Press release for Country Garden Holdings Limited: Property developer’s core profit jumps to a new high of 38% in 2018
In its 2018 annual results report, Country Garden Holdings Limited has achieved approximately 379.08 billion yuan (RM230.18 billion) in total operational income, in which there was an increase of 67.1%; gross profit was about 102.48 billion yuan (RM62.23 billion), an increase of 74.3%; net profit about 48.54 billion yuan (RM29.47 billion), an increase of 68.8%
Kuala Lumpur, 28 March 2019 – Country Garden Holdings Co Ltd (Country Garden), the nation’s top property developer by sales, has reported a core profit for 2018 that increased to a record 38% in line with robust revenues and higher margins – growing to 34.13 billion yuan (RM20.72 billion) excluding non-recurring income and revaluation gains.
Its 2018 annual results report revealed that the Group achieved approximately 379.08 billion yuan (RM230.18 billion) in total operational income, in which there was an increase of 67.1%. Additionally, its gross profit was about 102.48 billion yuan (RM62.23 billion), an increase of 74.3%; net profit about 48.54 billion yuan (RM29.47 billion), an increase of 68.8%; and profit attributable to shareholders was approximately 34.62 billion yuan (RM21.02 billion), an increase of 32.8%. The Group’s overall growth was at 38.2%, with basic earnings per share at 1.61 yuan (RM0.98), an increase of 30.9%.
With this, its board of directors has also announced a final dividend of 30.32 cents per share, an increase of 21.5% over the same period last year. Together with the interim dividend, the total dividend for the year was 48.84 points, an increase of 38.0%. In 2018, Country Garden continued to strengthen its cash flow management, with a cash balance of more than 240 billion yuan (RM145.73 billion). At the same time, the company’s net loan ratio decreased drastically to 49.6%, as it actively implemented stability and efficiency as their core development strategy.
The Country Garden Group recently held a press conference to announce its 2018 Annual Results at the Four Seasons Hotel in Central Hong Kong.
[From L-R] Wu Bijun, Chief Financial Officer and Vice President; Yeung Kwok Keung, Chairman of the Board of Directors; Mo Bin, President; Cheng Guangyu, Executive Vice President
Ample cash flows
As of 31 December 2018, Country Garden, together with its joint venture company, maintained its leading position in the industry when it achieved contracted sales attributable to shareholders’ equity of the company of approximately 50.18 billion yuan (RM30.47 billion), an increase of 31.25% – displaying an impressive equity sales rate at 76.4%.
In the capital-intensive real estate industry, cash reserve has always been regarded as the most important financial indicator by companies. Country Garden’s net operating cash flow has been in the positives for the third consecutive year amidst a majority of companies operating on a tight cash flow due to rapid development and relying on external financing to ease the pressure. The annual sales results of Country Garden’s real estate equity were approximately 455.79 billion yuan (RM276.76 billion), and the return rate of equity sales was as high as 91%. Its gross profit margin also continued to increase to 27%.
Together with the company’s steadily improving operations and decreasing dependency on external financing, Country Garden looks to further boost its presence in the market. As of 31 December, the company had a cash balance of 242.54 billion yuan (RM147.27 billion), reflecting 14.9% of its total assets. Another 301.7 billion yuan (RM183.19 billion) bank credit lines have not been used.
Continuous optimisation of debt structure
Despite last year’s inconsistent financial outlook for domestic real estate enterprises, Country Garden has always managed to maintain stabilised operational costs, offering one of the most competitive real estate prices in the industry. As of the end of last year, Country Garden’s net loan ratio was only 49.6%, in which there was a decrease of 7.3%. As a fast-growing company, Country Garden has maintained a net loan-to-deposit ratio of less than 70% for many years, which shows stability in its financial security management.
According to research carried out by China Real Estate Data Application Service Provide (CRIC), the weighted average net lending ratio of major listed homes (A shares, H shares and others) increased to 91.09% in 2017, an increase of 16.19% from 2016, thus, the industry average lending ratio increased. Data from the research shows that Country Garden’s interest-bearing liabilities at the end of 2018 were 328.475 billion yuan (RM199.45 billion) (including banks and other borrowings, corporate bonds and convertible bonds), of which short-term interest-bearing debts that need to be repaid within one year was 126.1 billion yuan (RM76.57 billion). It stands at 38.4% of the total interest-bearing liabilities, and the remaining 61.6% was long-term liabilities of more than one year.
Last year, Country Garden was once again selected as one of Fortune’s Global 500 companies, and its ranking raised 114 places, up to 353, making it one of the top Chinese companies in the list
At the same time, the company’s cash balance of 242.5 billion yuan (RM147.25 billion) on the short-term interest-bearing debt coverage ratio was 1.92 times, in which it further showed financial stability. Based on the rapid growth of the company’s operating performance and its excellent financial management, Country Garden has performed well in the capital market. Last year, Country Garden was once again selected as one of the Fortune Global 500 companies, and its ranking raised 114 places, up to 353, making it one of the top Chinese companies in the list.
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