On March 31, Vanke Enterprise Co., Ltd. (000002.SZ, 02202.HK) held an online performance promotion meeting for 2021. Yu Liang, Chairman of the Board of Vanke, Zhu Jiusheng, President of Vanke, Zhang Hai, Chief Partner of the Development and Operation Division, Property Business Group Chief Partner Zhu Baoquan, Executive Vice President and Chief Financial Officer Han Huihua, Executive Vice President Liu Xiao, Board Secretary Zhu Xu and other management attended.
Facing the first sharp drop in Vanke’s net profit in 13 years, Yu Liang responded positively at the performance meeting, and mentioned that “the performance is not good, to 52 Ten thousand shareholders express our sincere apologies.”
According to the annual report data disclosed by Vanke, in 2021, Vanke will achieve an operating income of 452.8 billion yuan, a year-on-year increase of 8%; the net profit attributable to shareholders of the listed company is 22.52 billion yuan, a year-on-year increase A drop of 45.7%.
In response to the drop in net profit: there is a problem of large dispersion in Vanke’s management
According to the annual report data released by Vanke, Vanke has experienced three declines in net profit, In 1995, 2008 and 2021, respectively, Yu Liang said that behind each decline, the shortcomings accumulated in the past development were exposed. When the external environment presents challenges, the shortcomings will be knocked down in the form of a decline in net profit. Sound the alarm.
Yu Liang admitted at the performance meeting that Vanke has a problem of large dispersion in management. He said that in the past, Vanke has always been a fully authorized and distributed mechanism, which is conducive to quickly grasping market opportunities during the period of rapid industry growth. However, as the competition becomes more and more intense, there are more and more large-scale and complex projects, there is a single company and a single region, and they do not have complete capabilities, which will show problems of unevenness and large dispersion, which will lower the overall performance.
In addition, Yu Liang said at the press conference that the cost of exploring multiple tracks at the same time was greater than expected, which had an impact on past performance.
He said that in 2014, when Vanke started its transformation and exploration, it tried many tracks, because with the scale of Vanke, there were only one or two tracks. may not be enough to support sustainable development. However, the difficulty and cost of exploring multiple tracks at the same time far exceeded the initial estimate. In the past, the development business grew rapidly and borne related costs, but after the market environment changed, the impact of these tuition fees on performance became apparent.
At the same time, it mentioned that policies and measures conducive to market stability are constantly being introduced. Governments at all levels are also formulating policies to stabilize the market, and Vanke has confidence in the policy environment. After adjustment, the industry will return to normality and rationality. Too high and too low profit margins are unsustainable, and the industry’s income level will eventually return to the social average. This is the basis for Vanke’s policy of “stopping the decline and stabilizing, and improving while maintaining stability”. In addition, real estate is a huge market with a scale of more than 10 trillion yuan, and it is often done and often new. He believes that the real estate market is still a huge single-product market, with a scale of more than 10 trillion yuan. Real estate development is still an important economic activity, and it is also the main business of Vanke now and in the future. This business will continue to be frequent in the future.
Response to non-development business: tuition fees for the new track have been paid, and there will be positive contributions this year
Yu Liang mentioned at the performance meeting, The development business is still the main business of Vanke, but if it does not operate the service business, it will not be able to support the better development of Vanke in the future. Yu Liang believes that one of the indicators to measure the success of an operating business is whether each business can be listed independently. “We said internally, whether we can grow up, start a family and start a business, and go outside.”
Yu Liang said that Vanke’s operations and service businesses continued to improve, with a compound growth rate of over 30% in property revenue over the past ten years, 52% in logistics in the past three years, and 52% in its apartment business in the past three years. In 2021, Vanke’s overall operating service business revenue will exceed 40 billion yuan.
At the same time, Yu Liang said that most of the tuition fees for exploring these businesses have been paid. Vanke has always pursued profit with cash flow. Therefore, the cost method is adopted to measure these businesses, and depreciation and amortization are listed in the cost and expenses. This part of the expenses in the scope of the consolidated statement last year reached 8 billion yuan, which objectively exists in the statement profit. influence. This year, the non-development business as a whole will start to make a positive contribution.
According to the data disclosed by Vanke, in terms of development business, in 2021, Vanke will achieve a sales area of 38.078 million square meters and a sales amount of 627.78 billion yuan, a decrease of 18.4% and 10.8%.
In terms of non-development business, in terms of property services, Wanke Cloud achieved operating income (including income from services provided to Vanke Group) of 24.04 billion yuan, a year-on-year increase of 32.1%. Vanke’s rental housing business achieved operating income of 2.89 billion yuan, a year-on-year increase of 13.9%. During the reporting period, Port Apartment acquired 27,600 new rooms, with a net new opening of 17,100 rooms. The operating income of commercial projects managed by SCPG was 5.23 billion yuan, a year-on-year increase of 23.9%, the same-store revenue increased by 12.1% year-on-year, and the overall occupancy rate was 95.3%.
Responding to mergers and acquisitions: Pay attention to relevant opportunities while ensuring your own safety
In response to the issues of the land acquisition market and the improvement of industry concentration at the press conference, Yu Liang said that whether it is advancing or retreating, it is based on a principle, that is, whoever uses the new development model can advance, and whoever uses the original traditional growth method will retreat. The original traditional method is characterized by the addition of speed and scale and the multiplication of high financial leverage. Those who follow the past method may retreat. As long as you don’t simply stick to the old model, you can actually survive. The advance and retreat depends on whether it is stable and whether it is converted to the requirements of the new development model.
Yu Liang believes that the industry concentration may increase, but due to the obvious localization characteristics of the real estate industry, the concentration of leading companies will increase, but the market There will still be many developers in it. Vanke still hopes to be the top force and the first camp. This is Vanke’s positioning requirement for itself. Regarding whether it will take advantage of the problems of some enterprises to carry out mergers and acquisitions, Vanke adheres to two principles: first, ensure its own safety and not cause trouble to the industry; under this requirement, we will do our best to do things that are beneficial to the virtuous circle of the industry, and will pay attention to it. related opportunities.
In terms of land acquisition investment strategy, Zhang Hai, chief partner of Vanke Development and Operation Headquarters, said that in 2021, whether it is housing sales or investment in the open market, in such a market environment , which brings greater challenges to investment, mainly in two aspects: one is to be constrained by the actual environment; the other is to have forward-looking judgments. Vanke conducted a review of the investment based on the performance results. Some of the investments met expectations, while others failed to meet expectations. In the past, the investable amount was based on the return of each area, and everyone hoped to invest more in their own area. Since last year, such an investment method has been discontinued, the investment quota is no longer divided, and investment is more concentrated in areas with stable markets, safe projects, and strong trading capabilities. In addition to this, we have also changed the investment evaluation of new projects, focusing on direct impactJudgment and control of key factors of post-investment results.