CHINA VANKE CO.,LTD.
（000002.SZ, 2202.HK）
2024 Interim Results
Announcement
August 2024
www.vanke.com
1
I. Overall Work Plan
The industry is undergoing a transformation in supply and demand dynamics and is shifting from traditional to new development models. The company is encountering challenges unique to this stage and must address risks, guarantee quality housing delivery, and transition from the longstanding high leverage, high liabilities and high turnover rate model. The company is tasked with developing diverse capabilities within this new framework to address diversified housing needs effectively and promote sustainable and robust growth.
- In the first half of the year, the company developed and implemented a "comprehensive package plan". This plan is Vanke Group's five-year strategy to thoroughly mitigate potential risks and actively adapt to the industry's shift towards a new development model. The plan
specifically includes:
- Achieved an overall reduction in total liabilities, restored financial stability, and attained industry-leading levels in debt volume and structure.
- Clearly defined three core businesses: comprehensive residential development, property services, and rental housing. Streamlined and divested non- core financial investments, asset transaction and existing projects revitalization, fully completing strategic and operational restructuring. Achieved strategic and capability focus, excelling in and strengthening core businesses, to establish industry benchmarks in products and services.
- Finalize the transformation of the financing model. Transition from a financing model based on centralized borrowing and repayment with corporate credit, to one primarily relying on project and asset-based credit. Effectively utilize tools such as the real estate coordinated financing whitelist and operation loans.
◼ At present, this plan is making positive progress. Most non-core business investments are in the process of transaction negotiations. As of the end of July, the company's interest-paying debt in the consolidated statement combined with supply chain financing fell by 17.2 billion yuan compared to the beginning of the year, particularly with asset transactions achieving 20.4 billion yuan (including SCPG asset transactions and REIT issuances).
◼ It's important to note here that the "comprehensive package" plan is not simply about making "subtractions". It also includes development strategies, specifically: actively promoting innovation in comprehensive residential product modules to enhance competitiveness in development business; ensuring investment fulfillment levels; achieving quality growth in asset management scale for operational services such as long-term rental apartments and property services, with industry-leading competitiveness, etc.
◼ We believe that as the "comprehensive package" plan progresses, after Vanke overcomes the temporary difficulties of the next two years, the group's business， investments and capabilities will become more focused. It will set the group on a path of high-quality development.
3
- Key Initiatives and Achievements in 2024H1
- Key Initiative 1 - Ensuring High-Quality Housing Delivery
- Key Initiative 2 - Ensuring Repayment of Debt
- 2024H1 Results Overview
1. Key Initiative 1 - Ensuring High-Quality Housing Delivery
Ensuring High-Quality Housing Delivery
- In 2024H1, the company completed 169 projects in 262 batches, delivering 74,000 housing units on schedule and with high quality, of which 62,000 were residential properties.
- Construction site dynamic visualization: 988 owner participation events conducted across 257 projects; over 20,000 homeowners visited Vanke construction sites to experience build quality firsthand
- Enhanced Housing Delivery Process: 78 Projects Achieved Simultaneous Handover of Properties and Ownership Certificates in H1
- In 2024H1, 48 significant projects aimed at enhancing community businesses, transportation, and education were completed. In addition, a variety of cultural and sports events, weekend markets, and other activities were conducted to foster a vibrant community.
- Total occupancy increased by 13,964 households compared to the beginning of the year, with the occupancy rate rising by 16%
Building Communities Together, Fostering | Upgrading Housing Delivery Standards, |
Customer Trust | Providing Peace of Mind for Customers |
• | Enhancing housing delivery standards across the Shanghai |
region by completing 46 projects comprising 16,800 "Xing | |
Delivery" units. |
Enhancing Community Amenities, Offering Customers Comfort and Security
- Note: "Xing Delivery" aims to enhance delivery quality by adhering to the principles of supplying aesthetically pleasing and functional products, maintaining a quality that ensures customer satisfaction, and providing attentive service with human touch.
6
2. Key Initiative 2 - Ensuring Repayment of Debt
- Initiative 1: Proactively Enhancing Sales and Cash Collection
- Initiative 2: Maximizing Utilization of Existing Resources
- Initiative 3: Vigorously Advancing Bulk Transactions and REITs Issuances, achieving Contract Sales of 20.4 Billion Yuan
- Measure 4: Continuously Transform the Financing Model and Ensure Smooth Financing Channels
- Outcome: Public Debt Obligations Were Met and Paid on Schedule, with interest-paying debt in the consolidated statement combined with supply chain financing fell by 17.2 billion yuan
Initiative 1: Proactively Enhancing Sales and Cash Collection
- Continue to engage proactive sales. In 2024H1, sales amounted to 127.33 billion, sustaining a leading position in the industry and securing a Top 3 ranking in 37 cities. Achieved sales collection approached 130 billion yuan, maintaining a collection rate of over 100%.
•
•
Enhance the turnover of inventory by categorizing and managing the sales of ready-built residential properties, parking lots, and commercial spaces. Utilize the synergistic effects between real estate and property management to attain a sales revenue goal of 24 billion yuan for ready-built residential properties, 32 billion yuan for near-ready-built residential properties, and 15 billion yuan for parking spaces and commercial locations at the start of the year.
Regular live streaming sales and customer retention strategies have enhanced sales performance, with 221 official accounts hosting 49,000 live streaming sessions and attracting 149,000 customer for purchase intention registration.
New Strategies Boost Sales of Ready-built Residential Properties,
Parking Lots, Commercial Spaces, and Office Buildings
- Fuzhou: In partnership with homeowners, the City Garden project has been revitalized, resulting in an increase in the conversion rate of ready-built properties from 3% to 13%.
- Changzhou, the Vanke Jingwanhui project has adopted a unique management approach by transitioning from delivering ready-built property to providing immersive theaters. This shift has boosted the conversion rate from 5% to 12%, leading to the highest monthly sales performance in the region.
- Jinan：established a sales team dedicated to parking spaces, aiming to thoroughly revitalize and upgrade the ready-built properties and parking lots, achieving a monthly sales target of 306 parking spaces.
Leveraging Online Livestream Events
to Enhance Customer Acquisition and Sales
- Guangzhou, North Vanke City Project offers live streaming that is available to all staff members, which contributes 26% of the total sales during 2024H1.
- Zhengzhou established a specialized task force for live streaming to enhance the promotion of new and ongoing sales projects. As a result, 79 units were subscribed to via live streaming in the past six months.
- Shenyang, CITS Vanke City Project achieved the highest sales via live streaming, totaling 77.52 million yuan over a six-month period, which represented 20% of the project's total sales.
8
Initiative 2: Maximizing Utilization of Existing Resources
- Diversified Approaches to Revitalize Challenging Development Projects
- Since 2023, the company has revitalized and optimized resources with a total production capacity of RMB 45.5 billion, achieving cash recovery of RMB 8.1 billion from revitalization efforts. Cumulative sales from revitalized and optimized resources amounted to RMB 14 billion.
- The company leveraged government support policies for revitalizing existing resources. Through strategies such as converting commercial properties to residential use and resource exchanges, the company revitalized a number of challenging projects.
- Revitalize Resources in Rental Housing Business
- Revitalizing 6 commercial and office projects by implementing the "sale to rental" strategy, encompassing more than 5,500 rooms in total.
Guangzhou Sanyuanli Flagship Apartment | Shenzhen Longcheng Yuandian Apartment | |
Case - Shenyang Yinyue
- Revitalization Strategy: Acquire projects by exchanging existing resource assets and obtain new projects with better investment conditions. To achieve good returns at the same time, and also optimize the resource structure.
- Product Design: The company adopted a modern Oriental style with axial planning and layout. The demonstration area resonates with the city's historical and cultural heritage. The design implements a five-tiered planning structure with central axis symmetry, reimagining the ceremonial sequence of returning home.
- Revitalization Outcome: Acquired on April, 2024, and launched on July, 2024. In the month of launch, it achieved a sales of RMB 250 million, realizing 100% of the projected investment.
- Revitalize 1548 rooms by bulk transactions totaling 840 million
- Scheduled to open in November 2024
• | Revitalize 1790 rooms through | |
operational planning | 9 | |
• | Scheduled to open in August 2025 |
Initiative 3: Vigorously Advancing Bulk Transactions and REITs Issuances, Achieving Contract Sales of 20.4 Billion Yuan
◼ | As the end of July, achieved asset transactions sales of 20.4 billion yuan (including | ||
SCPG asset transactions and REIT issuances). | |||
• | In February, 50% equity of Qibao Vanke Plaza was transferred for 2.38 billion yuan. | ||
• | In May, the transaction for the Shenzhen Bay Super Headquarters Base Project was finalized | ||
with a payment amounting to 2.235 billion yuan. | |||
• | In June, SCPG successfully acquired a 48% stake in Nanxiang INCITY MEGA, amounting to a | Chengdu Jade Park Vanke Li | |
transaction of 1.32 billion yuan. | |||
• In March 2024, the project sold for | |||
255 million yuan. | |||
• Advance payments made to achieve | |||
efficient performance | |||
- Pre-REITFunds and REITs Have Shown Promising Progress, Providing a Range of Options for Asset Transactions:
- SCPG has successfully completed the issuance of a commercial infrastructure REIT valued at 3.26 billion yuan, with an annualized distribution rate of 5.44%, achieving 104.37% of the forecasted recruitment level stated in the prospectus. The logistics warehousing REITs have been approved by the CSRC, while the guaranteed rental housing REITs have been submitted for approval to the local development and reform commission.
- 2 Pre-REIT funds, with a combined total of 12.2 billion yuan, have been established.
-CCBHousing-Vanke Rental Fund acquired Vanke Guangzhou Sanyuanli Phase II Apartment Project, with a transaction valued at 840 million.
In August, CITIC Vanke Consumer Infrastructure Pre-REIT Fund (valued at 2.234 billion yuan) was launched. This fund is set to acquire the Shenzhen Longgang Vanke Plaza and Beijing Jiugong Vanke Plaza projects, with SCPG continuing the management.
CICC SCPG REIT Presents
Good Performance
- Between April 17th and June 30th, CICC SCPG REIT generated an operating revenue of 69.16 million yuan and a distributable sum of 36.81 million yuan.
- As of end-June, Hangzhou Xixi INCITY demonstrated strong performance with a 98.4% occupancy rate and 100% rent collection rate. The property saw positive year-over-year growth, with foot traffic increasing by 3.3% and sales rising by 10.7%.
10