Revenue Surged by 53%, Gross Profit Leapt by 65%,
Proposed Dividend of HK6.1 Cents
Pushing Forward Urban Renewal Projects,
Creating Smart City in Greater Bay Area
Financial and Business Highlights
Results for the year ended December 31, 2019:
- The Company achieved total revenue of approx. RMB6,902.4 million, representing a year-on-year increase of 52.9%;
- Gross profit was RMB4,430.4 million, representing a year-on-year increase of 64.9%;
- Profit attributable to owners of the Company was RMB1,749.9 million, representing a year-on-year growth of approx. 4%;
- Basic earnings per share was RMB12 cents, representing a year-on-year growth of approx. 39.3%;
- The board of directors (“Board”) recommended the payment of a final dividend of HK1 cents (equivalent to approx. RMB5.46 cents).
(March 30, 2020, Hong Kong) LVGEM (China) Real Estate Investment Company Limited (“LVGEM (China)” or the “Company” or together with its subsidiaries, the “Group”; stock code: 00095.HK) today announced the audited consolidated results of the Company and its subsidiaries for the year ended December 31, 2019 (“the Year”).
Creating Smart City in Greater Bay Area
In the Year, the Group achieved total revenue of approximately RMB6,902.4 million (2018: RMB4,515.7 million), representing a year-on-year increase of approximately 52.9%. Gross profit was RMB4,430.4 million (2018: RMB2,686.2 million), representing a year-on-year increase of approximately 64.9%. Gross profit margin remained at a relatively high level of 64.2% (2018: 59.5%). Profit for the year was RMB1,750.6 million (2018: RMB1,230.4 million), representing a year-on-year growth of approximately 42.2%. The profit attributable to owners of the Company was RMB1,750.0 million (2018: RMB1,237.2 million), representing a year-on-year growth of approximately 41.4%. The basic earnings per share was RMB35.12 cents (2018: RMB25.21 cents), representing a year-on-year growth of 39.3%. The board of directors recommended the payment of a final dividend of HKD6.1 cents (equivalent to approximately RMB5.46 cents).
Urban Renewal
The Group is devoted to the development of core area in core cities of the Greater Bay Area for more than three decades. Started as a construction company, LVGEM (China) marched into the urban renewal industry in 1990s, commercial office and community shopping mall segments later, garnering extensive land resources and developing a highly efficient operating team. In 2019, the Group further promoted the urban renewal projects in Shenzhen, Zhuhai, Hong Kong, and Dongguan, including Shenzhen Baishizhou Urban Renewal Project, Liguang Urban Renewal Project, Shazui Phase II, and Zhuhai Dongqiao Urban Renewal Project. Among them, the Shenzhen Baishizhou Urban Renewal Project, the so-called “Urban Renewal Mothership Project in Shenzhen”, is located at a prestigious geographical location with a GFA of 3.58 million square meters. On October 28, 2019, LVGEM (China) officially acquired 25% equity interests in Shenzhen Baishizhou Urban Renewal Project owned by a controlling shareholder at a consideration of US$10,000. Injection plan of the remaining equity interest is to be launched. Gradual injection of the “Grand Urban Renewal Project” will foster a revaluation of the Group. In addition, on July 12, 2019, the Group has officially become the operating entity of the renewal project for the old village in Dongqiao and obtained all necessary administrative approvals. Dongqiao Urban Renewal Project is the key urban renewal project of Zhuhai City which is also the first batch of projects officially started. Accomplishing the commencement of construction within four some years, Dongqiao Urban Project has become one of the Group’s first batch of old village projects in Zhuhai that has commenced construction, which marks an important milestone of the Group.
Real Estate Development and Sales
Real estate development and sales is the Group’s main business, with strategic layout mainly in the core area in core cities of the Greater Bay Area. During the Year, the real estate development and sales of the Group generated revenue of approximately RMB5,962.4 million, representing a year-on-year increase of approximately 62.7%. Total contracted sales amounted to approximately RMB6,279.9 million, representing a year-on-year increase of approximately 48.1%. During the Year, LVGEM Mangrove Bay No. 1 was re-launched and contributed RMB4,463.9 million contracted sales. Other major projects for sales include LVGEM International Garden, LVGEM Amazing Plaza and LVGEM Joyful Town (formerly known as “Kaiwei Project”).
In the Year, the Group continued to push forward projects with high potential, including Shenzhen LVGEM Mangrove Bay No. 1, LVGEM Amazing Plaza, LVGEM Liguang Project, Zhuhai’s Dongqiao Urban Renewal Project, LVGEM Joyful Town, Huazhou LVGEM International Garden and Hong Kong Lau Fau Shan Project. In the future, the Group will continue to strive for excellence, develop an upgraded and excellent residential and living community with unique and quality design, thereby driving the continued steady growth of profitability and scale.
Commercial Property Investment and Operations
The Group plans its business layout with the “Two-Pronged” business model, i.e. “Development + Business”. As of December 31, 2019, the Group’s revenue from the investments and operations of commercial properties was approximately RMB618.7 million, representing a year-on-year increase of approximately 13.9%. The Group holds 26 quality commercial property projects comprising a total gross floor area of approximately 612,713 square meters, mainly comprised by two commercial brands, namely “NEO” and “Zoll”, including Shenzhen NEO Urban Commercial Complex, Hong Kong LVGEM NEO, LVGEM Zoll Chanson Shopping Mall, LVGEM 1866 Zoll Shopping Mall, LVGEM Zoll Hongwan Shopping Mall, LVGEM Zoll Mangrove Bay No.1, Shopping Mall, LVGEM Zoll International Garden Shopping Mall, LVGEM Zoll Jinhua Shopping Mall, LVGEM Zoll Yuexi Shopping Mall, Dongguan LVGEM Zoll Shopping Mall and other shops and investment properties. In the future, with the gradual injection of controlling shareholder’s assets, and the launch of large-scale urban renewal projects, the Group will expand the area of the commercial properties in the core areas of core cities which will create stable rental income and growth of asset value.
Comprehensive Services
In respect of comprehensive services, as of December 31, 2019, this segment generated revenue of RMB321.3 million. The Group provided comprehensive property management services for most of its property development projects, including security services, property maintenance and management of ancillary facilities, property brokerage business, and online platform and e-shops for lifestyle services. The “Common Life” app, an online platform for lifestyle services, launched services like cleaning of air-conditioners in the Year, and achieved a value growth of 1.19 times year on year in 2019. The Group operated and managed two hotels in Shenzhen and the United States, including the LVGEM Hotel, which is located in the central business district of Futian District, Shenzhen, and the Vanllee Hotel in Covina, California, the United States, which was acquired in 2017. As of December 31, 2019, the average occupancy rate of LVGEM Hotel was approximately 75%. Vanllee Hotel occupies a site area of 22,652 square meters, completed its renovation in 2019 and maintained an occupancy rate of over 46% even under renovation.
Financing
The Group completed the extension of domestic corporate bonds in August 2019. In the current rough global capital market environment, the Group prudently launched the US dollar bond exchange and issuance scheme in the first quarter of 2020 as a preparation for refinancing upon the public bond due in August and the private debt matured in June.
Future Prospects
The Group has actively responded to the national plan of developing the Greater Bay Area into an international innovation and technology hub, incorporated the “Technology + Property” strategy into the planning, design, and implementation of urban renewal projects, and strived to develop the smart city benchmark. In July 2019, the Group has entered into a strategic cooperation with industry-leading technology enterprises, Huawei Technologies Co., Ltd. (“Huawei”), to establish interconnected, real-time sensing, efficient and convenient smart cities through the application of Internet of Things, cloud computing and 5G technologies. In March 2020, the Group entered into a strategic cooperation agreement with one of the three major telecommunication operators in China, China United Network Communications Co., Ltd. Shenzhen Branch (“China Union”), and Shenzhen GenJoy Technology Co., Ltd. to establish a long-time strategic cooperation relationship for the joint development of informatization and smart urban areas. Three parties will fully unleash their respective strengths in technology, operations, and management in their business sector and cooperate in the development of informatization and smart urban areas in full swing against the backdrop of industrial digitalization in real estate development, management and operation. Using the urban renewal project in Baishizhou, the parties will jointly provide the relevant technical support and services for the development of smart urban areas in that project. The Group will promote the cooperation with Huawei and China Unicom in full swing in the area of smart technology and empowered its real estate business with technology so as to enhance branding, bring better life experience to residents, inject vitality to the city’s renewal and development, and deliver substantial returns to investors.
Looking forward, the Group will continue to optimize the business structure and insist on systemized management, development under three-orientation strategy and closed-end management and continue to put more efforts into the three major business divisions, namely finance, real estate, and asset management so as to drive the sustainable development. Leveraging on almost 30 years of experience in urban renewal and experienced operation team, the Group will continue adhering to the strategic guidance of “Focus on urban renewal in the Greater Bay Area and develop a brand new smart city”, focusing on the business presence in the core cities and area in the Greater Bay Area. The Company will seize the tremendous opportunities of the current era. Devoted to the corporate mission of “continuously enhancing the urban value”, the Group will make great efforts towards the vision and goal of “being the most respected city value-creator” in the PRC, striving to develop the Company into a smart city developer and operator contributed to the construction of the Greater Bay Area.
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