Sat Aug 24, 2019 06:21
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CHINA VANKE (2202)

Principal Activities

The Company is engaged in professional property development with its principal operation including property development and property services.

Latest Results

The Group's profit attributable to shareholders for the 3 months ended 31-03-2019 amounted to RMB 1.12 billion, an increase of 25.2% compared with previous corresponding period. Basic earnings per share was RMB 0.102. No dividend was declared. Turnover amounted to RMB 48.37 billion, an increase of 59.4% over the same period last year, gross profit margin up 1.9% to 35.0%. (Announcement Date: 29 Apr 2019)

Business Review - For the year ended December 31, 2018

In 2018, the external environment experienced significant changes. The macro environment became increasingly complex. The growth rate in commodity housing sales area in the country slowed down quarter by quarter, while intensified market concentration led to more severe competitions among large-scale corporations. There were still many challenges facing corporate transformation. Various long-term and short-term factors intertwined, increasing the complexity and uncertainties in operations.

In light of the changes in external environment, the Group explicitly stated in mid-2018 that it would “converge our focus, consolidate and improve our fundamentals”, with emphasis on deepened understanding of and adapting to the prevailing trend, and a clear focus on its core competitiveness, to ensure “survival, quality development and sustainable development”, with “review of strategies – business rationalization – organizational restructuring – correspondence of responsible persons to related activities” being the key approaches to promote systematic reform of various business units, and improved the capabilities of the organization. Benefitting from forward-looking planning and timely and effective responses, the competitive edges of the Group’s traditional property development business in 2018 continued to consolidate. There were improvements in the overall customer satisfaction and quality satisfaction amidst year-on-year increases in sales and delivery of properties. Non-property development businesses also displayed satisfactory operating performance, with continued improvement in operating capability. During the Reporting Period, the Group achieved a revenue of RMB297.08 billion and profit for the year attributable to equity shareholders of the Company of RMB33.77 billion, representing a year-on-year increase of 25.2% and 20.4% respectively. The Group maintained a safe and sound financial position and leading credit ratings in the industry. The net debt ratio at the end of the Reporting Period was 30.89%, remaining at a low level in the industry. While achieving the growth in performance, the Group actively fulfilled its social responsibilities and made contributions within our capability to precise poverty alleviation, rural revitalization, education development, and environmental protection, etc.

The Group’s principal businesses included property development and property services. Through consolidating the fundamental of its core businesses, the Group continued to expand into businesses related to city and town development and services for daily life.

During the Reporting Period, the Group adhered to “city and town development and service provider” strategy, and took converge our focus to continuously consolidate and improve our fundamentals. The Group realised a revenue of RMB297.08 billion, representing a year-on-year increase of 25.2%; and profit for the year attributable to equity shareholders of the Company of RMB33.77 billion, representing a year-on-year increase of 20.4%. Basic earnings per share amounted to RMB3.06, representing a year-on-year increase of 20.4%. Return on equity on a fully diluted basis was 21.68%, representing an increase of 0.54 percentage point as compared to that of 2017.

Business Outlook - For the year ended December 31, 2018

(1) Our strategies: to clearly define development direction, focus on our core business, consolidate and enhance our fundamentals

We will strengthen the fundamentals of property development for sale, ensure enough resources invested into, consolidate and strengthen investment expansion, product design, construction engineering, operation management, and sales and marketing effort. Along the direction of urban development, we will emphasize further entrenching our position, aiming at providing quality products and services addressing the genuine demand of customers. We will maintain our bottom line of quality consciousness, to build quality buildings, and to launch and sell our properties in an efficient and disciplined manner, in order to enhance project operating efficiency.

We will strengthen the fundamentals of our residential property services, ensure enough resources invested into, mobilize our elementary workers’ initiative, and apply technological means to effectively respond to customer service needs. We will improve the quality and efficiency of basic services of residential properties, and further strengthen Vanke Services’ reputation in the industry.

We will expedite the process for business inauguration, and enhance operation quality of acquired projects as the fundamental of rental housing business, in order to elevate the brand influence of Vanke’s rental housing. Focusing on major cities with strong demand we will explore solutions to enhance customer experience with higher value for money, and offer quality products and services addressing the pain points of customers. We strive to expedite the conversion of acquired prospects into inaugurated operations and to develop marketable showcase projects. We will strictly adhere to our investment model and will optimize the means for resource acquisition.

We will continue to strengthen the operating performance of existing projects as the fundamental of commercial property business. We strive to provide customer better consumption choices and experience, to help our tenants to enhance operating results, and to ensure continuous improvement in retail sales per square foot of existing projects, thereby enhancing our brand influence.

We will efficiently operate the existing projects and fine-tune the future planning of the operations as the fundamental of logistic warehousing business. We will strengthen our leasing capability and optimize the composition of our customer base, and secure new customers through provision of quality services. We will expedite the development process of secured projects, and shorten the period from inauguration to full occupancy.

We will continue to develop sites and ski resorts and offer competitive ski resort services meeting the budget and needs of customers as the fundamental of ski resort business. In the operation of ski banches, we are committed to broadening our customer base nationwide and lifting individual customer spending, and to establish quality membership system and strengthen customer loyalty.

(2) Market: proactive sales approach, effective management of investment and financing

We will persist with our proactive sales approach and to actively expedite sales proceeds collection. We consider each project as an operating management unit, and exert stringent control on development mode, to enhance development efficiency. We align supply, sales and proceeds collection, to improve resource conversion efficiency, and actively destock aging inventory. We streamline the inventory assets and further exploit the potential of the Company’s assets. We will optimize our operation momentum, everyday is the right time for the property sale.

We will maintain our prudent approach in investment, allowing sufficient safety cushion in investment forecast, in order to ensure the quality of investments and reasonable total amount of resources. We will broaden our resource acquisition channels, and pay attention to the opportunity for acquiring quality resources through merger and acquisition. We will converge our focus, and have effective resource allocations to find suitable project resources, fund sources and organizational resources to match development of business, and support sustainable development by paying attention to nonlinear development opportunities.

We will cautiously control our leverage, and optimize our debt structure and arrange appropriate financing means in accordance with the characteristic of the concerned business. We will maintain access to financing resources, thereby, ensuring our flexibility in financing. We strive to maintain a healthy financial position and a leading credit rating in the industry.

In 2019, the new construction area of the existing projects of the Group is expected to be 36.090 million sq.m.. It is estimated that the area to be completed in 2019 will be 30.766 million sq.m.. Please refer to “Development of Major Domestic Projects in 2018 and Development Plan for 2019” in this section for details of the Group’s plan for commencement and completion of projects in 2019.

(3) Customers: Provide quality products and services meeting customer budget and needs

We continue to explore, understand and respond to customers’ changing needs, with their genuine demand in mind, and to create marketable showcase products and services.

We need to learn from outstanding manufacturing and service enterprises, and to develop our basic capabilities in various business segments. We also need to have regulatory work procedures and evaluation standards, to seek to apply new tools, new tactics and to establish our competitive advantages along our integrated industrial chain.

We will further update and upgrade production system of development business, and push forward the implementation of Vanke’s “industrialization 2.0”, and accomplish our concept of “enhancing quality and efficiency, and reducing reliance on labour and environment pollution”, to elevate overall construction capability.

We will extend the application of technological products and innovative technology in each of our various business scenarios, to improve operating efficiency, and lower operating cost, as well as to enhance customer experience.

(4) Safety: Ensure safety at work and maintain our bottom-line for quality and moral standards

We are committed to maintain our bottom-line for safety and quality, and to have comprehensive relevant regulations and systems. We not only need a safety conscious mindset but also effective action to ensure safety practice. We will strengthen internal control management, and will strictly comply with our operation bottom-line. Each of our business unit will establish risk prevention system applicable to their specific business nature, to contain material exposure, particularly those less likely high-risk incidents.

(5) Business Partnership Mechanism: Complete organizational restructuring, realize correspondence of responsible persons to related activities

Each of our business group and business unit will complete organizational realignment and realize correspondence of responsible persons to related activities, to ensure motivated by tasks and match people with tasks and to continue to improve structural capability and efficiency.

We will push forward the implementation of Business Partnership Mechanism in every business unit and maintain the development of a partnership for concerted endeavour and a healthy corporate culture.

Source: China Vanke (02202) Annual Results Announcement

Business Nature

We are a leading residential property developer in China, primarily focused on the development, sales and management of quality residential properties. We were ranked No. 1 in China in 2011, 2012 and 2013 in terms of contracted sales, according to China Real Estate Appraisal Centre (中國房地產測評中心) and China Real Estate Information Corporation (中國房產信息集團).

Prospect

Chairman
YU Liang
Contact Info
Company Address:
55/F, Bank of China Tower 1 Garden Road Hong Kong
Web: http://www.vanke.com/
Quote
HSI: 26,179.33 130.61
28.15
0.10 (0.4%)
As of16:15 23 Aug 2019
Open: 28.25 52Wk High: 35.60
Day High: 28.30 52Wk Low: 21.50
Day Low: 27.75 P/E: 8.081
Prev. Close: 28.25 Yield: 4.234%
Volume: 4.49M
Mkt Cap: 44.58B
Turnover: 126.06M NAV: 16.066
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Contact CHINA VANKE
Company Address:
55/F, Bank of China Tower 1 Garden Road Hong Kong
Web: http://www.vanke.com/

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