China Fortune Land Development (CFLD) issued its semi-annual report on Friday. In the first half of 2019, net income attributable to shareholders of listed companies rose 22.4% year-over-year to 8.48 billion yuan; operating income increased by 10.7% to 38.73 billion yuan; total assets grew by 11.6% to 457.07 billion yuan. In the past five years, the compound annual growth rate of CFLD’s net income attributable to shareholders of listed companies reached 35%.

Operating indicators register sustained and stable growth

According to the report, CFLD produced a stable and sound performance in the first half of 2019, with a number of key economic indicators achieving breakthroughs. It generated an integrated gross profit margin of 48.7%, a year-over-year improvement of 2.9 percentage points; an overall net profit margin of 21.1%, a gain of 2.1 percentage points from 2018; weighted return on average equity of 21.3%, a year-over-year gain of 4.8 percentage points.

In the first half of 2019, CFLD saw its cash flow from operating activities continuously increasing to a level of 40.79 billion yuan, while the payback rate rose from 46% to 62% year-over-year.

By the end of June, deposits received totaled 140.3 billion yuan. The deposits received above 100 billion yuan will be gradually carried forward to operating revenue and income in the coming three years.

Financing channels remain smooth and the corporate structure is continuously improving

Thanks to its outstanding business models and the share purchase by Ping An Insurance, CFLD is able to maintain steady progress in its financing in the first half of 2019.

Statistics show the net cash flow from financing activities increased to 31.74 billion yuan from -9.72 billion yuan last year. During the reporting period, CFLD raised another 63.26 billion yuan, of which 52.99 billion, or 84%, was from non-real estate projects.

In June, CFLD launched a special plan to provide financial support for the PPP project of Wenjin New Industry City in Xinzhou District of Wuhan. The 2.1 billion yuan project was issued with one-to-six-year maturity with interest rates ranging from 6% to 7.3%. It is the only financial support plan for single-park PPP projects emerging since 2018.

With focus on core metropolitan areas, CFLD has made notable progress in applying successful practices in more regions

CFLD adheres to the strategy of focusing on core metropolitan areas, and trying to create a “3+3+X” pattern. The company is making intensive efforts to develop business in the Beijing-Tianjin-Hebei metropolitan area. At the same time, it is expanding rapidly to other metropolitan areas, including those in the Yangtze River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area.

The report said the contribution rate from activities outside the greater Beijing region grew significantly. Income reached 14.808 billion yuan ($2.103 billion), an increase of 96.54% year-on-year. This accounted for 38.47% of the company’s main business income, an increase from the figure of 21.69% in the same period last year. Sales outside the greater Beijing region totaled 37.564 billion yuan, a year-on-year gain of 16.82%. This accounts for 58.21% of the company’s overall sales, increasing from 39.94% year-on-year.

Until the end of the reporting period, 30 of CFLD’s New Industry Cities projects located in various metropolitan regions have been added to the database of the Finance Ministry’s Public-Private-Partnership (PPP) cooperative, among which there are five national level PPP demonstration projects and one at provincial level. All five PPP projects added during the reporting period are located outside the greater Beijing region.

Capacity of industrial development stays strong with emerging major projects

Against a background of developing metropolitan regions and taking advantage of new urbanization, CFLD actively consolidates resources and utilizes leading enterprises to promote the development of strategic industry clusters based on local conditions, in order to transform and upgrade regional industry.

Statistics shows that, in the first half of 2019, a total of 328 new businesses signed contracts with an industrial park with investment from, and being run by, CFLD, involving a total 105.2 billion yuan of fresh investment. Newly-contracted investment has maintained rapid growth for four years in a row. The compound annual growth rate reached nearly 33%, and the figure in mid-2019 shows a 9% increase over the same period last year.

During the reporting period, a CFLD’s New Industry City in Nanjing, Jiangsu province, hosted a ten billion yuan-level battery industry contributing much to the city’s industrial landmark New Energy Vehicle project. Another Top 500 Chinese business has located its polarizer project in a CFLD’s New Industry City in Changfeng, Anhui province, improving the latter’s competence in building a 100 billion yuan-level industrial cluster specializing in camera lens.

CFLD continues to introduce advanced industrial clusters to various cities. During the reporting period, based on its 17 years of industrial investment experience, CFLD has built an industrial big data platform incorporating artificial intelligence and specialized R&D centers for big data. The platform highlights 10 key industries; focuses on 19.6 million separate businesses; and recorded almost 1 billion pieces of dynamic data. Such platform can greatly improve CFLD’s capacity of industrial development.

Business-run service offers new vista for innovation

Another announcement issued on the same day showed that CFLD transferred 100% of the equity and RMB 442 million of debt of the project company (Beijing Wusheng Technology Co., Ltd.) to Ping An Life Insurance. At the same time, Ping An Life Insurance authorized CFLD’s branch company to act on its behalf to conduct construction and provide management services in the contracted area.

CFLD also transferred its project company’s equity and bonds, a total 5.828 billion yuan, to Ping An Life Insurance, and started a new developing model using an asset-light strategy.

Last September, Ping An Insurance established a strategic cooperative partnership with CFLD. The project marks implementation on a business level for the first time between two sides. This shows the success of CFLD’s business model using assets to manage output, as well as CFLD’s advancement in business-run services. Further, it also indicates Ping An Insurance’s trust and recognition of CFLD’s management capacity. In the future, cooperation between two side is expected to advance further.

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