Vanke Maintains Steady Growth In All Aspects Upgraded Strategic Positioning Of “urban and rural development and living services provider”
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China Vanke Co., Ltd. (“Vanke” or the “Company”, together with its subsidiaries “the Group”, stock code: 2202) announced that its revenue for the year ended 31 December 2017 (the “Year”) amounted to RMB237.34 billion, representing a year-on-year increase of 3.68 per cent; with profit attributable to equity shareholders of the Company surging by 33.4 per cent year-on-year to RMB28.05 billion. Basic earnings per share were RMB2.54, representing a 33.4 per cent year-on-year growth. Net return on equity on a fully diluted basis remained at a relatively high level of 21.1 per cent, up by 2.61 percentage points when compared to that in 2016. Vanke’s board of directors recommended a 2017 final dividend of RMB0.9 per share (including tax) (2016: RMB0.79 per share). Based on this amount, the total amount of cash dividends for distribution in 2017 amounts to approximately RMB9.935 billion.
The Company ranked 307th in “Fortune Global 500 List”, up by 49 places. Based on the Group’s strategic transformation surrounding provision of cities and ancillary services embarked in 2012, the Company has upgraded its strategic positioning to becoming an “urban and rural development and living services provider”.
All of the Group’s businesses maintain healthy and steady growth
According to the annual report, in 2017, while maintaining continued steady growth of its traditional business, certain of the Group’s businesses, which were considered as new growth engines, achieved significant progress, laying a solid foundation for the Group’s sustainable healthy development.
The Group’s property development business realized a sales area and sales amount of 35.952 million sq m and RMB529.88 billion in 2017, representing year-on-year increases of 30.0 per cent and 45.3 per cent respectively. Basing on the sales amount of commodity housing in China of RMB13.37 trillion, the Group’s market share in the country in 2017 was 3.96 per cent.
During the year under review, Vanke’s property development business achieved a booked revenue of RMB227.69 billion. As at the end of 2017, the Group had an area of approximately 29.63 million sq m sold but not completed for recognition, with an aggregate contract amount of approximately RMB414.32 billion, representing an increase of 30.0 per cent and 48.9 per cent respectively, as compared to those at the end of 2016. The aforementioned area will gradually be booked over the next few years.
The main products of the Group’s property development business were commodity housing. Among the products sold in 2017, residential properties, commercial and office properties and other ancillary facilities accounted for 82.7 per cent, 13.6 per cent and 3.7 per cent respectively. The Group’s residential properties focused on end-user demand of mainstream customers, with small and medium-sized units under 144 sq m accounting for 93 per cent of the total. In addition to intensified development in existing cities, the Group also entered such cities as Harbin, Shijiazhuang, Lanzhou, Xichang, Yichang in 2017; with its sales amounts ranked first in 22 cities.
In 2017, the area of projects labelled as green buildings completed by the Group was 43.72 million sq m. Since the promotion of green buildings in 2009, the area of green building completed by the Group reached a total of 112 million sq m. New construction area of the Group applying standardisation technology accounted for 84 per cent of the total. The Group’s mainstream products were able to shorten its construction period by 20 per cent than those applying traditional technology. The Group has been committed to the promotion of green buildings, maximizing the conservation of resources, protecting the environment and reducing pollution.
As at the end of 2017, the Group’s property service business had tapped into 80 cities. The brand of Vanke’s property service continued to maintain a leading position in the industry and had been awarded “TOP 1 of China’s Top 100 Property Service Providers” by China Property Management Association and China Index Academy for eighth consecutive year.
The Group has consolidated its centralized long-lease apartment operations under the brand “Port Apartment”. As at the end of 2017, the Port Apartment covered 29 first and second tier cities, with a total of over 100,000 units, among which more than 30,000 units were in service. The Group also launched the “Wan Cun Plan”. The Group would specialize in comprehensive improvement and leasing operations of urban villages. The Group would upgrade the public facilities of the urban villages and provide standardised leasing services. The Group entered into a strategic cooperation agreement with Shenzhen Talents Housing Group Co., Ltd., for cooperation in development and construction, property leasing, decoration and property management of talent housing and social rental housing.
With respect to commercial properties development and operation, Vanke uses SCPG as the management platform for its commercial properties operation. As at the end of 2017, there were a total of 172 projects under management, with a total GFA of more than 10 million sq m. In January 2018, SCPG jointly purchased 20 shopping centres from CapitaLand to further improve its commercial properties development and operation portfolio. As of present, the total area managed by SCPG ranked second in the industry domestically.
The Group’s logistics properties focus on high-standard warehouse products. Its customers are mainly domestic mainstream e-commerce, couriers and freight services, high-end manufacturers, modern retailers and fresh food companies. As of the date of publication of the Company’s annual report, the Group’s logistics property business had obtained a total of 62 projects, with a GFA (leasable GFA) of 4.82 million sq m. Among the 62 projects, 26 were completed and in operation. The Group formed a consortium with Bank of China Group Investment, HOPU, Hillhouse Capital, SMG to jointly participate in the privatization of Global Logistic Properties Limited (“GLP”, a company listed on the Singapore Stock Exchange, stock code: MC0.SG), which was a leading global provider of modern logistics facilities.
As for the Group’s skiing resort business, during the snow season from November 2017 to February 2018, the total number of visitors to its Jilin Vanke Songhua Lake Resort and Beijing Shijinglong skiing resort exceeded 500,000, which was a record high. The operation capabilities of Vanke Songhua Lake Resort was well-recognized by the industry, enabling it to win the “2017 Best Ski Resort in China” awarded by the 5th World Ski Award.
In addition, Vanke has actively explored elderly services and education businesses. As at the end of 2017, for elderly service business, the Group has commenced operation in 15 cities and acquired 170 projects. The Group participated in the operation of over 10 schools nationwide. Vanke entered into a strategic cooperation agreement with Banyan Tree Singapore to jointly expand hotel and relevant businesses. The Group also joined hands with the CMC Holding Group to explore related products and services in the cultural field and bring more diverse products and services to cities and its customers.
Insist on a rational investment approach with an emphasis on cash flow
Vanke insisted on the concept of “constant creation of true value with an emphasis on cash flow”. In 2017, the Group’s net cash generated from operating activities reached RMB82.32 billion, representing a year-on-year increase of 108.06 per cent. As at the end of 2017, the cash and cash equivalents including pledged and restricted deposits held by the Group amounted to RMB174.12 billion, which was significantly higher than the sum of short-term liabilities and long-term borrowings due within one year of RMB62.27 billion. As of the end of 2017, the Group’s net gearing ratio (interest-bearing liabilities less cash and cash equivalents and pledged and restricted deposits divided by net assets) was 8.8 per cent, which remained at a relatively low level in the industry. Vanke’s sound financial and cash positions have earned it outstanding credit ratings in the industry. S&P, Moody’s and Fitch have given the Company “BBB+”, “Baa1” and “BBB+” ratings respectively.
In 2017, the Group added 216 new development projects with an aggregate GFA of 46.15 million sq m. The aggregate planned GFA attributable to the Company’s equity holding amounted to 27.68 million sq m. In terms of investment amount, 90 per cent of the new projects were in first and second tier cities. In addition, Vanke also participated in certain urban renewal projects with an aggregate GFA attributable to the Company’s equity holding of approximately 2.89 million sq m.
Actively fulfilling social responsibilities
While achieving growth in performance, the Group also actively fulfilled its social responsibilities allowing more people to benefit from its corporate achievements. The Group has made its best effort to contribute to precise poverty alleviation and development of pleasant rural area.
Vanke Foundation initiated a “Green Village” program, to encourage rural residents to use clean stoves. It also donated to establish Tibet Intangible Cultural Heritage Museum in Lhasa, Tibet, jointly with Shenzhen municipal government. The Group actively explored new rural rejuvenation model, completed the revamping of Dongluo Village in Xinghua city, Jiangsu Province. Taheman School built with the aid from Vanke was tested and proved during the earthquake in Tashkurgan Tajik autonomous county, Xinjiang in May 2017. In addition, 12 poverty alleviation photovoltaic power stations constructed with donation from the Group in Zhangbei County, Hebei province, commenced grid-connected power generation.
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