Net Profit Growth For Ten Years, New High Poly Development Counter Cyclical Growth Secret

As the last disclosure of the annual report of the head of housing prices, poly development to the housing enterprises earnings season drew a satisfactory conclusion.

In 2019, Pauli development realized contracted sales of 461 billion 800 million yuan, ranking the top five of the industry and the first among the central enterprises. The total business income reached 236 billion yuan, up 21.3% over the same period last year, and net profit of 28 billion yuan, an increase of 47.9% over the previous year, reaching a ten year high and ranking among the top ten housing companies.

Continued urban deep ploughing and management reform made the development of Pauli ushered in in 2019. This earnings report far exceeds market expectations, which makes people somewhat anticipate for the central business real estate boss.

Can Pauli go back to the top three of the industry again? Under the 2020 epidemic black swan and industry adjustment, everything is possible. The top ten housing companies have undergone major changes.

Steady central enterprises pursue growth through cycle. For Pauli, adversity may lead to more opportunities for overtaking.

From simple developers to diversified operators, Pauli is also ahead. Under the strategy of one main and two wings, Pauli is committed to developing real estate finance and community consumption services, and seeks new growth points. It expects to achieve a multiple profit growth mode through the synergy of the three parties.

Behind the high net profit growth

In the annual report of poly, the most obvious data is net profit growth, which set a ten year high in the history of the development of Pauli, surpassing market consensus expectations.

Compared with other leading figures, Vanke's net profit increased by 15.1% over the same period last year, while the net profit of Biguiyuan increased by 14.2% compared to the same period last year. The net profit grew by 57%, while the Evergrande net profit dropped. The top ten housing prices were only behind the financial growth rate.

The high growth of net profit is due to the growth of settlement revenue and the improvement of operation and management capabilities, which eventually raised the company's gross profit margin by 2.48 percentage points to 34.97% in 2019, of which the gross profit rate of real estate conversion increased by 2.69 percentage points to 35.38%, and net interest rate increased 2.47 percentage points to 15.91%.

Can such high growth continue? Some brokerages believe that 2016 to 2018 is the three year of the collective sales of housing prices. According to the calculation of the two years of sales to the settlement period, 2018 to 2020 should be the outbreak of the profit of Housing enterprises. At least, Pauli can maintain a high growth rate of two or three years.

In the mainstream Housing enterprises, it is rare to realize the increase in profits and profits. Behind this is the support of the company's financial and capital control.

In 2019, Pauli's ability to manage its funds increased. It was mainly realized as a total sales of 431 billion 200 million yuan a year, and the rate of return of funds was 93%, which was 5 percentage points higher than that in 2018. It maintained a higher level in history and laid the foundation for future revenue and profits.

Capital and financing costs are important factors affecting net profit. As a real estate developer of the central enterprises, poly development has natural financing advantages. Historically, the financing interest rates of poly are in the low position. Last year, the total cost of interest bearing liabilities was only 4.95%, which was significantly better than the average level of the industry.

As far as financial security is concerned, the net debt ratio of Poly Real estate has dropped sharply as a result of strong payment and cash flow last year. By the end of last year, the ratio of Baoli assets and liabilities was 77.79%, 0.18 percentage points lower than the beginning of the year, and the net debt ratio was 56.91%, significantly lower by 23.64 percentage points compared to the same period last year, which is a relatively low level in the industry. The money is nearly 140 billion yuan, 2.1 times the short-term debt and the debt maturity in one year, and its cash reserves are abundant.

Continuous focus on second line

As a veteran veteran central business developer, the top four traditional leading enterprises and the top five of the current housing enterprises list, Pauli development continues to deepen the Chinese real estate market, through several economic cycles, to achieve steady development, and its advanced urban layout and vision can not be separated from the relationship.

In the past five or six years, Pauli has been labeled conservatively, but Pauli has not been tempted by some illusory markets and always sticks to the second line.

As early as six or seven years ago, Pauli tested the water across the three or four line market, but soon found that the demand in these areas was difficult to sustain, only a flash in the pan. So quickly turned around and put the main energy back to a second tier city.

Last year, in the context of slowing sales nationwide and housing prices, Pauli continued to grow rapidly, benefiting from the urban layout. During the reporting period, sales of 38 core cities in Pauli reached 77%, and the sales volume reached 100 billion in the Pearl River Delta and the Yangtze River Delta. Among them, Guangzhou achieved more than 42 billion contracts, and Foshan, Wuhan and Beijing exceeded 20 billion, and Fuzhou, Xi'an and Sanya exceeded 10 billion for the first time.

In 2019, poly first put forward the theory of real estate cycle, and thought that the scale of the real estate sales market was about to reach the top. In the next ten years, the market will be around 15 trillion.

Based on this judgment, Pauli has focused more on the second line to ensure the sustainability of future sales and net profit growth.

In 2019, Pauli ranked the top three of the top 100 housing companies with a sum of 116 billion 600 million yuan, an increase of 16.48% over the previous year, only 161 billion yuan and 130 billion 300 million yuan after Vanke and Biguiyuan.

During the reporting period, there were 127 expansion projects in Baoli, with an additional floor area of 26 million 800 thousand square meters and a development cost of 155 billion 500 million yuan. The proportion of active development projects increased to 71%, and the additional equity area was 19 million 160 thousand square meters.

By the end of 2019, Pauli had 131 million 580 thousand square meters in construction area and 81 million 120 thousand square meters to be developed, of which 38 core cities accounted for 58%.

This year, Pauli has taken a high profile against the market. In March, the company acquired 6 new projects in Beijing, Shanghai, Hangzhou, Suzhou, Nanchang and Ganzhou. The new land occupied 1 million 82 thousand and 300 square meters of construction area, and the total land price in the single month was 10 billion 944 million yuan, an increase of 94.5% over the same period last year, accounting for 40% of the sales amount of the month, and the investment intensity increased.

As of mid April, Pauli has accumulated 20 new projects through listing and cooperation. It is generally located in a second tier core city. It optimizes the land holding structure, strengthens the advantages of second tier market reserves, and focuses on cultivating core cities.

In the long run, many brokerages have pointed out that policy guidance is conducive to continuously pushing resources to the central cities and key urban agglomerations.

Shen Wan Hongyuan believes that the supply of land in the first tier cities is more resilient. Because of the increased intensity of the city strategy, the promotion of the sales and performance of Housing enterprises deserves attention.

According to Kerri data, with the resumption of work, 100 housing enterprises in March sales rebound, which is also a second tier urban layout of the main housing enterprises recovery is more obvious.

In the first quarter of 2020, the development of Pauli realized 71 billion of contracted sales, down 35% from the same period last year. However, many brokerages believe that sales will return to elastic in the two quarter after the current housing demand is postponed, and annual sales will continue to grow steadily.

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