2020.08.18

Times Property Holdings Limited (Times China, stock code 01233.HK) announced its 2020 interim results via the Internet on August 18, 2020. Despite the COVID-19 pandemic and its impact on the pace of sales, delivery and settlement in the real-estate industry, several indicators of Times China--including contracted sales and net profit--remained stable or even rose in the first half of 2020, thus evidencing the company's solid fundamentals.

▲ Announcement of Times China's 2020 Interim Results

▲ Times China Board Chairman Shum Chiu Hung attends the conference

Times China CFO/Executive Director Niu Jimin announces the results

Robust development amid the pandemic

Given the gradual normalization of real-estate regulation and the impact of the pandemic, the overall growth of the industry slowed somewhat during the first half of 2020. Times China insisted on quality as a determinant of growth and, accordingly, struck an ideal balance of growth and benefits relative to risk as to ensure sound development.

Times China strengthened innovation in marketing and actively promoted sales during the first half of 2020. Its contracted sales rose at a consistent pace for a total of RMB 32,566 million, thus constituting a year-on-year increase of 4.3%.

The company maintained stable profitability. During the first half of 2020, due to influence of the pandemic and carry-overs, the turnover and gross margin of Times China were RMB 14,925 million and 26.9%, slightly decreased by 6.4% and 5.6 percentage points year-on-year. Net profit totaled RMB 1,811 million, an increase of 6.5% year-on-year. The net profit margin was 12.1%, an increase of 1.4 percentage points year-on-year. Gross profit reached RMB 1,830 million, an increase of 1.3% year-on-year, with a gross profit margin of 12.3% for an increase of 1 percentage point year-on-year.

Times China recorded a net liability ratio of 71% by June 30, 2020, thus attesting to its prudent application of control. Moreover, the company had a total cash and bank balance of RMB 34,533 million, up 17.9% from the end of the previous year. Given the ability to cover short-term liabilities, Times China maintained favorable liquidity while extending the scale of its operations.

Decreased Cost of Financing

Times China maintained the "AAA" corporate credit rating assigned by China Chengxin Securities Rating Co., Ltd. as well as by United Ratings during the first half of 2020, easily earning a "stable" outlook.

The company, by virtue of recognition and preference in the capital market, continued the effort to reduce its financing costs and optimize the debt structure. During the first half of 2020, Times China issued domestic corporate bonds and overseas syndicated bonds with lower costs and longer terms to replace debts payable during the year. Debts payable within a year were either replaced or made subject to limitations. For example, the company issued RMB 6.3 billion in domestic corporate bonds with an average weighted cost of 5.4%, 2.7% lower than that of its original debt. Moreover, it issued USD 200 million equivalent of syndicated bonds with a financing cost of 5.7%, almost 1 percentage point lower than that of its original debt.

Breakthroughs in Urban Renewal and Industry-City Business

Given the intensive development trend at work throughout the Greater Bay Area and Times China's vigorously increasing the market share in the region, the company has established a presence in the Yangtze River Delta, the middle reaches of the Yangtze River, the Chengdu-Chongqing City cluster and other high-growth regions. In fact, Times China acquired seven new land plots during the first half of 2020, representing a gross floor area of approximately 920,000 square meters. Specifically, the floor area attributable to the company was in the neighborhood of 550,000 square meters. As of June 30, 2020, Times China's abundant reserves of high-quality land were dispersed over 16 Chinese cities and distributed mainly in first- and second-tier urban districts and the GBA (Greater Bay Area), where land reserves (inclusive of Qingyuan) accounted for almost 90%. Consequently, a solid foundation has been created for the company's next three to five years of development.

Additionally, the urban renewal business of Times China has developed to a remarkable extent. As of June 30, 2020, the total number of urban renewal projects of Times China exceeded 150, and most of the projects were situated in GBA cities boasting developed economies. The potential floor area was approximately 52,000,000 square meters. In June 2020, four urban renewal projects were transferred, representing floor area of approximately 1,370,000 square meters and a total value of RMB 42.5 billion. Thanks to benefits obtained from faster urban renewal, the business has become a new growth opportunity for Times China.

Times China has also enjoyed strategic breakthroughs in the industry-city business sector. As of June 30, 2020, two industry-city projects -- Times Automobile Town and Makers Town, in Foshan -- were implemented with a combined floor area exceeding 1,200,000 square meters. Successful implementation of the industry-city business model will be a new impetus for the growth of the company's business.

Times China Board Chairman Shum Chiu Hung stated in the announcement that, because real estate is important as a cornerstone of China's economic growth, the industrial policy would maintain stability on the whole. Thus, he reaffirmed his confidence in the company's development. Times China, as one of the country's leading providers of urban development services, will continue its dedicated effort for the progressive development of domestic cities, ensure stable housing development business, deepen investment in urban renewal business, and make steady progress in developing commercial business and industrial business so as to offer better products and services while ensuring bigger returns for shareholders.