Real Estate Sector China August 2014 Produced by: - 1 -
Table of Contents I. Sector Overview 1. Sector Highlights 2. Main Sector Indicators 3. Sector Revenues & Profits 4. Sector Costs Overview 5. Investments 6. Employment & Wages 7. Business Climate 8. Prices 9. Sector Forecast 10.Government Policy II. Residential Property Market 1. Subsector Highlights 2. Investments & Sales 3. Residential Floor Space 4. Residential Property Regional Markets 5. Housing Mortgages III.Office & Commercial Property 1. Subsector Highlights 2. Investments 3. Sales 4. Office & Commercial Floor Space IV.Land Market 1. Land Market Activity 2. Local Land Markets 3. Land Supply 4. Land Prices 5. Land Prices by City V. Main Players 1. China Vanke Co.,Ltd. 2. China Vanke Co.,Ltd. (cont d) 3. Evergrande Real Estate Group Ltd. 4. Evergrande Real Estate Group Ltd. (cont d) 5. Poly Real Estate Group Co.,Ltd 6. Poly Real Estate Group Co.,Ltd (cont d) 7. China Overseas Land & Investment Ltd. 8. China Overseas Land & Investment Ltd. (cont d) 9. Country Garden Holdings Co., Ltd. 10.Country Garden Holdings Co., Ltd. (cont d) - 2 -
I. Sector Overview - 3 -
Sector Highlights Development After a decade of average growth in the industry of about 25%, a slowdown took place in 2011-12. In 2013, the industry showed some signs of recovery but amid policy controls, stronger competition, rising costs and market oversupply in some places, such rates will not to be achieved again in the foreseeable future. Policy balancing The government finds itself in the difficult position to balance between the interests of both sides of the market. On one hand, high prices are causing discontent in Chinese society. On the other, however, the sector has been a major contributor to the country's GDP growth and is heavily relied on by local governments for revenue generation. New government While a number of tightening measures were announced by the previous government, the new administration which came to power in early 2013 has stepped back on their implementation and left the market to play a larger role. As a result, 2013 saw the biggest property price increase since 2009, as 69 out of the 70 large and middle cities reported rising prices of newly-built commodity housing. Main players The number of property developers with annual sales of more than RMB100bn rose to seven in 2013, up from three in the previous year. Meanwhile, the number of real estate companies in the country's top 500 list of Fortune China reached 40, up from 39 in 2012. Consolidation The market slowdown is seen as beneficial for a new wave of M&A activity in the sector. A total of 73 deals took place in the first half of 2014 among China's real estate companies, with a total value of RMB 15.2bn (up 2.1 times on the same period in 2013), and the trend is likely to continue into the next quarters. - 4 -
Main Sector Indicators China's Real Estate Sector in Figures 2007 2008 2009 2010 2011 2012 2013 GDP, RMB bn 26,581 31,405 34,090 40,151 47,310 51,947 56,885 Sector revenues, RMB bn 2,340 2,670 3,461 4,300 4,449 5,103 n/a Revenues as share of GDP 8.8% 8.5% 10.2% 10.7% 9.4% 9.8% n/a Investments, RMB bn 2,529 3,120 3,624 4,826 6,180 7,180 8,601 Total assets, RMB bn 11,108 14,483 17,018 22,447 28,436 35,186 n/a Total liabilities, RMB bn 8,268 10,478 12,504 16,730 21,447 26,460 n/a Shareholders' equity, RMB bn 2,840 4,005 4,514 5,717 6,989 8,726 n/a Number of employees, mn 1.7 2.1 2 2.1 2.3 2.4 n/a Number of enterprises 62,518 87,562 80,407 85,218 88,419 89,859 n/a Source: National Bureau of Statistics - 5 -
Sector Revenues & Profits Revenues, RMB bn Profit 2,670 3,461 29.6% 4,300 4,449 159 24.2% 115 122 74 90 115 106 54 14.1% 131 14.7% 52 4,746 4,059 4,170 3,251 2,439 3.5% 47 50 52 66 82 2008 2009 2010 2011 2012 Total revenues Other, RMB bn Rental income, RMB bn Commodity building sales, RMB bn Land transfer, RMB bn Growth, % y/y 700 600 500 400 300 200 100 0 36.6% 623.6 630.1 584.8 494.5 24.8% 26.1% 362.0 7.8% -6.2% 2008 2009 2010 2011 2012 Total profit, RMB bn Growth, % y/y 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% Comments According to research company China Real Estate Information Corp (CRIC), the total sales of China's top ten real estate developers in 2013 accounted for 13.27% of the property sales market, up 0.5% over 2012, whereas the floor area sold by them accounted for 8.4%, representing a 0.7% increase over 2012. Rising construction, land and marketing costs as well as an increase in the proportion of flats relative to villas, with the former being less profitable, are the major factors putting a downward pressure on profitability in the latest quarters. Source: National Bureau of Statistics - 6 -
Sector Costs Overview Cost of Sales Other Costs 4000 35.0% Expenses 2008 2009 2010 2011 2012 3500 3000 31.5% 3,002.4 3,075.9 3,556.3 30.0% 25.0% Sales & tax surcharges, RMB bn 182.9 258.5 346.5 383.3 461.1 2500 2,456.3 22.2% 2000 1,868.5 20.0% Sales expenses 82.5 96 128.1 149.1 171.4 15.6% 15.0% 1500 1000 10.4% 10.0% Administration expenses 164.5 172.8 216.2 259 299.5 500 5.0% 2.4% 0 2008 2009 2010 2011 2012 0.0% Financial expenses 60.4 65.8 76.3 102.7 135.7 Total profit, RMB bn Growth, % y/y Source: National Bureau of Statistics - 7 -
3,624.2 4,825.9 6,179.7 7,180.4 8,601.3 16796 23986 26882 24125 28798 Investments Real Estate Investments FDI 33.2% 28.1% 689 19.8% 569 466 472 530 16.1% 16.2% 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Real estate investments, RMB bn Growth, % y/y FDI utilized, USD mn Number of contracts Comments Facing a stronger competition and tighter policy controls aimed at curbing demand, many of China's leading developers are stepping up their investments in overseas real estate, with the Southeast Asian region appearing to be especially attractive for them. At home, property investment growth is still strong, remaining in the double-digit area, although off its peak levels of nearly 30% in 2010 and 2011. A negative impact on FDI is expected from the fall of the RMB exchange rate which has made investments in yuan-denominated assets less appealing to foreign investors. Source: National Bureau of Statistics, Ministry of Commerce - 8 -
Investments (cont'd) Residential 68.5% Investment Distribution by Type (2013) Office buildings 5.4% Commercial buildings 13.9% Other buildings 12.2% Investment Distribution by Funding Source (2013) Domestic funded: others 84.1% Domestic funded: collective owned 0.7% HMT funded enterprises 6.3% Foreign funded enterprises 3.4% Domestic funded: state owned 5.5% Investment Distribution by Region, in RMB bn Indicator 2010 2011 2012 2013 Jiangsu 430.2 555.3 620.6 724.1 Guangdong 366 489.9 535.3 649 Liaoning 346.6 448.8 545.6 645.1 Zhejiang 303 413.7 522.6 621.6 Shangdong 325.2 410.8 470.8 544.5 Anhui 225.2 259 315.2 394.6 Sichuan 219.5 283.7 326.6 385.3 Henan 211.4 262 303.5 384.4 Fujian 181.9 240.3 282.4 370.3 Beijing 290.1 303.6 315.3 348.3 Hebei 226.5 307 308.7 344.5 Hubei 161.8 206.3 253.9 328.6 Chongqing 162 201.5 250.8 301.3 Shanghai 198.1 217 238.1 282 Hunan 146.9 189.7 221.1 262.8 Yunnan 90 127.3 178.2 248.8 Shaanxi 116 142.1 183.6 224 Guizhou 55.7 87.9 146.8 194.3 Guangxi 120.6 150 155.5 161.5 Heilongjiang 84.3 121.9 153.6 160.5 Other regions 565.7 756.3 852.1 1025.9 Source: National Bureau of Statistics - 9 -
Employment & wages Average wages 35,870 30,118 32,242 33,967 19,489 21,334 23,228 28,471 30,800 46,764 42,837 43,814 43,464 30,778 27,017 51,048 35,038 2008 2009 2010 2011 2012 2013 Private real estate management enterprise average wage, RMB Urban non-private real estate management enterprise average wage, RMB Staet-owned real estate management enterprise average wage, RMB Employees 2,100.4 1,949.3 2,091.1 2,257 2,386.8 2008 2009 2010 2011 2012 No of employee, thou Source: National Bureau of Statistics - 10 -
Jun, 2010 Jul, 2010 Aug, 2010 Sep, 2010 Oct, 2010 Nov, 2010 Dec, 2010 Feb, 2011 Mar, 2011 Apr, 2011 May, 2011 Jun, 2011 Jul, 2011 Aug, 2011 Sep, 2011 Oct, 2011 Nov, 2011 Dec, 2011 Feb, 2012 Mar, 2012 Apr, 2012 May, 2012 Jun, 2012 Jul, 2012 Aug, 2012 Sep, 2012 Oct, 2012 Nov, 2012 Dec, 2012 Feb, 2013 Mar, 2013 Apr, 2013 May, 2013 Jun, 2013 Jul, 2013 Aug, 2013 Sep, 2013 Oct, 2013 Nov, 2013 Dec, 2013 Feb, 2014 Mar, 2014 Apr, 2014 May, 2014 Jun, 2014 Jul, 2014 Business Climate 106 104 102 100 98 96 94 92 90 88 Real Estate Climate Index (RECI), 2000=100 RECI Comments Following a decline which started in early 2010, the index has stabilised over the last two years, but it remains at levels between 94 and 98 which is below the neutral level of 100. Increasing uncertainty in the market has been taking its toll on the confidence of market participants. Source: National Bureau of Statistics - 11 -
Prices Average Property Selling Price by Type, RMB/sq.m. Average Property Selling Price by City, RMB/sq.m. 50% 40% 30% 20% 10% 0% 8,378 3,800 5,886 3,576 12,997 12,327 12,306 11,406 10,608 9,777 8,488 9,021 7,747 4,681 5,032 5,357 5,791 6,237 6,871 4,459 4,725 4,993 5,430 5,850 3,219 3,671 4,099 4,182 4,306 Expectations % of respondents expecting higher housing prices 4,908 2008 2009 2010 2011 2012 2013 Average price Residential Office building Other building type Commercial bldg City 2010 2011 2012 2013 Shenzhen 19170 21350 19590 24402 Beijing 17782 16852 17022 18553 Shanghai 14464 14603 14061 16420 Guangzhou 11921 12104 13163 15330 Hangzhou 14132 13286 13447 15022 Xiamen 8883.5 10556 12280 13625 Nanjing 9565.2 9310.7 10106 11495 Fuzhou 8414 10178 11188 11236 Ningbo 11224 11032 11240 11100 Tianjin 8230 8744.8 8217.7 8745.9 Qingdao 6576 7495.4 8056.1 8435.2 Dalian 7043.7 8052 8003.5 8263.3 Wuhan 5746 7192.9 7344.1 7717.4 Haikou 8015 6634.6 6821.3 7423 Chengdu 5936.5 6716.7 7288.2 7196.7 Source: National Bureau of Statistics, PBoC - 12 -
Sector Forecast Real Estate Market Value Rental Market Size 14000 12000 10000 8000 6000 4000 2000 27.7% 9,912.9 10,348.9 4.4% 11,392.2 10.1% 12,324.0 8.2% 13,204.0 7.1% 30% 25% 20% 15% 10% 5% 180 175 170 165 176.7 176.6 176.5 176.4 176.3 0.0% 0.0% 0.0% 0.0% -0.1% 0.3% 0.2% 0.1% -0.1% -0.2% 0 2014 2015 2016 2017 2018 Market value, RMB bn Annual growth 0% 160 2014 2015 2016 2017 2018 Rented properties, mn Annual growth -0.3% Office Rents, Expected Net Yield Comments 2012 2013 E 2014 F 2015 F 2016 F 2017 F 2018 F Shanghai 2-8% 4-5% 4-5% 2-8% 2-8% 2-8% 2-8% Beijing 3-10% 3-10% 3-10% 3-10% 3-10% 3-10% 3-10% Wuhan 7-9% 7-9% 7-9% 7-9% 7-9% 7-9% 7-9% Shenzhen 4-7% 4-7% 4-7% 4-7% 4-7% 4-7% 4-7% Research firm MarketLine expects the Chinese real estate market to grow by 70% in value between 2013 and 2018, with a CAGR of 11.2% for the period. Weakening in the mid- and long term is seen as a consequence of slower overall growth and industrial production and the corresponding drop in demand across the economy. Office rentals are to remain solid, supported by strong demand in major cities. BMI expects rental rates to largely remain the same by the end of 2015. Source: Marketline, BMI - 13 -
Regulations The new government has announced its commitment to market-oriented reform of the real estate sector through ongoing policy measures such as limiting property purchases, reform on property tax, and region-specific property market controls. Chinese Prime Minister Li Keqiang has recently highlighted the importance of local control measures as opposed to nationwide property regulations. New major regulations, long-awaited by the market, are likely to be published by the end of this year or in early 2015. The regulations are to be directed at increasing housing supply and curbing property price increases. In May 2014, China established a government agency to supervise property registration as part of an effort to accelerate the registration process. The bureau, under the Ministry of Land and Resources, is to be in charge of the registration of land, real estate, forest, grassland and maritime space. Beijing is planning to build a national property registration system in about three years and make it operational for information sharing and queries in four years. The system is expected to make the property market more transparent and serve as a foundation for better market regulation. The cooling of China's property market is likely to encourage authorities to speed up property tax reforms. A legislation plan to establish a property sector taxation system is to be submitted to the Standing Committee of the National People's Congress later this year. The legislation process is to be completed by the end of 2016, and the related taxes are to be implemented in 2017. Major proposed reforms include a real estate tax levied on homeowners and a land tax on property developers. With a real estate tax, a homeowner has to pay taxes in proportion to the monetary value of their housing at a certain tax rate each year. In China, taxes are currently imposed only when a housing transaction takes place, which makes it easier for speculation. In August 2014, the Ministry of Commerce announced that foreign real estate investors only need to apply at the ministry online, rather than previous practice of handing in paper applications, thus simplifying the procedure for foreign investment in the property market of China. In July 2014, the National Development and Reform Commission announced that the government will no longer be provide guidance for real estate consulting prices, which will be determined by the market. Source: Mergent, Xinhua, China Daily - 14 -
II. Residential Property Market - 15 -
Subsector Highlights Development Following a strong year in 2013, when consumers were back on the market as the new government was hesitant in implementing new property curbs, the residential real estate market has again started to lose momentum in early 2014 as bank credit was tightened, supply is growing and homebuyers' sentiment is waning. Divergence As the market changes drastically from the past decade, an increasingly notable difference between major and smaller cities is emerging. Demand in first and, to a large degree, second-tier cities, where purchasing power is stronger, remains robust, and supply of residential property is not always sufficient. On the contrary, in third- and forth-tier cities, supply exceeds demand and price growth has been fading. Affordable housing In order to protect families from the increasingly unaffordable house prices, the government has stepped up the construction of subsidised housing. 24.9 million units have been started from 2011 to 2013, which constitutes some 70% of the 2011-2015 planning period target of 36 million, and 15.8 million units have been completed. In 2014, the central government plans to spend RMB 116bn on subsidised homes. The availability of affordable housing is seen as a major factor in bringing down home prices while supporting demand. Rents up As housing prices in major cities become less affordable for newcomers while demand has shown few signs of weakening, the home renting market is gaining steam. In 2013, rental prices in the 11 leading cities have risen by an average of 5.4%, much higher than overall price level. However, supply in the segment is falling short as much property in older and more affordable areas is being demolished, while homebuyers tend to be more interested in asset appreciation than generating rental income. - 16 -
Investments & Sales Residential Investments Residential Property Sales 5,895 6,769 6,749 4,432 4,937 5,171 4,862 5,347 5,778 5,482 3,403 3,816 4,395 3,948 3,605 3,972 4,380 2,561 2,599 3,047 2,964 2,042 1,554 852 790 890 967 1,288 207 283 342 345 364 113 107 110 2009 2010 2011 2012 2013 Residential property investments, RMB bn Residential property investments: villa & deluxe apartments, RMB bn Residential property investments:economic housing, RMB bn 488 2008 2009 2010 2011 2012 2013 Value of buildings sold, RMB bn Value of buildings sold: existing, RMB bn Value of buildings sold: in advance, RMB bn Value or residential buildings completed, RMB bn Source: National Bureau of Statistics - 17 -
43.4 56.2 36.5 53.5 50.8 49.1 56.5 42.3 146.1 126.9 143.1 129.5 165.8 134.4 186.8 185.8 798.9 924.6 2,166.7 2,508.0 1,294.7 1,460.3 1,307.0 3,149.4 1,458.4 3,884.4 4,289.6 4,863.5 Residential Floor Space Residential Commodity Building Floor Space Started Res. Commodity Building Floor Space Under Construction 2008 2009 2010 2011 2012 2013 Total, sq.m. mn Villa & deluxe apartments, sq.m. mn Economic housing, sq.m. mn 2008 2009 2010 2011 2012 2013 Total, sq.m. mn Villa & deluxe apartments, sq.m. mn Economic housing, sq.m. mn Residential Commodity Building Floor Space Completed 477.5 596.3 612.2 716.9 790.4 787.4 29.9 32.2 30.2 34.5 32.7 32.0 33.4 31.7 2008 2009 2010 2011 2012 2013 Total, sq.m. mn Villa & deluxe apartments, sq.m. mn Economic housing, sq.m. mn Source: National Bureau of Statistics - 18 -
9.1 3.3 10.9 3.9 11.6 4.5 16.3 19.2 28.7 36.3 46.3 30.6 42.2 27.5 37.3 34.8 20.2 22.8 34.6 19.5 32.6 17.4 28.4 27.1 Residential Floor Space (cont'd) Residential Commodity Building Floor Space Sold 1,157.2 861.8 933.8 965.3 984.7 592.8 Residential Commodity Building Floor Space Presold 899.3 713.3 746.8 763.8 624.4 399.2 2008 2009 2010 2011 2012 2013 Total, sq.m. mn Villa & deluxe apartments, sq.m. mn Economic housing, sq.m. mn 2008 2009 2010 2011 2012 2013 Total, sq.m. mn Villa & deluxe apartments, sq.m. mn Economic housing, sq.m. mn Residential Commodity Building Floor Space Leased Residential Commodity Building Floor Space Waiting For Sale (Vacant) 4.7 3.2 3.2 3.0 2.6 1.2 1.1 1.2 0.9 0.9 0.1 0.1 0.3 106.6 114.9 124.5 180.9 236.2 324.0 2008 2009 2010 2011 2012 Total, sq.m. mn Villa & deluxe apartments, sq.m. mn Economic housing, sq.m. mn 2008 2009 2010 2011 2012 2013 Total, sq.m. mn Villa & deluxe apartments, sq.m. mn Economic housing, sq.m. mn Source: National Bureau of Statistics - 19 -
144.6 353.8 143.6 398.4 163.2 399.2 155.9 161.9 157.5 396.1 240.1 347.8 223.6 325.9 191.9 184.0 Residential Floor Space (cont d) Residential Commodity Building Flats Completed Residential Commodity Building Flats Sold 4,939.2 5,548.9 6,019.8 7,219.2 7,642.4 5,565.8 8,040.5 8,817.5 9,139.7 9,446.4 2008 2009 2010 2011 2012 Total, units th Villa & deluxe apartments, units th Economic housing, units th 2008 2009 2010 2011 2012 Total, units th Villa & deluxe apartments, units th Economic housing, units th 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Social Housing 4,320 4,536 5,440 10,430 7,688 6,660 2011 2012 2013 Number of flats completed, units th Number of flats started, units th Source: National Bureau of Statistics, Ministry of Housing and Urban-Rural Development - 20 -
Residential Floor Space (cont d) Residential Floor Space in Selected Cities, in sq.m. mn Started Under construction Completed Sold 2012 2013 2012 2013 2012 2013 2012 2013 Chongqing 43.5 53.9 170 192.5 33.9 28.7 41.1 43.6 Shenyang 28.9 27.2 80.4 84.8 16.4 12.3 22 20.2 Chengdu 22.4 25.5 98.6 101.1 15.9 13.5 24.2 25.6 Wuhan 16 20.6 50.7 62.3 9 5.3 13.9 17.5 Suzhou 14 20.6 60.5 67.3 13.9 12.3 12.6 16.3 Changsha 11.6 19.8 53.3 61.1 11.3 10.7 13.9 16.6 Zhengzhou 13.6 19.8 56 63.5 10.4 7.6 12.3 13.1 Xian 22.7 19 82.5 83.3 9 6.6 13.8 15 Kunming 16.4 18.4 42.3 53.5 5.2 5 9.2 10.4 Tianjin 17.6 17.4 69.2 75.6 19.1 21.2 15.1 17.2 Beijing 16.3 17.4 75.1 74.1 15.2 16.9 14.8 13.6 Shanghai 15.6 16.4 83.2 81.3 16.1 14.2 15.9 20.2 Dalian 11.9 15.1 48.3 48.7 5.9 8.5 9.7 11 Hefei 9.6 14.8 42.4 46.8 7.3 10.7 11.2 14.5 Guiyang 10.1 14.4 40.3 46.5 4.4 5.4 9.5 11.5 Guangzhou 9.8 13.4 49.2 49.9 8 7.1 11.3 14 Hohhot 9 13.1 31.3 40.6 2.9 3.1 4.1 3.4 Nanjing 10 12.9 42.3 41.3 13.6 7.5 8.8 11.4 Fuzhou 11 12.6 42.8 49.6 4 6.1 7.3 11.1 Qingdao 12.3 11.7 44.8 46.9 9.3 6.7 8.4 10.5 Hangzhou 10.3 11.4 50.3 55.1 6.7 8.5 9.2 9.7 Source: National Bureau of Statistics - 21 -
Residential Property Regional Markets Residential Property Investments, RMB bn Average Res. Property Price in Municipalities, RMB/sq.m. 2009 2010 2011 2012 2013 Eastern China 1,444.6 1,923.3 2,521.5 2,764.9 3,269.7 Central China 598.6 786.0 983.2 1,106.4 1,326.5 Western China 518.7 694.5 926.2 1,066.2 1,298.9 Beijing 90.7 150.9 177.8 162.8 172.5 Tianjin 49.5 56.5 67.9 84.3 98.6 11,648 10,661 8,253 8,115 5,576 5,598 2,588 2,640 13,224 12,364 6,605 3,266 17,151 14,213 7,913 4,040 17,854 15,518 16,553 16,192 13,448 13,870 8,539 8,010 8,390 4,492 4,805 5,239 Shanghai 91.9 123.0 139.9 145.2 161.6 Chongqing 78.9 109.1 143.8 170.7 204.4 2007 2008 2009 2010 2011 2012 2013 Shanghai Chongqing Beijing Tianjin Comments In first- and second-tier cities where demand is strong and prices are skyrocketing, more tightening policies are expected to be implemented in 2014. However, unlike many other countries, even if a price correction takes place in major cities, it is not seen as likely to lead to a national housing or financial crisis, unlike most mature Western markets, due to the fact that such cities only represent a small share of the total market. For instance, first-tier cities account for 4.7% of the total population and 3.8% of the residential property transactions. Source: National Bureau of Statistics - 22 -
Housing Mortgages Housing Mortgage Loans to Individuals, RMB bn 6,927 7,137 7,300 7,490 7,800 8,100 8,570 9,070 9,470 9,800 10,290 10,740 Q3/2011 Q4/2011 Q1/2012 Q2/2012 Q3/2012 Q4/2012 Q1/2012 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Q2/2014 Comments Chinese commercial banks are becoming increasingly reluctant to provide mortgage lending, bringing about new fears about a future market correction. As the market is reaching a more mature stage and the downward risks are rising while profitability from individual loans is wearing thin, banks are much more conservative in their approach. The country's central bank, the People's Bank of China, has recently urged banks to speed up lending to homebuyers, especially first-timers but their reaction has so far been subdued. Source: PBoC - 23 -
III. Office & Commercial Property - 24 -
Subsector Highlights Development Unlike residential property, office and commercial real estate has retained its uniform strength and, with demand significantly outpacing supply, has become one of the most lucrative investment segments in China. Due to the exponential growth of the e- commerce industry and its need for storage facilities, logistics property has become especially attractive. Multinational demand In spite of rising costs and the bleak economic outlook, over two thirds of multinational companies expect to be adding new staff in China over the next three years, while more than half of them are planning to expand their presence in the country geographically. Most of the companies view Eastern China as the best region for expansion or relocation, with the city of Shanghai standing out as most preferable. Improved transparency According to the JLL and LaSalle Investment's biennial Global Real Estate Transparency report, transparency in the commercial real estate sector in China, especially in first-tier cities, has shown some improvement over the recent years. The report attributes the relative improvement of mainland China s market fundamentals to the stronger presence of global real estate advisers. The most improving areas are land use planning and compulsory purchase by a public body, while taxation consistency and predictability, as well as the accuracy of data in real estate debt are the main factors hindering further development. - 25 -
Investments Office & Commercial Property Investments 1,194.5 931.2 737.0 320.0 111.2 137.8 417.2 180.7 559.9 254.4 336.7 465.2 2008 2009 2010 2011 2012 2013 Office building investments, RMB bn Commercial building investments, RMB bn Comments Real estate research firm Insite expects 15 million square meters of new commercial property to enter China's major 20 cities in 2014. The number is to reach 35mn sq m by the end of 2016, which would represent a rise of 54% over the existing stock in 2013. The new supply of office space is to reach 58mn sq m in 2016, a 73% increase over the existing stock. Source: National Bureau of Statistics - 26 -
Sales Office Property Sales Commercial Property Sales 400 800 350 700 300 600 250 200 285.7 Value of buildings sold: in advance, RMB bn 500 400 339.0 454.5 485.1 Value of buildings sold: in advance, RMB bn 150 100 50 110.3 159.0 51.4 55.9 183.4 66.8 218.6 58.8 89.1 Value of buildings sold: existing, RMB bn 300 200 100 134.1 94.5 214.4 145.7 196.4 215.8 214.8 Value of buildings sold: existing, RMB bn 0 2009 2010 2011 2012 2013 0 2009 2010 2011 2012 2013 Source: National Bureau of Statistics - 27 -
Office & Commercial Floor Space Office & Commercial Commodity Building Floor Space Started Office & Commercial Commodity Building Floor Space Under Construction 174.6 123.5 93.2 22.8 28.1 36.8 259.0 206.7 220.1 53.6 59.9 68.9 446.2 289.0 344.4 91.9 99.8 121.4 562.8 159.5 194.3 658.1 245.8 806.3 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 Office, sq.m. mn Commercial, sq.m. mn Office, sq.m. mn Commercial, sq.m. mn Office & Commercial Commodity Building Floor Space Completed 54.9 65.2 79.3 90.5 102.3 108.5 16.5 16.1 17.5 21.8 23.2 27.9 2008 2009 2010 2011 2012 2013 Office, sq.m. mn Commercial, sq.m. mn Source: National Bureau of Statistics - 28 -
Office & Commercial Floor Space (cont'd) Office & Commercial Commodity Building Floor Space Sold Office & Commercial Commodity Building Floor Space Presold 11.1 38.5 15.1 52.2 69.2 78.8 77.6 18.8 20.1 22.5 28.8 84.7 6.8 20.0 10.2 28.0 47.7 48.9 39.4 13.2 14.2 17.4 21.2 54.8 2008 2009 2010 2011 2012 2013 Office, sq.m. mn Commercial, sq.m. mn Office & Commercial Commodity Building Floor Space Leased 2008 2009 2010 2011 2012 2013 Office, sq.m. mn Commercial, sq.m. mn Office & Commercial Commodity Building Floor Space Waiting For Sale (Vacant) 12.2 31.4 10.3 25.5 28.1 24.1 21.8 12.0 11.5 12.0 71.3 60.9 50.0 50.3 52.7 9.9 10.9 11.1 12.6 15.5 19.5 93.5 2008 2009 2010 2011 2012 Office, sq.m. mn Commercial, sq.m. mn 2008 2009 2010 2011 2012 2013 Office, sq.m. mn Commercial, sq.m. mn Source: National Bureau of Statistics - 29 -
Office & Commercial Floor Space (cont'd) Office & Commercial Floor Space In Selected Cities (2013), in sq.m. mn Started Under construction Completed Sold Office Commercial Office Commercial Office Commercial Office Commercial Chongqing 2411.5 10013 7819.8 29657 757.56 4560.8 686.69 2440.4 Beijing 6714 3510.1 21141 12334 2730.5 1783.6 3179.3 1025.2 Shanghai 2640.6 2749.6 14317 15007 1760.1 2534.5 1612.2 1164.7 Chengdu 1785.7 5614.1 7915.7 17755 866.99 1534 1060.3 1741.6 Tianjin 1738.4 3701.1 8410 11586 1885.9 1878 234.91 516.02 Shenyang 699.68 5524.2 3396.7 19220 85.439 1786 174.53 2019.6 Zhengzhou 2086.9 2674.7 8664.1 10791 850.75 1350.1 1767.4 882.67 Guangzhou 2213.9 2430.5 7690.8 9612.5 1473.6 827.08 1608.5 958 Hangzhou 2469.7 2244.6 10066 8469 683.15 786.73 946.31 529.19 Suzhou 932.41 3022.5 3520.5 11282 635 2058.2 524.15 1652.5 Ningbo 1226.8 2943.5 6014.7 9123.4 863.83 1025.5 495.87 557.05 Hefei 814.21 3489 4467.5 10229 604.17 1281.6 580.59 827.18 Wuxi 829.58 2477.1 3719.5 10945 892.69 1400.1 416.92 801.09 Changsha 1059.3 2755.5 4090.4 8709.7 356.16 1140.4 642.59 927.54 Wuhan 1355.8 2709.1 3960.6 9267.9 334.18 637.72 714.36 1240 Qingdao 948.39 2210.1 3814.4 9151.1 257.22 1178 464.27 420.13 Xian 1512.8 2737.3 4159.7 8546.2 303.37 450.1 333.59 614.35 Kunming 1194.2 3347.3 4420.6 8285.9 216.75 354.75 407.37 704.75 Hohhot 322.64 2899.8 2242.2 10253 77.331 510.64 168.34 406.05 Harbin 175.46 3320.8 1582.6 8420.1 240.59 844.48 195.71 838.34 Changchun 746.09 1635.3 2631.8 7398.1 152.31 1391.1 158.44 439.49 Source: National Bureau of Statistics - 30 -
Office & Commercial Property Regional Markets Average Office Property Selling Price, RMB/sq.m.n Average Commercial Property Selling Price, RMB/sq.m.n 25,997 23,413 23,702 23,623 23,426 21,598 22,114 21,000 16,554 16,857 18,888 11,134 13,855 9,783 11,783 12,306 11,441 13,349 10,608 11,406 12,327 12,997 8,907 11,495 8,378 9,537 11,687 11,370 4,667 5,175 2008 2009 2010 2011 2012 2013 Shanghai Chongqing Beijing Tianjin Nationwide 24,920 26,405 22,452 19,091 19,527 20,476 17,148 19,294 16,550 15,237 8,955 15,779 16,218 10,338 10,546 11,222 13,008 9,021 9,576 9,777 6,610 10,780 5,886 6,871 7,747 8,488 7,145 8,003 8,132 5,432 2008 2009 2010 2011 2012 2013 Shanghai Chongqing Beijing Tianjin Nationwide Office & Commercial Property Investments, RMB bn 2009 2010 2011 2012 2013 Office Commercial Office Commercial Office Commercial Office Commercial Office Commercial Nationwide 137.7 418.1 180.7 564.8 255.9 742.4 336.7 931.2 465.2 1194.5 Beijing 16.7 20.1 25.9 33.6 36.4 29.7 38.5 27.6 n/a n/a Tianjin 3.3 9.7 7.7 12.7 11.0 17.7 8.6 15.5 n/a n/a Shanghai 18.9 18.5 22.4 24.5 22.8 25.2 26.3 29.4 n/a n/a Chongqing 2.2 11.7 3.2 13.4 5.3 21.8 10.2 30.8 n/a n/a Source: National Bureau of Statistics - 31 -
IV. Land Market - 32 -
1,591 1,510 230.4 212.5 319.1 328.2 314.6 2,710 2,600 2,690 2,550 356.7 3,150 3,020 399.5 402.2 402.0 388.1 443.3 422.8 4,200 4,040 Land Market Activity Land Area on the Market Land Transfer Revenues 2009 2010 2011 2012 2013 Land area purchased, sq.m. mn Land area developed, sq.m. mn Land area to be developed, sq.m. mn 2009 2010 2011 2012 2013 Land transfer revenues, RMB bn Land transfer revenues: bid, auction, listed, RMB bn Comments In 2013, land sales in China reached a record high. However, since the beginning of 2014 real estate enterprises have become increasingly cautious about land purchases as the financing environment has worsened and demand for housing in most places outside the biggest cities has cooled down. According to market observers, land sales account for more than 50% of local governments' income in China. Source: National Bureau of Statistics, Ministry of Land and Resources - 33 -
Local Land Markets Land Area Purchased by Region, in sq.m. mn 407.6 21.8 359.2 11.6 294.3 12.3 366.5 13.5 16.6 325.8 353.8 19.0 8.2 5.1 3.3 6.3 4.4 1.8 8.6 6.5 4.3 5.1 7.6 6.4 3.1 3.0 3.0 9.1 2.1 4.2 2008 2009 2010 2011 2012 2013 Beijing Tianjin Shanghai Chongqing Rest of the country Comments Companies in the sector have shifted their focus from smaller cities to bigger ones, particularly first-tier cities where more people are arriving from the rest of the country and the undersupply of residential property is increasing. Therefore, demand for land in major cities is being driven to new heights and the trend is not expected to end anytime soon. Source: National Bureau of Statistics - 34 -
Land Supply Land Supply, in ha th Land Supply Usage, in ha th 690.4 730.5 2013 138.1 203.2 210.0 317.3 587.7 2012 110.8 160.2 203.5 326.6 319.1 291.5 432.5 333.9 322.8 367.0 2011 2010 135.9 167.3 192.6 124.4 115.3 153.1 153.8 227.8 208.8 2009 96.8 76.5 102.8 119.4 2008 63.3 55.1 75.2 82.8 2009 2010 2011 2012 2013 Land supply: transferred Land supply: total Other use Property use Residential Industrial, mining & storage use Source: Ministry of Land and Resources - 35 -
Land Prices Land Prices, 105 Major Cities, RMB/sq.m. 5,018 5,185 5,358 5,506 5,615 5,654 5,705 5,728 5,793 5,843 5,964 6,044 6,201 6,306 6,415 6,475 4,085 4,245 4,349 4,443 4,518 4,518 4,516 4,522 4,564 4,620 4,702 4,799 4,910 5,033 5,139 5,214 2,805 2,882 2,945 3,000 3,040 3,049 3,057 3,069 3,093 3,129 3,175 3,226 3,286 3,349 3,412 3,458 623 629 638 645 649 652 654 659 662 670 676 684 691 700 712 722 09/2010 12/2010 03/2011 06/2011 09/2011 12/2011 03/2012 06/2012 09/2012 12/2012 03/2013 06/2013 09/2013 12/2013 03/2014 06/2014 Average price Average price: commercial Average price: residential Average price: indusrial Comments The government's measures to curb prices growth in major cities had no significant effect in 2013 as they registered a 35% rise in land prices. There was some minor adjustment in price growth rates in early 2014 on the back of tighter credit and slower growth in individual mortgage loans but any significant downward trend is yet to be observed. Source: Ministry of Land and Resources - 36 -
Land Prices by City Source: Ministry of Land and Resources Land Prices, RMB/sq.m. Commercial Residential Industrial June 2013 June 2014 June 2013 June 2014 June 2013 June 2014 Shenzhen 32922 36179 29132 35160 2605 3045 Shanghai 34950 37926 25335 30019 1699 1852 Guangzhou 25596 29629 19661 25195 598 697 Hangzhou 15342 15969 15269 16383 527 581 Beijing 13418 14492 14124 15563 1595 1670 Fuzhou 16670 17457 10731 11301 584 600 Nanjing 17534 18734 8946 9670 1072 1081 Kunming 14213 16079 6911 7295 666 671 Wenzhou 11608 11432 9711 9440 1697 1674 Chengdu 10139 10846 7632 7870 692 716 Ningbo 8522 8700 8750 9124 1098 1147 Tianjin 8428 8747 5721 6013 792 813 Qingdao 8224 9559 4428 5130 775 783 Quanzhou 6626 6963 5746 6067 581 599-37 - Land Prices, RMB/sq.m. (cont d) Commercial Residential Industrial June 2013 June 2014 June 2013 June 2014 June 2013 June 2014 Dongguan 6943 7301 5007 5398 703 720 Guiyang 8554 8799 3636 3696 451 459 Nanchang 6560 7658 4315 5166 455 464 Foshan 6143 7515 3657 4833 636 693 Liuzhou 6884 7198 2681 2824 406 421 Shantou 5308 5580 3401 3609 824 874 Hefei 5341 5601 3420 3793 408 408 Harbin 6322 6355 2514 2533 435 436 Suzhou 5405 5525 2816 2890 618 623 Jinan 4377 4495 3680 3747 687 703 Nanning 6156 6397 1891 1991 498 510 Dalian 4845 4937 2664 2865 710 761 Changzhou 4744 4827 3038 3091 374 377 Haikou 3601 3843 3455 3667 565 587
V. Main Players - 38 -
China Vanke Co.,Ltd. Financial Performance 127,454 96,860 67,709 47,764 31,406 34,639 24,460 18,235 7,283 9,625 12,551 15,119 2010 2011 2012 2013 Revenue, RMB mn Gross profit, RMB mn Net profit, RMB mn Other Financial Data Indicator 2010 2011 2012 2013 Cost of sales, RMB mn 29,529 43,249 65,454 92,814 Total assets, RMB mn 215,985 296,534 379,095 479,475 Total liabilities, RMB mn 161,398 228,702 296,957 374,035 Total stockholders' equity, RMB mn 54,586 67,833 82,138 105,439 Earnings per share 0.66 0.88 1.14 1.37 Highlights China Vanke Co.,Ltd.was founded in Shenzhen in 1984 and became engaged in real estate in 1988. It was the second listed company on the Shenzhen stock exchange (1991). The Company is the world s largest property developer It is the 9 th largest enterprise in China in terms of operating revenue, and the 2 nd in amount of taxes paid. Vanke s business covers 53 large and medium-sized cities in the Pearl River Delta region, the Yangtze River Delta region and the Bohai Economic Rim, as well as the central and western part of China. Amid severe competition for land in mainstream city markets, the Company is staying loyal to its strategic principle of rather forgoing an opportunity than making a wrong acquisition, doing its best to avoid to avoid acquiring overvalued sites. In a move towards further strengthening its management, in late 2013 Vanke established a partnership plan requiring project managers to make personal investments in their development projects in order to align their interests with Company. In June, Vanke established strategic partnership with the country's leading internet company Baidu.com Inc., which is to bring Baidu's location-based services in its commercial property businesses to provide better services and to construct a commercial ecosystem that integrates consumers, merchants and operators. Source: Company data - 39 -
China Vanke Co.,Ltd.(cont d) Company Size Performance by Business (2013, in RMB mn) 40000 35000 30000 25000 20000 15000 10000 5000 0 2009 2010 2011 2012 2013 2.06% 2.06% 2.19% 35,330.0 2.09% 31,019.0 1.66% 27,951.0 17,616.0 22,850.0 2009 2010 2011 2012 2013 Number of employees Market share in China, % 3% 2% 2% 1% 1% 0% Property develiopment Property management Amount Revenue % of total Change y/y Cost of sales Amount % of total Change y/y 124,977 98.1% 31.0% 9,155 98.6% 41.7% 1,385 1.1% 71.5% 116 1.3% 65.9% Other business 1,092 0.9% 71.6% 11 0.1% -17.8% Total 127,454 100.0% 31.6% 9,281 7.3% 41.8% Contracted Sales Area Revenues by Region (2013, in RMB mn) 16000 14000 12000 10000 8000 6000 4000 2000 0 90% 42% 39% 6,137 5,570 6,636 19% 3,228 2,318 1,638-9% 14,899 12,956 10,753 8,977 35% 20% 20% 15% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Contracted sales area, sq.m. th Growth y/y 100% 80% 60% 40% 20% 0% -20% Shanghai 26,308 Guangzhou & Shenzhen 41,931 Beijing 32,036 Chengdu 24,703 Source: Company data - 40 -
Evergrande Real Estate Group Ltd 5,723 3,914 1,117 45,801 Financial Performance 61,918 65,261 18,419 20,274 17,131 8,025 11,785 9,182 Other Financial Data 93,672 26,457 2009 2010 2011 2012 2013 13,709 Revenue, RMB mn EBITDA, RMB mn Net income, RMB mn Indicator 2009 2010 2011 2012 2013 Total operating expenses, RMB mn 2,650 29,022 37,110 43,120 60,846 Sales, general and admin. expenses, RMB mn 1,820 2,959 4,882 5,618 7,782 Total assets, RMB mn 63,071 104,452 179,023 238,991 348,148 Total liabilities, RMB mn 49,914 83,086 144,166 197,299 268,806 Total stockholders' equity, RMB mn 13,157 21,366 34,858 41,691 79,343 Earnings per share 0.07 0.51 0.76 0.61 0.79 Highlights Evergrande Real Estate Group, listed on the HK stock exchange, was incorporated in 1996 in Guangzhou. It is the owner of Asia s most successful football club in recent years, Guangzhou Evergrande.F.C. However, a 50% stake in it was sold to Alibaba Group in June 2014. The Group which over 2013 was developing 291 large projects in 147 major Chinese cities has over 48,000 employees. It has established branch companies (or regional companies) in all 4 municipalities and 29 provincial capitals across the country. In 2013, it paid13.4 billion RMB in tax and created 600 thousand jobs. Evergrande s recent strategic behaviour has been focusing on replenishing of its land reserves, optimizing the regional layout of residential property projects and acquiring quality land plots in first and second-tier cities. One of its strong competitive advantages is cost efficiency, as at 949 RMB/sq.m on average, the cost of its land reserves tends to be below the one of its major competitors. 45.4% of the aforementioned 291 projects were in first- and second-tier cities across China. Most recently, the Group has sought to diversify its business, expanding into the fields of agricultural products and consumer goods. Source: Company data - 41 -
Evergrande Real Estate Group Limited (cont d) Source: Company data Revenues by Source, in RMB mn Expenses by Type (in RMB mn) 2011 2012 2013 Sales of properties 60,474 63,507 92,235 Rental income of investment properties 84 99 126 Property management services 463 507 742 Other businesses 897 1,148 569 100,000 0 1,769 337 401 388 4,718 3,750 41,532 2,337 513 754 663 5,887 5,350 59,674 2012 2013 Others Depreciation & amortisation Sales commissions Advertising costs Staff costs including directors emoluments - 42 - Region No. of projects Regional Distribution of Business Site area (sq.m. th) Total GFA (sq.m. th) Land reserve GFA (sq.m. th) Share of total Guangdong 24 10,560 19,885 14,847 9.8% Liaoning 20 5,082 18,229 13,224 8.8% Jiangsu 20 7,973 16,458 12,928 8.6% Hebei 17 6,459 14,274 11,740 7.8% Shandong 16 4,803 13,857 10,786 7.2% Anhui 17 3,605 13,052 9,960 6.6% Sichuan 15 6,238 12,532 8,525 5.7% Henan 12 3,285 10,130 7,692 5.1% Hunan 15 2,843 9,596 5,359 3.6% Jiangxi 9 3,692 6,904 4,753 3.2% Gansu 5 1,967 4,711 4,711 3.1% Hubei 9 3,720 7,073 4,213 2.8% Chongqing City 12 3,286 7,666 3,829 2.5% Shanxi 10 2,262 6,712 3,814 2.5% Guizhou 6 1,322 4,592 3,683 2.4% Hainan 8 2,400 4,129 3,482 2.3% Heilongjiang 10 1,565 4,152 3,405 2.3% Rest of the country 66 14,761 30,457 23,803 15.7%
Poly Real Estate Group Co.,Ltd Financial Performance Highlights 92,356 35,894 47,036 68,906 22,987 14,568 17,298 7,516 10,575 5,201 3,519 4,920 6,531 8,438 10,747 2009 2010 2011 2012 2013 Revenue, RMB mn EBITDA, RMB mn Net income, RMB mn Other Financial Data Indicator 2009 2010 2011 2012 2013 Total operating expenses, RMB mn 17,766 28,470 37,072 55,512 76,349 Total assets, RMB mn 89,831 152,328 195,015 251,169 313,940 Total liabilities, RMB mn 64,742 122,619 159,757 208,682 262,177 Total stockholders' equity, RMB mn 25,088 29,709 35,258 42,486 51,763 Earnings per share 0.35 0.46 0.61 0.79 1.01 Poly Real Estate (Group) Co. Ltd. was established in 1992 in Guangzhou and was listed on the Shanghai Stock Exchange in 2006. It is a part of the China Poly Group Corporation. For five successive years, it has ranked at number 1 in terms of comprehensive strength of state-owned real estate enterprise. Its core business involves the development and distribution of residential, commercial, and composite buildings. Its chief operations are concentrated in the cities of Guangzhou, Beijing, Shanghai, Foshan, Shenyang, Changchun, Wuhan, Chongqing, Chengdu, Changsha, Nanchang, Tianjin, Baotou, Hangzhou, and Yangjiang. Poly took advantage of the tight supply in the residential property market in H1 of 2013 and stepped up its sales, which helped it reach an over 18% growth in property area sold over the year in total. Contracted sales value for the same year amounted to RMB15.3 bn, which represented a share of 1.54% in domestic market. Source: Company data - 43 -
Poly Real Estate Group Co.,Ltd (cont d) Employees Costs, in RMB mn 25 23.2 70,000 20 15 10 5 0 18.6 14.9 11.4 8.5 5.7 3.9 2007 2008 2009 2010 2011 2012 2013 Number of employees, th 60,000 50,000 40,000 30,000 20,000 10,000 0 1,269 1,014 34,400 26,541 26,986 16,401 2012 2013 Other costs Developm ent & constructio n costs Land costs Revenues by Business (2013, in RMB mn) Revenues by Region (2013, in RMB mn) Source: Company data Real estate 89,290 Others 3,051 2012 2013 Guangdong 14,135 26,801 Beijing 4,677 10,379 Sichuan 9,542 8,677 Hubei 4,288 7,560 Shanghai 6,667 7,506 Chongqing 3,716 6,199 Hangzhou 2,095 4,790 Jiangsu 4,955 4,433 Liaoning 4,465 3,530 Other regions 14,335 12,465-44 -
China Overseas Land & Investment Ltd. Financial Performance Highlights 82,469 39,278 12,2597,646 46,650 51,332 23,388 18,914 12,671 15,464 64,581 Other Financial Data 27,070 28,348 23,044 18,722 2009 2010 2011 2012 2013 Revenue, HKD mn Operating profit, HKD mn Profit attributable to shareholders, HKD mn Indicator 2009 2010 2011 2012 2013 Total operating expenses, HKD mn Sales, general and admin. expenses, HKD mn 23,736 21,713 23,298 35,474 51,304 1,327 1,907 1,897 2,037 2,817 Total assets, HKD mn 114,117 162,248 175,975 229,825 296,522 Total liabilities, HKD mn 71,788 103,478 104,085 142,268 185,472 Total stockholders' equity, HKD mn 42,330 58,770 71,890 87,557 110,050 Earnings per share 0.94 1.55 1.89 2.29 2.82 China Overseas Land & Investment Ltd., also known as COLI, was established in 1979 in Hong Kong and listed at the HK stock exchange in 1991. COLI is a subsidiary of China State Construction Engineering Corporation, the largest construction conglomerate in China, and operates in 42 cities and regions on the mainland, in Hong Kong and Macau. Its core business is the development and sales of property projects, with a strategic focus on mid- to high-end real estate. It is also engaged in other property-related businesses such as property investment, property management, and planning and construction design etc. Rental income reached HKD860 million in 2013, representing a year-on-year growth of 48.3%. The COLI announced plans to launch up to 30 projects worth HKD110 bn in the second half of the current year. Source: Company data - 45 -
China Overseas Land & Investment Ltd. (cont d) Land Reserves Land Reserves by Region (2013) 50 40 30 30.6 30.6 34.5 35.1 38.8 Northern China 37.0% South China 18.3% East China 21.0% 20 10 0 2009 2010 2011 2012 2013 Land reserves, sq.m. mn Northeast China 9.2% HK & Macau 0.6% Western China 13.9% 10,000 8,000 6,000 4,000 2,000 0 Contracted Sales 9,234 7,290 138.5 5,580 4,768 5,301 111.5 87.1 67.1 47.8 2009 2010 2011 2012 2013 160 140 120 100 80 60 40 20 0 Contracted sales area, sq.m. th Contracted sales value, HKD bn Source: Company data - 46 -
Country Garden Holdings Co., Ltd. Financial Performance Other Financial Data Indicator 2009 2010 2011 2012 2013 Total operating expenses, RMB mn Sales, general and admin. expenses, RMB mn 12,747 17,412 22,710 26,448 43,649 1,180 1,455 2,448 3,754 6,337 Total assets, RMB mn 63, 940 82,081 107,310 136,522 206,239 Total liabilities, RMB mn 42,399 56,663 77,243 97,638 160,228 Total stockholders' equity, RMB mn 34,748 41,891 62,682 25,804 17,586 14,064 7,393 10,141 12,228 4,390 2,126 4,318 5,838 6,885 8,848 2009 2010 2011 2012 2013 Revenue, RMB mn EBITDA, RMB mn Net income, RMB mn 21,300 25,418 30,067 38,884 46,011 Earnings per share 0.13 0.26 0.35 0.38 0.47 Highlights Country Garden Holdings Co., Ltd, based in Foshan, Guangdong province, together with its subsidiaries, is one of China s leading integrated property developers, with businesses comprising construction, installation, fitting, property development, property management, as well as hotel development and management. It has been listed on SEHK since 2007. The Group has over 100 high-quality property projects, covering 11 major regions of China and serving over 300,000 home owners. Country Garden said in August it was planning to launch new 37 projects in the second half of 2014, up from 22 in the first six months. Country Garden recently announced expansion plans for new new overseas markets in North America and Southeast Asia, while setting a target for an over 20% contracted sales growth in 2014. It currently has two projects in Malaysia and one in Australia. The highest contracted sales contributor for 2013 was Country Garden Danga Bay project in Malaysia, which contributed about RMB7 bn. The Group s management has expressed interest in expanding its positions in the Malaysian property market and is planning to list its local unit on the Bursa Malaysia stock exchange. Source: Company data - 47 -
Country Garden Holdings Co., Ltd. (cont d) 70,000 Revenues by Business Property Business Overview (2013) 60,000 995 867 777 Indicator GFA, sq.m. th Hotel services 50,000 All projects 99,392 40,000 314 592 972 Property management services Completed 45,732 30,000 60,043 20,000 40,012 Construction, fitting and decoration services Total completed saleable 43,751 10,000 Property sales Total saleable GFA sold and delivered 39,127 0 2012 2013 Total saleable GFA pre-sold pending delivery 1,102 Source: Company data - 48 -
Contact: Corporate Headquarters Nestor House Playhouse Yard London EC4V 5EX UK Voice: +44 207 779 8471 Fax: +44 207 779 8224 Americas Headquarters 225 Park Avenue South New York, New York 10003 US Voice: +1 212 610 2900 Fax: +1 212 610 2950 Asia Headquarters Eucharistic Congress Bldg. No. III 4th Floor, 5 Convent Street Mumbai 400 001 India Voice: +91 22 22881123 Fax: +91 22 22881137 Disclaimer: The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional Investor PLC take no responsibility for decisions made on the basis of these opinions. A Euromoney Institutional Investor company. About EMIS Insight EMIS Insight is a unit of EMIS that produces proprietary strategic research and analysis. The service features market overviews, industry trend analysis, legislation and profiles of the leading sector companies provided by locally-based analysts. About EMIS Founded in 1994, EMIS (formerly known as ISI Emerging Markets) was acquired by Euromoney Institutional Investor PLC in 1999. EMIS works from over 15 offices around the world to deliver electronic information products, by subscription, to institutional customers globally. EMIS provides hard-to-get information covering more than 100 emerging markets. Its flagship products are EMIS Intelligence and EMIS Professional. EMIS clients include top investment banks, corporations, law firms, consultants, investment and insurance companies, universities and libraries, multilateral organizations, and others. - 49 -