Landsea Green Properties Doubles Revenue in 1H 2017
“Product-differentiation, Asset-light and Market globalization” Strategy Achieves Significant Results in Transformation and Upgrades
Hong Kong, August 21, 2017 - Landsea Green Properties Co., Ltd., (“Landsea” or the “Company” and its subsidiaries collectively the “Group”, HKEX stock code: 00106), China’s leading integrated green-technology property development services company, is pleased to announce its unaudited interim results for six months ended 30 June 2017 (“the period under review”).
In the first half of 2017, the Group continued to deepen the strategy of “product-differentiation, asset-light and market-globalization”, actively developing various property projects, and achieving satisfactory results in development and sales. During the period under review, operation income of the Group amounted to RMB2,314 million, representing a year-on-year increase of 191.2%. The total profit of the Group amounted to approximately RMB129.6 million. Excluding the effect of net exchange gains, the total profit would have been approximately RMB244.4 million, representing a significant increase of 2.2 times as compared to the corresponding period last year.
During the period under review, the Group recorded contracted sales under “Products of Landsea” of RMB9,851 million with a contracted gross floor area of 443,096 square meters. Among which, contracted sales derived from entrusted development management services projects by independent third parties amounted to RMB4,357 million, with contracted gross floor areas of 210,461 square meters, representing an increase of 200% and 97%, respectively, as compared to the last period. This reflects the substantially enhanced development and management services capability of Landsea and an increasing recognition by the market, and verifies Landsea’s successful transformation into an advanced asset-light enterprise engaging in the provision of development, management and real estate financing services.
In terms of new projects, Landsea capitalized on its strengths and cooperated with business partners to successfully secure numerous quality projects by means of off-market approaches, including land acquisition, merger and acquisition of equity, and equity participation in project companies. Landsea acquired a total of 12 projects across Chengdu, Xian, Wuxi, Hefei, Hangzhou and the U.S., and acquired 2 development management projects by entrusted independent third parties. The total gross floor areas secured were approximately 1,564,116 square meters in aggregate, with an increase of approximately 1,118,027 square meters in gross floor areas of projects in which the Group held equity interest.
Adhering to the concept of “project-differentiation”, Landsea has focused on building residences with innovative green technology, and combining ecological green environments. Projects are expected to be upgraded from product 1.0 to product 3.0 at the end of first half of this year. The 3.0 product technology system series represents the most advanced technology of Landsea. While ensuring the basic requirements of constant humidity, temperature and oxygen, the technology system conducts multi-dimensional exploration of sound, light, intelligence, energy saving and personalization on the basis of passive energy principles; equipped with energy-saving architecture, ceiling radiation and floor air distribution, it eliminates 95% of smog, and achieves S1 standards of Finland for Formaldehyde control and controls TVOC (Total Volatile Organic Compound). With its outstanding green technology research achievements, Landsea was ranked as China’s Top 10 Innovative Real Estate Developers and Landsea Taihu Lake Green Building R&D Base was awarded the medal of “Green Building R&D Demonstration Base”.
Landsea has consolidated its competitive edge in launching its self-innovates product, Le Mansion, a product different from the 1.0 to 3.0 product system, it adheres to the principle of “buildings supplemented by equipment”. Landsea’s Le Mansion establishes a highly functional and intelligent system that integrates air conditioning and convectional refrigeration for buildings, to provide its tenants with healthier, more comfortable, energy-saving and environment-friendly residential products.
During the period under review, Landsea continued to explore asset-light businesses such as minority interest cooperation, joint development and entrusted development, etc. The Group has also identified new growth opportunities and enhanced operational capabilities of office buildings, commercial properties and lease properties. In addition to traditional residential development business, the “banyan tree scheme” is a comprehensive sub-brand system that covers property financing services, development and design, decoration, property and elderly care services, achieving vertical integration capabilities.
In January, Landsea acquired a Ningbo project solely for commercial purposes and a Hangzhou project for commercial and residential purposes. In February, Green Fir Investment acquired office premises in Yangpu, Shanghai. In May, Landsea started to gain presence in Xian, Shaanxi Province, planning to develop residential and commercial property. These activities not only mark an important milestone for the national presence of the Group, they also demonstrates the expansion of the scale of the property fund platform, the strengthening of merger & acquisition capabilities and the optimization of the multifunctional platform of investment, financing and asset management.
The “Market-internationalization” strategy has been explored and intensified during the period under review. Landsea has currently secured 11 projects across the main cities of East Coast and West Coast in the U.S. In the first half of 2017, the total contracted sales of the projects in the U.S. amounted to RMB445.6 million, with sales areas of 7,330 square meters. Income from sale of properties of RMB112.2 million was reported during the period, representing an increase of 27% as compared to the corresponding period last year. The total recognized sales areas were approximately 3,614 square meters. At present, sales of Kingswood in East Bay, San Francisco has come to an end. Portola project in Orange County, Southern California, and the Sunnyvale project in Silicon Valley, Northern California will also be put on sale. In April 2017, the Avora project in New York won ten awards issued by SAM and it was honored as “the Best Community in 2017”, in recognition of Landsea’s outstanding performance in the project’s residential design, marketing and sales. The project was capped in May this year.
In terms of financial condition, the Group continued to optimize its capital and debt structure. As at 30 June 2017, the net debt to equity ratio of the Group was 76.3%, representing a decrease of 25.5 percentage points as compared to 31 December 2016. The Group’s debt to total assets ratio was 27.3%, representing a decrease of 6.5 percentage points as compared to 31 December 2016.
Mr. Tian Ming, Chairman of the Board of Landsea Green Properties, concluded: “In 2017, the real estate industry bid farewell to the rapid growth in price and sales volume over the past decade. It is expected that the government’s macroeconomic regulations and control of properties will not be relaxed. We believe that the market concentration of the Chinese property industry will continue to rise and regional segregation will become increasingly obvious in the future.
The Group launched “Landsea Apartment”, a long-term rental apartment brand at the beginning of 2017. It is a new project which is in line with market upgrade and pursues the strategy of differentiation. Landsea Apartment has secured 25 projects with 5,776 apartments in various cities, including Beijing, Shanghai, Shenzhen, Hangzhou, Nanjing, Suzhou and Shenzhen, covering different areas including business districts, high-tech industrial parks, university districts and downtown and commercial districts. The Group intends to develop in 17 first and second-tier major cities in the next three years and become one of the leading brands in the domestic long-term rental apartment market.
Looking ahead, capitalizing on its smooth progress in transformation, Landsea will become an international professional development service provider committed to vertical business integration and environmental protection in one or two years. In the future, Landsea will shift from product-oriented to customer-oriented to provide more comfortable and more environmental-friendly products and higher quality services for its customers, and actively explore and implement the 2.0 business model.”