Shenzhen Investment Announces 2023 Interim Results


Shenzhen Investment Limited (“Shenzhen Investment” or the “Group”, SEHK stock code: 00604.HK) convened 2023 interim results presentation on the afternoon of 31 August in Shenzhen and Hong Kong through online live streaming. The Chairman of the Board, Mr. Lu Hua, Executive Director and President, Mr. Wang Yuwen, Executive Director and Vice President, Mr. Xu Enli, Vice President, Mr. Yan Zhongyu, Vice President, Ms. Meng Yijing attended the presentation.

In the first half of 2023, Shenzhen Investment realized revenue of HK$6.06 billion; gross profit was HK$[2.08 billion, with overall gross profit margin of 34.4%. As projects are mostly scheduled to be completed in the second half of the year, area booked during the period decreased, and coupled with the loss of an associate, loss attributable to equity shareholders of the Company was HK$117 million. The Board resolved to pay an interim dividend of HK$ 2.00 cents per share for 2023 in cash.

Integrated Development in Real Estate Business

In the first half of 2023, the Group actively promoted the development of its real estate business and achieved contracted sales of approximately RMB14.8 billion, representing an increase of 198% over the same period of last year, and accomplished approximately 64% of the annual sales target. In particular, the Upper Coast project in Qianhai, Shenzhen was over 90% sold on the opening day, which set the record for the highest single-day housing units sold and sales amount this year in China

During the Period, adhering to the investment principle of “selecting the best among the best”, the Group acquired a commercial and residential land parcel in Shenzhen and Zhongshan, with an aggregate area of approximately 270,000 square meters and valuing approximately RMB7.6 billion;In addition, the Group has strived to promote the urban renewal and benefit coordination projects in Shenzhen, including phase IV and phase V of Taifu Square in Luohu District, Chegongmiao renewal project in Futian District, Guangming Shangcun, Baihua Community in Guangming District, and Henggang South. As of 30 June 2023, the Group had land reserves with a capacity building area of approximately 6.59 million square meters, of which 65% are in Guangdong-Hong Kong-Macau Greater Bay Area.

Since the beginning of this year, government policies to encourage and support spending have brought about positive changes in the commercial market In the first half of 2023, the Company strengthened its tenant sourcing and operation, resulting in a strong rebound in rental income with an overall occupancy rate beat the market. During the Period, the Group achieved property investment income of approximately HK$6.9 billion, representing an increase of 25% over the same period of last year.  

Urban Integrated Operation Business Recorded Excellent Performances

The Group has been steadfast in promoting the transformation of its traditional real estate business to urban operation and services. During the Period, the Group has made significant breakthroughs in the expansion of integrated urban operation, commercial operation and hotel operation, boosting its comprehensive strength steadily. In the first half of 2023, a total of 43 new development and operation projects were launched in the Shum Yip Operations, with a net expansion area of 9.46 million square meters (including joint venture companies). Shum Yip Operations had total contracted areas of approximately 75.61 million square meters, and GFA under management of approximately 71.83 million square meters, of which approximately 63% were non-residential properties and approximately 73% were developed by third parties, both higher than the average in the industry.

In terms of commercial operation, the Group’s PPP project, Shenzhen Women and Children Tower, successfully bid in 2020,had its debut, and becomes a model project to revitalize the city’s existing public service facilities and help Shenzhen build a child-friendly city; The grand opening of the Galeries Lafayette department store, the first store in South of China, on 8 July 2023 brought a number of first stores in Asia and China, and on the day of the grand opening, it attracted over 200,000 customers; Total of 11 Fortune 500 companies moved into the office building of UpperHills, further consolidating its position as an iconic commercial building in the market.

In terms of hotel operation, Mandarin Oriental Hotel Shenzhen won a Forbes Travel Guide Five-Star for the first time, and was recognized as one of the World’s Best Hotels 2023 in LA LISTE’s first global hotel ranking, being the only hotel in Shenzhen on the list. Meanwhile, the Group released its independently-operated hotel brand “JINGJU”, consisting of four product lines, aiming to improve the light assets brand portfolio of its hotel management segment.

With its industry-leading comprehensive strength and widely-recognized service, Shum Yip Operations was ranked No.17 in the rankings of the Top 100 Property Service Enterprises China 2023 issued by the China Index Academy and No.6 in the rankings of the Top State-Owned Property Management Companies by Comprehensive Strength 2023 issued by the China Property Management Research Institution.

Accelerated Growth of Innovative Business Development

During the Period, technology-empowered product upgrading and business transformation promoted high-tech manufacturing business and the agricultural technology business, and the spin-off of mature businesses with scale. Shenzhen Jinghua Displays Electronics Co., Ltd. (“Jinghua”), a subsidiary of the Group and a national-level high-tech enterprise and a “specialized, refined, unique, and new” small and medium-sized enterprise in Shenzhen Jinghua has industry-leading technological innovation achievements and a wide range of high-quality domestic and foreign customer resources, obtained three new authorized patents in intelligent controller products and has further expanded the customer base for its electronic control products. The high-tech agriculture sector under the Group has made significant progress: four patents have been authorized in the field of intelligent agriculture, the scale of the construction of agricultural parks has been continuously improved. The “Four Seasons” agri-tourism project has been implemented in a well-grounded manner, becoming the forerunner of the agricultural tourism project of state-owned enterprises. Feng Nong You Pin has been selected as a key agricultural leading enterprise in Shenzhen for a better demonstration effect. Each of the operation arm and the manufacturing arm of the Group has stepped into an advanced stage in respect of their separate spin-off. Application for the listing of H shares on the Stock Exchange of Hong Kong is in the process of listing audit; Jinghua filed its IPO application and has been accepted by the Shenzhen Stock Exchange for further process.

Outstanding Corporate Management Performance

During the Period, the Group deepens the implementation of sustainability concept, set clear targets for carbon emissions, use of energy, use of water resources, waste consumption and green buildings, and continued to track, report and manage the sustainability performance of the Group’s core businesses, With its excellent performance in sustainability, the Group continued to maintain a good MSCI ESG rating.

Given the prevailing complex and volatile market environment, the Group proactively expands financing channels and continues to explore cost-efficiency methods. In the first half of the year, the Group successfully obtained foreign debt facilities of US$730 million and also entered into a HK$5 billion medium- to long-term loan agreement; A subsidiary of the Group invited bids for project development loans through financing platform and obtained the lowest interest rate of 2.52%. Financial indicators remain well, with excluding advance receipts a gearing ratio of 68.9%, a net debt ratio of 53.2%, and a cash to short-term debt ratio of 1.73.

The group adheres to the core values of "sunshine and honesty, innovation and excellence, diligence and responsibility, harmony and sharing", focusing on cultural promotion and middle-level management training. Taking advantage of the 40th anniversary of the controlling shareholder Shum Yip Group, the Group will organize various staff cultural activities to promote staff recognition and foster unity. The management of human resources has achieved remarkable results, with the precise recruitment of scarce talents to build a high-quality team, driving optimization in organizational control of its subsidiaries, and deepening the reform of performance appraisal. By utilizing a digitalized platform,the Group continues to push forward the construction and promotion of two key technology support platforms and eight major shared applications to achieve to achieve cost reduction and efficiency gains.

Goals and Prospects for the Second Half of 2023

2023 is a crucial year for the implementation of the “14th Five-Year Plan”, the Group will keep focus on the principal business to ensure the achievement of its business objectives in the second half of the year;It will take opportunities to promote transformation and upgrading. The Group adheres to long-term development, focus risk prevention and control, strengthen investment control, improve debt structure, accelerate asset securitization and make every effort to promote the Group's high-quality development.

In terms of real estate business, the Group will actively adapt to the new development mode of real estate, continue to enhance its product capability, polishing excellent products, in accordance with the progress schedule to ensure nine projects, including Cloud Center (phase II) and Natural City, are schedule to be completed within the year. The available-for-sale product value for the second half of the year is estimated to be approximately RMB 30 billion, including new or additional residential projects in prime locations in Shenzhen, Zhongshan, Shanghai and Chengdu. The Group will develop targeted marketing strategies to accelerate destocking and capital collection to ensure the achievement of the full-year sales target. In terms of investment, the Group will draw attention to the opportunities of urban village redevelopment, make further efforts to benefit coordination projects, speed up urban renewal projects to facilitate resource transformation in Shenzhen. 

The Group currently holds high-quality stock properties of approximately 1.8 million square meters. The Group will continue to innovate business model, and establish a positive cycle of "investment - holding - operation - revitalization - exit" for existing assets. The commercial business of the Group will capitalize on the positive momentum in the first half of the year, and the Company continue to improve its commercial rental income, put efforts in property upgrading and investment promotion to drive rental growth and property value enhancement. Meanwhile, the Company will utilized the advantages of the integrated operation of the whole industry chain, explore the revitalization of stock assets and improve operating results.

In terms of urban integrated operation business, the Group will continue to improve its core competitiveness in urban integrated operation, accelerate expansion and promote upgrading, actively carry out market expansion, service improvement and organizational control optimization management to establish a new presence for Shum Yip Operations. As a key segment, commercial operations will continue to refine commercial management system, strengthen the full value chain control of commercial assets, increase the revenue of operating shopping malls and hotels In the second half of the year, the Group will focusing on integration of Shenzhen and Hong Kong consumption, stimulate park economy, preparation for the opening of Zhongshan Bay Front will be further propelled, aiming to brand output of “UpperHills” and help form a new pattern in the Greater Bay Area. 

In terms of innovative business, utilizing its core advantage of “display + intelligent control” integration, Jinghua will develop its business in the human-machine interaction sector, and actively expand into the downstream areas, such as smart home, industrial control, etc., to promote overseas market layout and increase its market share; The agricultural sector will focus on intensive cultivation and strengthen industries, actively explore the establishment of a supply chain product system and park upgrading and transformation, strengthen the matchmaking of production and marketing, promote the launch of agricultural tourism projects and the Central China Flower Base, strengthen the brand effect of "Nongwofeng", and achieve the transformation of agricultural product sales through all channels.

With unremitting efforts, the Group will promote business transformation and forge ahead with high-quality development to make greater contributions to social economy and urban development, and create satisfactory returns for shareholders.