First, the time rushed early. When everyone was preparing to issue financial reports at the end of March and April, Sunac released its financial results half a month in advance, appearing to be quite confident in last year’s performance.
According to the annual report data, in 2020, Sunac China will realize operating income of approximately RMB 230.59 billion, an increase of approximately 36.2% over last year; gross profit of approximately RMB 48.40 billion, an increase of approximately 16.9% over last year; It was RMB 35.64 billion, an increase of approximately 36.9% over last year; core net profit was approximately RMB 30.26 billion, an increase of approximately 11.8% over last year.
The capital market also responded. As of press time, Sunac China rose 11% intraday, and the share prices of many leading real estate companies in Hong Kong stocks also rose.
At the subsequent performance meeting, Sun Hongbin, chairman of the board of directors of Sunac China, was very optimistic about the industry. “10 years ago, we sold only 8 billion yuan,” Sun Hongbin said: “Now is the golden age of outstanding enterprises.”
Good performance is inseparable from our own struggle, but we also have to thank the course of history. Behind the surge in Sunac’s earnings, the stock market in 2020 and the appreciation of the renminbi are indispensable.
A good stock of speculation, relying on national fortune to make money?
On the premise that gross profit increased by about 16.9% compared with last year, Sunac’s net profit increased by about 40.4% compared with last year. How did such a high growth rate come about?
The answer is: investment has made money, and the renminbi has appreciated.
Since Sunac issued a large number of US dollar bonds, Sunac accrued an exchange loss of approximately RMB 870 million in 2019 due to exchange rate changes. By 2020, Sunac has earned 4.16 billion yuan in exchange gains.
There are 50 more small goals in this one after another.
In addition, Sunac recorded a financial asset income of 9.65 billion in 2020, mainly from the listing of Shell and the sale of financial assets such as Jinke. This number was 780 million in the same period last year.
Coupled with the sales of joint ventures and associated companies to obtain revenue of approximately 2.57 billion (last year’s figure was 14 million), these three items alone generated 16.38 billion in revenue this year, accounting for 28.4% of the profit before income tax.
The stock market and RMB exchange rate in 2020 have created a shining profit figure for Sunac.
In terms of performance sales, Sunac China’s contracted sales amount is approximately RMB 575.26 billion, which is 95.88% of the annual target, which is still a little short of the annual target of RMB 600 billion.
Sun Hongbin responded at the performance meeting: “With this control and the epidemic, we will sell 20 billion less. There is no need to get 600 billion. I can also get 6,500.” He is very optimistic about the industry’s prospects and believes that the urbanization rate should be 20. Point, the demand is very large, the industry development is still early, in the future there will be three companies with more than one trillion.
“Now everyone has underestimated how good the real estate industry is.” Sun Hongbin said.
From the perspective of the revenue of each segment, Sunac China’s property development will generate revenue of 218.8 billion yuan in 2020, accounting for 94.9%; cultural tourism city construction and operation revenue of 3.88 billion yuan, accounting for only 1.7%; property management 33.4 100 million yuan, accounting for 1.5%.
The 2020 financial report shows that Sunac China’s cultural tourism project has been launched in 39 cities in China. Sun Hongbin believes that with the approach of the Winter Olympics, the ice and snow industry will develop better in the future, and the cultural tourism industry will also usher in a new period of development.
Continue to acquire land and be optimistic about the rotation of the land sector
“China still has a lot of opportunities. Among the small cities, the small cities in Jiangsu and Zhejiang are all very good. We have to be optimistic about where the purchasing power is strongest and where the hot money will be. We can’t see how much land is more expensive than others or last time. Cities have judgment.” At the performance meeting, Hongbin Sun was confident in some third- and fourth-tier cities.
In 2020, Sunac slightly increased its land reserves in third- and fourth-tier cities, and land storage costs decreased slightly. As of the end of the reporting period, Sunac China’s land bank was approximately 258 million square meters, and the value of its land bank was estimated to be approximately RMB 3.1 trillion, of which approximately 78% were located in first- and second-tier cities, and the average land cost was approximately RMB 4,270 per square meter.
In contrast, in 2019, Sunac’s land bank value was 3.07 trillion yuan, of which more than 82% of the land bank was located in first- and second-tier cities, with an average land cost of 4306 yuan per square meter.
Sun Hongbin thinks this is a good thing for the policy of centralized land supply in key cities. “One of this policy is to ensure the growth of land supply, increase land supply, and also ensure the transparency of land. This allows everyone to know how much land will be provided this year. This policy is beneficial to enterprises in the development of core cities. of.”
In terms of land acquisition strategy, Sun Hongbin said that Sunac’s 58 city companies responsible for 120 cities can seize the opportunity of plate rotation and have a relatively large advantage in the open market.
The debt ratio has both fallen, “the three red lines are a good thing”
Looking through this annual report, in addition to high growth in business revenue and profit, financial data has also made a lot of progress. Sunac’s net debt ratio was approximately 96.0%, a decrease of approximately 76.3 percentage points from the end of last year; the unrestricted cash short-term debt ratio was approximately 1.08; the debt-to-asset ratio after excluding advance receipts was approximately 78.3%, a decrease of approximately 5.6 percentage points from the end of last year percentage point. The two red lines reached the standard, and Sunac’s financial situation further improved.
Wang Mengde said that the company’s debt indicators will continue to be optimized by 2023, and the last indicator will be completed ahead of schedule in 2022.
As of the end of the reporting period, Sunac China’s cash balance was approximately RMB 132.65 billion, and the total borrowing amount decreased from 32.22 billion at the end of 2019 to 303.4 billion.
The increase in cash and the decrease in total borrowings are attributable to Sunac’s strong operating business hematopoietic ability. Sunac China’s net cash flow inflow from operating business was 73.71 billion, net cash flow outflow from investment business was 17.23 billion, and net cash flow outflow from financing business was 35.38 billion. The cash inflow from operating business is 21.1 billion more than the cash outflow from investment and financing.
“The total debt has not increased in three years, and sales have increased so much. The debt ratio must have dropped. Regulation has made the industry safer.” Sun Hongbin said.