CFLD reports net profit of 8.48b yuan in H1

On August 16, 2019, China Fortune Land Development (CFLD, 600340.SS) released its half-yearly report of 2019. According to the report, the company’s net profit attributable to the listed company’s shareholders was 8.48 billion yuan in the first six months, with a year-on-year growth rate of 22.4 percent. Its revenue totaled 38.73 billion yuan, up by 10.7 percent over the same period of 2018. The company’s total asset was 457.07 billion yuan, 11.6 percent higher than the first half of 2018.

According to the report, in the first half of 2019, CFLD maintained overall stable and growing business performance, notably with breakthroughs made on multiple indicators. During the period, the company continued to create value for the shareholders. It had an overall gross profit margin of 48.7 percent, up by 2.9 percentage points year-on-year; an overall net profit rate of 21.1 percent, up by 2.1 percentage points year-on-year; and a ROE of 21.3 percent, up by 4.8 percentage points year-on-year.

In this period, CFLD recorded stable business performance. It generated 40.79 billion yuan in cash inflow from operation, and a high accounts receivable rate at 62 percent, significantly higher than 46 percent of the same period of 2018.

As of the end of June 2019, the company had a deposit received balance at 140.3 billion yuan, which is expected to be turned into steady revenue and profit in the coming three years.

Clear financing channel, sustained structural optimization

In the first six months，the net cash flow for fund-raising increased to 31.74 billion yuan from -9.72 billion yuan of the comparing period. During the report period, CFLD additionally raised 63.26 billion yuan, of which 52.99 billion yuan (84 percent) was contributed by non-property programs.

In June 2019, “Asset-backed Special Program for PPP Project of Wenjin Industrial New City in Xinzhou District of Wuhan” was issued, with a total sales volume of 2.1 billion yuan, maturities ranging from one to six years, and issuing rates 6 percent to 7.3 percent. This program was the only PPP project by CFLD to fund an industrial zone since 2018.

Further implementation of metropolitan strategy

CFLD has further implemented its metropolitan strategy, which sets to construct an investment landscape of “3+3+X” key cities. The company further enhanced its presence in the Beijing-Tianjin-Hebei metropolitan area, invested heavily in the Yangtze-River-Delta (Nanjing, Hanghzou, Hebei and their adjacent areas), and expedited its planning on the Guangdong-Hong Kong-Macao Greater Bay Area. Within the period, it also promoted planning on three high-potential metropolitan zones (Zhengzhou, Wuhan and Chengdu) and four potential metropolitan zones (Changsha, Xi’an, Guiyang, and Shenyang).

According to the report, revenue contributions by non-Beijing metropolitan areas were significantly higher, at total realized income of 14.80 billion yuan, 96.54 percent higher than 2018’s first half. They contributed 38.47 percent of the company’s main business income in the report period, compared with 21.69 percent of the same period in 2018. They also generated sales income of 37.56 billion yuan, up by 16.28 percent over the first six months of 2018. It accounted for 58.21 percent of total sales income, compared with 39.94 percent of the same period in 2018.

Newly contracted investments surpass 100b

According to the report, in the first six months of 2019, CFLD-funded industrial zones signed in 328 companies, at total investment of 105.2 billion yuan. The company has seen high growth in newly contracted investments four years in a row, with a CAGR close to 33 percent and a year-on-year growth rate of 9 percent.

During the report period, for the purpose of making Nanjing a new landmark of renewable energy car manufacturing, the 10-million-yuan-level SUNWODA battery project was initiated in Lishui Industrial New City. Polarizer Project by Chimei, a China Top 500 and listed company, was signed with Changfeng Industrial New City, which will help the city of Hefei set up a 100-million-level new display screen industrial cluster.

New Business: First deal of new commercial-building business signed

In another notice issued on the same date as the report, it was disclosed that CFLD transferred 100 percent ownership and 442 million yuan in creditor’s rights of its project company (Beijing Wusheng Technology Co, Ltd) to Ping An Life Insurance. Also, Ping An Life Insurance authorized a subsidiary of CFLD to provide agent-construction and operational services at the project site.

The transfer of ownership and creditor’s rights to Ping An at a total price of 5.82 billion yuan marked a new start of light-asset business model for the company. After this milestone, CFLD has shifted to collection of commissions for offering agent-construction and asset management services.

Last September, Ping An and CFLD entered into a strategic partnership. This project was the first joint project implemented on business level under the new partnership.