In 2020, Huafa Industrial Co.Ltd.Zhuhai(600325) sold more than 100 billion for the first time, but also faced the pressure of “three red lines”. In 2021, Huafa Industrial Co.Ltd.Zhuhai(600325) are reducing the scale of liabilities and completing the transition from orange to green, but at the cost of slowing down the growth rate and a slight increase in revenue and profit.
On April 9, Huafa Industrial Co.Ltd.Zhuhai(600325) released the annual report of 2021. According to the annual report, in 2021, Huafa Industrial Co.Ltd.Zhuhai(600325) achieved an operating revenue of 51.241 billion yuan, a year-on-year increase of 0.46%; The net profit was 4.677 billion yuan, a year-on-year increase of 2.56%; The net profit attributable to shareholders of listed companies was 3.195 billion yuan, a year-on-year increase of 10.09%; The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was 2.94 billion yuan, a year-on-year increase of 5.07%.
Huatai Securities Co.Ltd(601688) analysis shows that in 2021, the area of Huafa Industrial Co.Ltd.Zhuhai(600325) carry forward increased by 22% year-on-year to 2.93 million square meters, but due to the change of regional distribution of carry forward projects, the average carry forward price decreased, resulting in basically flat revenue year-on-year. The year-on-year growth rate of net profit attributable to the parent company was higher than that of revenue, mainly because the change of carry forward structure promoted the gross profit margin to increase by 1.5 percentage points to 25.8% year-on-year; The proportion of minority shareholders’ profits and losses decreased by 4.7 percentage points year-on-year to 31.7%.
In terms of sales, in 2021, Huafa Industrial Co.Ltd.Zhuhai(600325) achieved sales of 121.89 billion yuan, with a sales area of 4.688 million square meters.
Specifically, in terms of regions, the annual sales of Zhuhai region reached 31.528 billion yuan, accounting for 25.87%, ranking the leading position in Zhuhai; East China completed 55.320 billion yuan of sales in the whole year, accounting for 45.38%; South China completed 23.33 billion yuan of sales in the whole year, accounting for 19.14%; In addition, the sales in the northern region accounted for 3.90% and that in Beijing accounted for 5.71%.
It is worth noting that the annual report of Huafa Industrial Co.Ltd.Zhuhai(600325) 2021 does not disclose the land reserves in each region in detail. However, HUAFA was particularly cautious in investment and land acquisition last year. With the rapid increase of sales scale, the land reserve has decreased year after year.
As of December 31, 2021, Huafa Industrial Co.Ltd.Zhuhai(600325) new construction area is 5227700 square meters, and the completed area is 6284000 square meters. The company has a land reserve with a construction area of 5.4397 million square meters and an area under construction of 154198 million square meters.
For comparison, according to the semi annual report of Huafa Industrial Co.Ltd.Zhuhai(600325) 2021, the area under construction is 174681 million square meters, and the building area of the land to be developed is 5.831 million square meters. The slowdown trend of real estate development business is obvious.
Huatai Securities Co.Ltd(601688) believes that the market downturn and the debt reduction target have led the company to reduce the intensity of land acquisition, the total price of land acquisition has decreased by 58% to 40.5 billion yuan year-on-year, and the intensity of land acquisition according to the amount has decreased by 46% to 33% year-on-year. However, thanks to the positive expansion in previous years, the company has abundant sales value in 2022.
Huafa Industrial Co.Ltd.Zhuhai(600325) ‘s emergency brake aims to control the scale of liabilities and achieve the standard of “three red lines” at the end of last year Huafa Industrial Co.Ltd.Zhuhai(600325) during the reporting period, the scale of interest bearing debt decreased by 10% year-on-year; The structure of interest bearing debt was significantly optimized, and short-term debt decreased by about 40%.
At the time of the rapid decline of interest bearing debt, Huafa Industrial Co.Ltd.Zhuhai(600325) also increased the issuance of commercial bills.
With its strong bargaining power in the real estate industry chain, the commercial bills issued by real estate enterprises reduce the occupation of their own company’s working capital, which can be understood as “financing in disguise”, and do not directly occupy bank credit and promote interest bearing liabilities.
As of December 31, 2021, Huafa Industrial Co.Ltd.Zhuhai(600325) the notes payable was 1.321 billion yuan, up 249.48% year-on-year Huafa Industrial Co.Ltd.Zhuhai(600325) explained that it was caused by the increase of commercial acceptance bills payable.
Kerui Research Center once believed that although the increase of commercial bills and other payables has controlled the scale of interest bearing debt for real estate enterprises, the issuance of a large number of commercial bills may lead to the phenomenon of falsely high solvency and hide the debt risk.
Since this year, Huafa Industrial Co.Ltd.Zhuhai(600325) as a state-owned enterprise has been very cautious in participating in acquisition and merger, and the obtained projects come from partners or from the confident base camp in Zhuhai.
In February, Huafa Industrial Co.Ltd.Zhuhai(600325) took over the urban renewal project of Lian’an village in Zhuhai, which was originally implemented by China Olympic Park. HUAFA also won 40% equity of Kunming rongchuang cultural tourism city phase II at a price of 1.4 billion. Kunming rongchuang cultural tourism city phase II was originally a cooperative development project between HUAFA and rongchuang, and it was also the first project of HUAFA in Kunming.
