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Financial Highlights

Results for the six months ended 30 June 2021:

Revenue recorded approx. RMB 2,030.3 million

Gross profit was RMB 963.5 million, gross profit margin was 47.5%

Profit for the year was approximately RMB 621.6 million, an increase of 1,518.8% year-on-year

Profit attributable to owners of the Company was RMB 638.0 million, increasing 1,596.8% YoY

Basic earnings per share was RMB 12.52 cents, increasing 1,591.9% YoY

(30 August 2021, 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 unaudited results of the Company and its subsidiaries for the six months ended 30 June 2021 (“the Period”).

During the first half of 2021, amidst the global trend of economic recovery, the Chinese economy continued to resume its growth. LVGEM seized the favorable opportunity brought by the economic recovery, advancing projects in the Greater Bay Area, and adopted proactive debt management approaches to ensure sufficient cash levels to support operation and development. During the Period, the Group achieved total revenue of approximately RMB 2,030.3 million, representing a decrease of approximately 17.5%. Gross profit was RMB 963.5 million, decreasing 39.9% YoY. Gross profit margin recorded 47.5%, which remained at a relatively high level. Profit for the Period was RMB 621.6 million, increasing 1,518.8% YoY. Profit attributable to shareholders was RMB 638.0 million, increasing approximately 1,596.8% YoY. Basic earnings per share increased approximately 1,591.9% YoY to RMB 12.52 cents.

Urban renewal projects proceeding as planned

Smooth commencement of Baishizhou Project

 During the first half of 2021, the Group continued to implement the “dual-core” strategy of “Focusing on Core Cities and Cities’ Core Areas” for its project layout, with low cost but high value landbank through urban renewal, and developed its real estate projects in the core areas of core cities in the Greater Bay Area such as Shenzhen, Zhuhai and Hong Kong. During the Period, the Group participated in the following urban renewal projects, including Shenzhen Baishizhou Urban Renewal Project, Shenzhen Liguang Urban Renewal Project, and Zhuhai Dongqiao Urban Renewal Project. Notably, Shenzhen Baishizhou Urban Renewal Project, the so-called “Grand Urban Renewal Project” in Shenzhen, achieved significant progress. The Group has been confirmed as the operating entity of Phase I of the Project. In July, the Group has obtained the Planning Permit for Construction Land issued by Shenzhen Municipal Planning and Natural Resources Bureau (深圳市規劃和自然資源局) and the Permit for Commencement of Construction Works (Earth-and-Stone, Foundation Pit Support Works) issued by Shenzhen Nanshan District Housing and Construction Bureau (深圳市南山區住房和建設局), confirming that Phase I of the Baishizhou Urban Renewal Project has obtained the construction commencement permit for earth-and-stone and foundation pit support works. Located in Nanshan District, Shenzhen City, the project has a total capacity area of approximately 3.58 million square meters. Following the historical commencement of this Grand Urban Renewal Project, it has marked that LVGEM (China) will step into a new stage of rapid growth.

During the Period, Shenzhen Liguang Urban Renewal Project achieved satisfactory results in terms of the contracting progress. The progress for Zhuhai Dongqiao Urban Renewal Project, officially renamed as LVGEM Royal Bay, was also satisfactory, which is expected to commence pre-sales in the fourth quarter of 2021. LVGEM International Garden in Huazhou launched D3 zone of Bolin Mansion in February and Block 3 in C1 zone of Yuehu Mansion during Labor Day Golden Week, respectively, both of which were exceptionally welcomed by the market since their launch, indicating that they have continuously been the benchmark in the local market of Huazhou. In June 2021, the Group officially became the operating entity of Phase II of Shenzhen LVGEM Mangrove Bay No. 1, comprising five high-quality sea-view residential buildings that occupy a site area of approximately 22,000 square meters and a planned gross floor area totaling 139,666 square meters. In the future, the Group will continue to focus on the development in the Greater Bay Area and strive for excellence in developing new benchmark smart cities by implementing the “technology + property” strategy, in order to empower and add values to cities and develop an upgraded and excellent residential and living community with unique and quality design, thereby driving the continued steady growth of cost-effectiveness and business scale of the Group.

Focus on core areas of core cities in the Greater Bay Area

Sufficient and high-quality land reserve

 In the first half of 2021, revenue from the Group’s real eastate development and sales was approximately RMB 1,556.0 million, decreasing by 23.4 % YoY. Revenue recognized during the Period was mainly from LVGEM Amazing Plaza, LVGEM Joyful Town in Zhuhai and LVGEM International Garden in Huazhou, while the launch of new projects in 2021 will mostly take place in the second half of the year. The amount of contracted sales was approximately RMB 2,141.4 million, decreasing by approximately 13.1% YoY.

As of 30 June 2021, the Group had a land reserves of approximately 8.68 million square meters, approximately 80% of which are located in cores cities in the Greater Bay Area, such as Shenzhen, Hong Kong, Zhuhai and Dongguan. In addition, the land reserve owned by the Group’s controlling shareholder was approximately 7.7 million square meters, including projects located in Shenzhen, Zhuhai and Zhangmutou Dongguan, located in core areas of the Greater Bay Area. The Group’s ample and valuation land reserve will be able to satisfy the Company’s needs for steady expansion and long-term development.

Dual growth of commercial properties and comprehensive services

 The “two-pronged” “residential + business” is an essential part of the Group’s business model. During the Period, the Group owned more than 25 quality commercial property projects comprising of a total gross floor area of approximately 0.83 million square meters, mainly represented 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. As of 30 June 2021, the revenue from commercial property investment and operations of the Group amounted to approximately RMB 331.2 million, representing a year-on-year increase of 4.3%.

The Group provides comprehensive services to customers and tenants of its residential and commercial properties, including property management services, hotel operations and others. For the six months ended 30 June 2021, the comprehensive services of the Group generated revenue of RMB 143.1 million, representing a YOY increase of 25.3%. The hotel industry was directly impacted by the knock-on effect brought by the pandemic in the corresponding period last year, however, the operating income of Shenzhen hotels basically returned to normal and the business of US hotel has been gradually improved during the Period.

Besides, the Group provided comprehensive property management services for most of its property development projects, including security service, property maintenance and management of ancillary facilities, which comprised a total gross floor area of approximately 3.23 million square meters. As the property management services and value-added services become more mature, it is expected that the property management company will contribute sustainable revenue growth for the Group in the future.

Constantly improving financial structure and maintaining financing costs at healthy level

During the Period, China’s economy remained at a stage of continued recovery. Despite this, the macro-economy continued to face challenges, while the real estate industry tended to be under more strict adjustment and control. The Group adopted diverse domestic and overseas financing means in their highest and best use and actively prepared for the refinancing schemes to secure sufficient capital for the Group’s development. The Group actively improved its financial structure and adapted itself to the national regulatory requirements of the “three red lines” for real estate enterprises. The liabilities to assets ratio after excluding receipts in advance and net gearing ratio was 62.4% and 77.6%, respectively, which were within the targets. Under the effective and active debt management, the overall financing cost maintained at a healthy level of 6.5% in the first half of 2021, representing a slight decrease of 0.4 percentage point from 6.9% for the period of six months ended 30 June 2020.

Looking into the future, Mr. Tang Shouchun, the CEO and Executive Director of LVGEM (China) said, “The Group will continue to adopt a prudent approach by closely monitoring the changes in the macro environment and adjusting its specific business development strategies. Adhering to the strategic guideline of ‘Focus on Urban Renewal in the Greater Bay Area and Develop a Brand New Smart City’, the Group will focus on its development in the core areas of core cities in the Greater Bay Area. To facilitate the urban renewal projects in the Greater Bay Area, the Group will continue to follow the national strategic plans, with a focus on facilitating variuos large-scale urban renewal projects held by the Group and its controlling shareholder. In particular, the Group will put more resources into the priority of Shenzhen Baishizhou Urban Renewal Project to ensure the orderly progress of the project. While pushing committed efforts in urban renewal projects, the Group will step up its endeavors in creating an outstanding business operation model, aiming to enhance brand value-added for the Group, bring better living experience to the residents, infuse vitality to the city’s renewal and development and deliver substantial returns to the investors.”