On February 23, China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) (001979) released the performance express. In 2021, the company achieved a total operating revenue of 160.643 billion yuan, a year-on-year increase of 23.93%; In the same period, the net profit attributable to the parent company was 10.372 billion yuan, a year-on-year decrease of 15.35%.
provision for asset impairment is 4.372 billion
The main reason for the decline in performance, China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) can be attributed to: during the reporting period, the area of the company’s real estate projects completed, delivered and carried forward increased, so the carry forward income of real estate business increased, but affected by the downward market, the carry forward gross profit margin of real estate business decreased year-on-year; The company’s investment income from the transfer of subsidiaries decreased by 2.445 billion yuan year-on-year, and the resulting net profit attributable to the shareholders of the listed company decreased by 2.049 billion yuan year-on-year; In addition, the company conducted an impairment test on the assets with signs of impairment as of December 31, 2021 according to the market reference price. according to the impairment test results, the provision for asset impairment of inventories, investment properties and long-term equity investment and the provision for credit impairment of receivables of major risk categories totaled 4.372 billion yuan, reducing the company’s net profit attributable to shareholders of listed companies by 3.456 billion yuan in 2021 and the impact on the net profit attributable to shareholders of listed companies by 1.272 billion yuan year-on-year.
How about the above provision for asset impairment? China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) a separate announcement was issued on the same day, including 981 million yuan of credit loss reserve, 1.719 billion yuan of inventory falling price reserve, 779 million yuan of investment real estate impairment reserve and 893 million yuan of long-term equity investment impairment reserve.
Specifically, the provision for credit loss refers to the grouping of receivables by the company according to the similarity and relevance of credit risk characteristics. These credit risks usually reflect the debtor’s ability to repay all due amounts according to the contract terms of such assets, and are related to the calculation of future cash flow of the inspected assets. This time, the company conducted a separate impairment test on the receivables with single provision for credit loss, and made a provision for credit loss of RMB 981 million according to the difference between the present value of its future cash flow and its book value.
In terms of inventory falling price reserves, it is mainly due to the fact that the sales prices of some real estate projects did not meet the expectations. The announcement shows that at the end of the reporting period, the company determines the net realizable value according to the market reference price and the amount of the estimated selling price of the inventory minus the estimated costs, selling expenses and relevant taxes to be incurred at the time of completion. When the net realizable value is lower than the cost, the inventory falling price reserve is withdrawn, totaling RMB 1.719 billion.
As for the provision for impairment of investment real estate, at the end of the reporting period, the company estimated the recoverable amount of investment real estate with signs of impairment according to the expected rental income and rental rate in the leasing market, and made provision for asset impairment according to the difference between its lower than the book value, with a total provision for impairment of investment real estate of 779 million yuan.
As for the provision for impairment of long-term equity investment, at the end of the reporting period, the company judged that there were signs of impairment for long-term equity investment whose operation was lower than expected and there was no sign of improvement. The company estimates the recoverable amount of these long-term equity investments, withdraws the asset impairment provision according to the difference between the book value and the long-term equity investment impairment of 893 million yuan.
contracted sales area decreased by nearly 30% year-on-year
According to the data, China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) is the flagship enterprise in the urban comprehensive development and operation sector of China Merchants Group. It is the only real estate asset integration platform and important business coordination platform in the group. The company provides comprehensive solutions for urban development and industrial upgrading, and provides diversified products and services covering the whole life cycle for customers’ life and work.
Judging from this year’s situation, under the background of the downturn of the real estate market, the company’s sales will inevitably decline. According to the briefing on the sales in January 2022 and the recent acquisition of land use rights, in January, the company achieved a contracted sales area of 705600 square meters, a year-on-year decrease of 27.66%; The contracted sales amount reached 15.147 billion yuan, a year-on-year decrease of 38.47%.
In this regard, Tianfeng Securities Co.Ltd(601162) analyzed in a comment report on February 11 that affected by the Spring Festival holiday, last year’s high base, the overall environment and other factors, the company’s monthly sales fell in double digits, but the average sales price increased month on month.
The bank also estimated that, based on the equity land price, the land acquisition strength of the company in January 2022 was 16.09%, a significant decrease compared with 40.68% in the previous month. From the perspective of floor price, the floor price of new projects in January 2022 was 11218.88 yuan / m2, a decrease of 19.44% compared with 13925.98/m2 in the previous month, mainly due to the increase in the proportion of replenishment in low-energy cities in the current month. The land sales ratio in January was 52.26%, a difference of 17.85% from 70.11% in the previous month, mainly due to the difference between the replenishment area and the sales area.
