Zhenro Properties Announces Interim Results 2021

Focus on High-Quality Growth

Profit Attributable to Owners of the Parent up by 33.1%

Deep Penetration in First- and Second-Tier Cities

Sound Financial Performance

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Financial Highlights:

RMB mn	For the six months ended 30 June		Changes
	2021	2020
Revenue	16,011	14,542	+10.1%
Profit for the Period	1,504	1,275	+18.0%
Core profit 1	1,541	1,312	+17.4%
Profit attributable to owners of the parent	1,166	876	+33.1%
Core profit attributable to owners of the parent 1	1,203	913	+31.7%
	2021.06.30	2020.12.31	Changes
Cash and cash equivalent	44,450	42,973	+3.4%
Net debt to total equity ratio	57.2%	64.7%	-7.5pts
Cash to short-term debt ratio	2.2x	2.2x	No Change
Liabilities to asset ratio (Exclude contracted liabilities)	72.4%	76.6%	-4.2pts
Short-term debt to total debt ratio	28.5%	29.1%	-0.6pts
Weighted average cost of borrowings	6.35%	6.5%	-15bps

HONG KONG SAR - Media OutReach - 23 August 2021 - Zhenro Properties Group Limited (“Zhenro Properties” or “the Group”; stock code: 6158), a leading PRC property developer, announced its unaudited interim results for the six months ended 30 June 2021 (the “Period”).

 

Results

During the Period, the Group achieved a solid growth in results. Its revenue increased by 10.1% year-on-year to RMB16.01 billion. Profit for the Period was RMB1.50 billion, representing a year-on-year increase of 18.0%. Net profit margin went up to 9.4%. The core profit¹ was RMB1.54 billion, representing a year-on-year increase of 17.4%. Core profit margin was 9.6%. The profit attributable to owners of the parent increased significantly by 33.1% year on year to RMB1.17 billion; and the core profit attributable to owners of the parent¹ increased significantly by 31.7% year on year to RMB1.20 million. The Board has resolved not to distribute interim dividends for the six months ended 30 June 2021.

 

Steady Growth in Contracted Sales

In the first half of 2021, the impact of the novel coronavirus pandemic on the national real estate market gradually weakened, and the abundant liquidity continuously unlocked the previously accumulated essential housing demand. With the Group’s precise project development plan, high-quality products, sufficient saleable resources and efficient sales and marketing strategies, it successfully achieved contracted sales of RMB82.299 billion during the period, representing a year-on-year increase of 47.0%, and achieved 54.9% of the annual sales target of RMB150 billion.

 

Sound Investment Focusing on Deep Penetration in First- and Second-Tier Cities

The Group adhered to the strategy of “regional penetration”, focused strategically on first- and second-tier cities with strong fundamentals, and forayed into two core cities, namely Guangzhou and Hangzhou, further pushing the national layout development and laying a foundation for sustainable high-quality development in the future. During the period, the total gross floor area (“GFA”) of the Group’s newly acquired land bank was approximately 3.56 million sq.m., of which 33%, 28% and 24% were located in three core regions, namely the Yangtze River Delta Region, Western Taiwan Straits Region and the Pearl River Delta Region, respectively, while the rest was located in the Central and Western China Region and Bohai Rim Region. In terms of the tiers of cities, 90% of the newly acquired land bank were located in first- and second-tier cities which had a vibrant economy and considerable population. As at 30 June 2021, the Group had a land bank with an aggregate GFA of about 29.30 million sq.m. in 35 cities in the PRC, of which 82% was located in first- and second-tier cities.

 

Decreased Financing Cost and Sound Financial Performance

In the first half of 2021, the Group successfully seized several financing opportunities and continued to lead the industry in green financing practice. During the period, the Group issued new green senior notes with an aggregate amount of US$1.26 billion and the average financing cost declined to 6.7%. At the same time, the Group repaid and early redeemed senior notes with an aggregate amount of approximately US$1.08 billion. The Group’s weighted average financing cost of borrowings was further reduced to 6.35% at the end of the Period (end of 2020: 6.5%) through the abovementioned debt swaps. As at 30 June 2021, the Group’s major credit ratios remained at an industry healthy level, including short-term debt to total debt ratio of 28.5% (end of 2020: 29.1%), net debt-to-equity ratio of 57.2% (end of 2020: 64.7%), cash-to-short term borrowing ratio of 2.2 times (end of 2020: 2.2 times) and liabilities to asset ratio (excluding advanced sales proceeds) of 72.4% (end of 2020: 76.6%), it is expected that all “three red lines” will be fulfilled.

 

The Group has been recognized by credit rating agencies for its prudent financial management and overall strength. During the Period, Fitch Ratings, an international rating agency, upgraded the Company’s rating outlook to “positive” and affirmed the Company’s issuer credit rating at “B+”. Moody’s maintained the Company’s credit rating of B1 (stable). In terms of domestic market, Zhenro Property Holdings Company Limited, a wholly-owned subsidiary of the Company, was assigned “AAA” corporate credit rating (which is the highest rating) with a “stable” outlook respectively by China Chengxin International Credit Rating Co., Ltd. and Dagong Global Credit Rating Co., Ltd.

 

Good Corporate Governance and Exploration of ESG Practice

As a pioneer in implementing ESG philosophy in the real estate industry, the Group has incorporated ESG objectives into its strategic plan for long-term development. In terms of green development and environmental protection, the Group has set the construction of environment-friendly and green buildings as the focus of its internal environmental protection policy, and invested in supporting innovative product design, so as to effectively utilize materials, energy and space, etc., thus protecting the environment from the source. As at 30 June 2021, a total of 16 projects of Zhenro Properties were granted “China 2 or 3-star green building certificates” with a total GFA of 1.69 million sq.m. In terms of green financing, as at 30 June 2021, the Group issued green senior notes with an aggregated amount of US$1.81 billion to support the refinancing of its green projects covering green building, energy efficiency, renewable energy, prevention and management of pollutants and management of sustainable water management. During the period, the Group received a BBB ESG rating from China Chengxin Lvjin (Beijing) Co., Ltd., which was the highest rating given among the real estate enterprises assessed in the year. In addition, the Post-issuance Stage Certificate from Hong Kong Quality Assurance Agency and a green evaluation score of E1/86 (where E1 was the highest rating) from S&P were granted for two green senior notes issued in September and November 2020, respectively, which shows the significant environmental benefits reaped from the green projects of the Group. Besides, the Group also obtained several international awards and honors, reflecting the Group’s investment value has been well recognized by all parties.

 

Looking ahead, Mr. Huang Xianzhi, Chairman of the Board said, “In the second half of the year, “stabilizing the land prices, property prices and expectations” remains the main keynote of government policies. The recent continuous adjustment and optimization of land supply policy are expected to slow down the growth of land price, stabilize the housing price trend and promote the long-term healthy development of the real estate industry. Considering the rigid housing demand arising out of the continuous advancement of new urbanization and the demand for improved housing resulting from the increase in the proportion with stable income group, the prospect of the real estate market remains promising in the long term. In addition, under the influence of the policies of “three red lines” and two caps on real estate loans and individual housing loans, the real estate industry will continue to deleverage comprehensively, and a differentiated financing environment has gradually taken shape with the real estate enterprises with high leverage and those of small and medium size being under greater capital and financing pressure. In order to achieve the goal of “high quality growth”, the Group put forward the “four focuses” policy, and will continue to give full play to our product, brand, capital, talent and operation advantages. Meanwhile, the Group will continue to fulfill its corporate social responsibility, strengthen its ESG work, and strive to become a high-quality and socially responsible enterprise.”

About Zhenro Properties Group Limited

Zhenro Properties Group Limited is a leading property developer in the PRC with nationwide business presence in six key economic regions. The Group achieved contracted sales of RMB141.9 billion in 2020 and was ranked the top 20 in the Best 200 China Property Developers by Comprehensive Strength in 2020. Upholding its brand position of “Home Upgrade Master”, the Group focuses on bringing quality residences to middle class and affluent home upgraders. Zhenro Properties was listed on the Main Board of the Hong Kong Stock Exchange in 2018. It is a constituent stock in the Hang Seng Composite LargeCap/MidCap Index, Hang Seng Large-Mid Cap Value Tilt Index and the MSCI China Index and is included in the list of eligible stocks for southbound trading of the Shenzhen/ Shanghai – Hong Kong Stock Connect.

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