Landsea Announces 2016 Annual Results with Revenue Surging 170.2%
Hong Kong, March , 2017 - Landsea Green Properties Co., Ltd., (“Landsea” or the “Company” and its subsidiaries collectively the “Group”, stock code: 00106), China’s leading integrated property development services company with green technology, is pleased to announce its annual results for the year ended 31 December 2016 (“the year”).
In 2016, the Group adhered to the strategy of “product-differentiation, asset-light and market-globalization”. It persevered with the implementation of its strategic transformation, and actively explored the new business model of version 2.0. As a result, the Group achieved outstanding operating results. Revenue of the Group substantially increase by 170.2% (restated) year-on-year to RMB4,845 million. The profit of the Group for the year increased by 26.5% (restated) year-on-year to RMB607 million. The Board recommended the distribution of a final dividend out of contributed surplus account of RMB3.54 cents per share (equivalent to HK cents 4.00).
During the year, the Group recorded contracted sales under “Products of Landsea” of approximately RMB28,349 million with a contracted gross floor area of approximately 1,646,470 square meters, representing an increase of 101.4% and 45.8% respectively. During the year, contracted sales amount of approximately RMB3,984 million and RMB9,366 million was derived from the entrusted development management projects with Landsea Group and independent third parties, respectively. The prominent sales revenue not only proves the consumers’ confidence in the quality of “Products of Landsea”, but also suggests that the strategy of differentiation and light assets is achieving excellent results.
The Group has transformed and upgraded into an advanced asset-light enterprise engaging in the provision of development, management and real estate financing services from an asset-heavy real estate developer. After adopting the asset-light strategy two years ago, the Group has consistently enhanced its capability of development and management, while the number of entrusted development management contracts entered into with independent third parties also increased significantly. During the year, the Group obtained development and management service contracts of approximately RMB1,200.0 million. The revenue derived from the provision of development and management services to independent third parties and cooperation partners increased significantly by 102.6% year-on-year. The Group made a good profit of approximately RMB273.0 million arising from the asset-light services projects with independent third parties and with cooperating parties.
As at 31 December 2016, the Group acquired a total of 25 projects in Nanjing, Shanghai, Suzhou, Hangzhou, Wuhan, Chengdu, Changsha, Hefei, Tianjin and the US. This was constitute of 18 projects in the PRC, including 12 projects in which the Group held equity interest, 6 development management projects by entrusted independent third parties, as well as 7 projects in the US. The Group recorded gross floor areas of approximately 3,777,420 square meters, an increase of approximately 3,208,094 square meters in gross floor areas of projects in which the Group held equity interest and an increase of 1,051,265 square meters in gross floor areas attributable to the Group.
During the year, the Group endeavored to accelerate its asset-light transformation. Capitalizing on its competence, expertise, brand value and distinctive products in green construction, Landsea cooperated with financial institutions and developers and other enterprises to have complement in terms of resources in property development under various arrangement, such as minority interest cooperation, joint development and entrusted development, in order to share risks as well as profits. The Group avoided to invest in projects of high risks by refraining from buying king of land and acquiring and merging land reserve in private market.
Advantages in product differentiation, which based on green construction, have long been the core competence that make Landsea stand out from other developers and the foundation of the Group’s strategy. During the year, Landsea applied the passive house standards in projects in Tianjin, Hangzhou and other cities along Yangtze River and developed a new product application system suitable for the local climate. Landsea Screen developed by the Group, which can show temperature, humidity, PM2.5, formaldehyde, VOC and CO2 indices with smart control functions, will become an icon of green construction of Landsea. In addition to Shanghai New Mansion and Nanjing Landsea Xihua Mansion, the Group applied Landsea Screen at a series of projects including Hangzhou Xihua Mansion Project.
In March 2016, the Company acquired another project of old building rehabilitation in Shanghai Putuo District and injected it, as the first project of the platform, into the investment and management platform for urban renewal properties jointly established by “Green Fir Investment”, the platform of the Group for real estate financing, and CITIC Capital Holdings Limited (“CITIC”) in December 2016. It marked the breakthrough of the Group in the real estate financing sector. Moreover, leveraging on distinctive products together with its capital funds, the Group has developed a business model for rehabilitation of existing buildings and quickly expanded the old building rehabilitation business that has a prosperous market.
During the year, the strategic layout of the Group for the international market has marked an initial success. For the end of 2016, the assets of the US business accounted for 23.9% of the Group’s assets after the Group injected into US business sector. In 2016, the total contracted sales of the projects in the US amounted to approximately RMB756, million, with sales areas of approximately 16,293 square meters. The income from sale of properties of approximately RMB287 million was recognized during the year, representing a year-on-year growth of approximately 340.7%. The Group has 7 projects in one-tier cities of US, comprising high-end high raised apartments and suburban villas with a total GFA of approximately 310,000 square meters.
In terms of its financial position, the Group optimized and adjusted its debt structure to reduce its financing cost of debts and maximise the profitability of its projects and to promote the development of projects. In addition, the Group established long-term and stable partnerships with a number of large domestic and overseas financial institutions, in order to develop diversified real estate financial products and create a win-win situation, laying a solid foundation for the long-term and stable development of the Company. In September 2016, the Group renewed its cooperation agreement with CITIC Capital, together exploring the asset reserve transformation business.
Mr. Tian Ming, Chairman of the Board of Landsea Green Properties, concluded: “Looking into 2017, we expect that property investment will be affected by the stricter risk prevention measures in the real estate market. The real estate market in China is characterized by frequent but short-term cyclical fluctuations. In general, the real estate industry is exposed to increasing risks. In the pursuit of the development strategy of ‘product- differentiation, asset-light and market-globalization’, Landsea will actively explore and implement new business models to create a win-win situation with our partners. Landsea needs to reform and upgrade to enhance its professionalism and financialization in order to build the new business model 2.0.
The Group will continue to vigorously develop various businesses such as projects with minority interests, joint development, entrusted development and acquisition and merger, with a view to raising asset values. The second hand market in major cities in China has been growing and there are high housing stocks. Landsea will strive to explore new businesses along with its reforms to create new growth drivers. The Group has established an asset operation department to operate office buildings, commercial properties and property leasing businesses. Meanwhile, the Group will implement a “banyan tree scheme” which is a structure comprising investment, finance, development, marketing and sustainable development of its real estate business. The scheme will build up sub-brand systems covering design, decoration, property, property financing services as well as elderly care services. As such, the Group will become a leading enterprise having different businesses organized as a ‘banyan tree forest’ as an ecosystem and achieve a leading and all-time new business model of version 2.0.”
About Landsea Green Properties Co., Ltd
Landsea Green Properties Co., Ltd. (Company website: www.landsea.hk) is the only listed platform under the Landsea Group (Group website: www.landsea.cn), which is engaged in green residential property development. Its businesses include property investment, development and management in China and the U.S.
With its green construction products and its advancing capabilities in effecting vertical integration of property development, Landsea Green Properties has resolutely executed the strategy of “Product-differentiation, Asset-light and Market-globalization”, transforming from a traditional developer to an asset-light company and a green business focusing on providing property development services. As at 31 December 2016, the Company’s attributable interest comprised GFA of approximately 2,854,000 square meters.
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