 [3]. - The company's property sales revenue accounted for 93.0% of total revenue, with a significant decline in all business segments, particularly a 22.1% drop in property sales revenue to 49.651 billion yuan [3][4]. - The gross profit for the first half was 7.159 billion yuan, down 21.4% year-on-year, with shareholder profit plummeting to 210 million yuan from 2.045 billion yuan, a decrease of 89.7% [4][5]. Asset Impairment and Losses - Greentown China recorded asset impairment losses of 1.933 billion yuan in the first half of 2025, significantly impacting shareholder profit. This included a non-financial asset impairment loss of 1.717 billion yuan, up 20.7% from the previous year [5]. - The impairment losses were nearly nine times the company's net profit for the period, highlighting the financial strain [5]. Land Acquisition and Sales Performance - The company aggressively acquired 35 new projects in the first half of 2025, with a total investment of 36.2 billion yuan, ranking third in the industry for land acquisition [7]. - Greentown's total contract sales area reached approximately 5.35 million square meters, with a total sales amount of about 122.2 billion yuan, elevating its sales ranking to second nationwide [8]. Debt and Financial Health - As of June 30, 2025, Greentown's total borrowings increased to 143.027 billion yuan, up from 137.187 billion yuan at the end of 2024, leading to a net debt ratio of 63.9%, an increase of 7.3 percentage points [9]. - The company holds cash and bank deposits of 66.795 billion yuan, down 8.2% from the end of 2024, indicating a tightening liquidity position [9].

Core Viewpoint - Greentown China reported a significant decline in both revenue and profit for the first half of 2025, with a notable 89.7% drop in shareholder profit, marking the worst performance in nearly two years. Despite this, the company aggressively expanded its project portfolio, investing 36.2 billion yuan in 35 new projects, elevating its sales ranking to second nationwide amidst a contracting industry [1][2]. Financial Performance - In the first half of 2025, Greentown China achieved revenue of 53.368 billion yuan, a decrease of 23.3% from 69.562 billion yuan in the same period of 2024 [2]. - The company's property sales revenue accounted for 93.0% of total income, with a significant drop in property sales revenue to 49.651 billion yuan, down 22.1% from 63.757 billion yuan year-on-year [2]. - The gross profit for the first half was 7.159 billion yuan, a decline of 21.4%, with shareholder profit plummeting to 210 million yuan from 2.045 billion yuan, a decrease of 89.7% [4]. Asset Impairment - Greentown China reported asset impairment losses of 1.933 billion yuan, which is nearly nine times the net profit for the first half, significantly impacting profitability [5]. - The company conducted impairment tests on certain properties, resulting in a non-financial asset impairment loss of 1.717 billion yuan, an increase of 20.7% from the previous year [4]. Land Acquisition and Sales Performance - The company acquired 35 new projects with a total construction area of approximately 3.55 million square meters, at a cost of about 36.2 billion yuan, ranking third in the industry for land acquisition [7]. - Greentown's total contract sales area reached approximately 5.35 million square meters, with a total contract sales amount of about 122.2 billion yuan, elevating its sales ranking to second nationwide [7]. Debt and Financial Health - As of June 30, 2025, Greentown's total borrowings increased to 1430.27 billion yuan from 1371.87 billion yuan at the end of 2024, leading to a rise in net debt to 762.32 billion yuan and a net debt-to-equity ratio of 63.9% [8]. - The company faces the challenge of balancing expansion with profitability, as it navigates the pressures of increased debt while striving for growth [8].

Core Viewpoint - Greentown China has reported a significant decline in both revenue and profit for the first half of 2025, with a notable 89.7% drop in shareholder profit, marking the worst performance in nearly two years [2][4][12]. Financial Performance - The company achieved revenue of 53.368 billion yuan, down 23.3% from 69.562 billion yuan in the same period of 2024 [4]. - This marks the second consecutive year of revenue decline for Greentown China in the first half of the year, indicating significant pressure on its revenue base [5]. - The revenue structure shows that property sales accounted for 93.0% of total revenue, with design and decoration services at 1.8%, project management at 2.6%, and property operation income also at 2.6% [6]. Revenue Breakdown - Property sales revenue was 49.651 billion yuan, a decrease of 22.1% from 63.757 billion yuan in 2024 [7]. - Project management service revenue fell to 1.361 billion yuan, down 17.0% from 1.64 billion yuan [8]. - Design and decoration revenue dropped to 960 million yuan, a 37% decrease from 1.525 billion yuan [9]. - Hotel operations generated 453 million yuan, a 7.0% decline from 487 million yuan [10]. Profitability Challenges - The gross profit for the first half was 7.159 billion yuan, a 21.4% decrease year-on-year [12]. - Shareholder profit was only 210 million yuan, a drastic drop from 2.045 billion yuan in 2024 [12]. - The significant decline in profit is attributed to uneven delivery schedules and a 22.7% decrease in recognized area, alongside a 19.33 billion yuan impairment loss [13][14]. Land Acquisition and Sales Performance - Greentown China invested 36.2 billion yuan in acquiring 35 new projects, ranking third in the industry for land acquisition [3][16]. - The total estimated value of new projects is 90.7 billion yuan, with a focus on core cities and high-quality investment opportunities [16]. - The company’s sales ranking improved to second nationally, with total contract sales area of approximately 5.35 million square meters and total sales amounting to about 122.2 billion yuan [18]. Debt and Financial Health - As of June 30, 2025, the company held 66.795 billion yuan in cash, down 8.2% from the end of 2024 [19]. - Total borrowings increased from 137.187 billion yuan to 143.027 billion yuan, leading to a rise in net debt from 64.199 billion yuan to 76.232 billion yuan [19]. - The net debt-to-equity ratio rose from 56.6% to 63.9%, indicating increased financial leverage [19]. Strategic Outlook - The company faces the challenge of balancing scale expansion with profitability improvement, as it seeks to align profit levels with growth [20].

Core Viewpoint - Company achieved revenue of 1.37 billion yuan in the first half of 2025, a year-on-year decrease of 17.7%, primarily due to intensified competition in the construction agency industry and the lagging effects of the overall downturn in the real estate market [1] - The net profit attributable to shareholders was 260 million yuan, down 48.9% year-on-year, with the decline in profit exceeding that of revenue mainly due to increased industry competition and declining fee rates leading to a decrease in gross margin [1] Revenue and Profit Performance - In the first half of 2025, the company reported operating revenue of 1.37 billion yuan, a decrease of 17.7% year-on-year [1] - The net profit attributable to shareholders was 260 million yuan, reflecting a year-on-year decline of 48.9% [1] - The overall gross margin for the first half was 40.0%, down 11.5 percentage points from the same period last year [1] New Orders and Market Position - The company saw a robust growth in new orders, with a total new construction area of 19.89 million square meters in the first half, representing a year-on-year increase of 13.9% [2] - The new construction project fees amounted to approximately 5 billion yuan, up 19.1% year-on-year, with private enterprises driving the growth [2] - The company maintained its leading position in the industry for new construction area [2] Financial Health and Dividend Policy - The company reported operating net cash flow of 110 million yuan, an increase of 45% year-on-year [2] - As of the end of the first half, the company had cash on hand of 1.64 billion yuan, an 8% increase from the end of the previous year [2] - The company announced its first interim dividend since listing, with a payout ratio of 59% and an annualized dividend yield of approximately 5.7% [2] Earnings Forecast Adjustment - Due to intensified industry competition and the overall downturn in the real estate market, the company has adjusted its earnings forecast, predicting EPS of 0.28, 0.29, and 0.31 yuan for 2025-2027 [3] - Despite the downward adjustment, the company’s leading position in the construction agency sector and steady growth in new orders support a maintained buy rating [3]

Investment Rating - The investment rating for the company is "Buy" and is maintained [9] Core Views - The company achieved a revenue of 47.57 billion yuan, representing a year-on-year growth of 34.6%, but the net profit attributable to shareholders decreased by 25.2% to 1.37 billion yuan due to pressure on gross margin and an increase in minority shareholder losses [6][9] - The company’s sales performance was significantly better than its peers, with a sales amount of 61.5 billion yuan, up 11.0% year-on-year, and it is expected to meet its annual sales target [6][9] - The company has maintained a healthy financial structure with a leading financing cost in the industry, and its debt structure continues to optimize [6][9] Summary by Sections Revenue and Profitability - In the first half of 2025, the company reported a revenue of 47.57 billion yuan, a 34.6% increase, while the gross margin fell by 3.1 percentage points to 10.6%. The net profit attributable to shareholders was 1.37 billion yuan, down 25.2% [6][9] Sales Performance - The company’s sales amount reached 61.5 billion yuan, reflecting an 11.0% increase year-on-year, outperforming the industry average decline of 11.4%. The company completed 51% of its annual sales target by mid-year [6][9] Land Acquisition and Market Position - The company acquired 13 plots of land in core cities with a total construction area of approximately 1.48 million square meters, maintaining a low average premium rate of about 9%, significantly below the average of the top 10 real estate companies [6][9] Financial Health - The weighted average borrowing cost decreased by 41 basis points year-on-year to 3.16%, with further reduction to below 3% at the end of the period. The company maintains a healthy financial status with a net debt ratio of 53.2% and a cash-to-short-term debt ratio of 1.7 [6][9]