Focus, and quality, drive sustainable growth for Sunac China Promising results prove the fair and studious top developer right
Peach Blossom Springs
hina property stocks were pumped a shot of adrenaline when The China Securities Regulatory Commission gave the green light to the trial issuance of preferred stocks and reissuance of new shares for domestic property developers on March 20. Now that the mainland property developers have been announcing their annual results, it was revealed, however, that broad income rises but sharp drops in profits were common. The top high-end property developer Sunac China (SEHK: 1918), in its 2013 results announcement on March 25, realized RMB54.73 billion in contracted sales and RMB30.84 billion in revenue, and a 48% increase over 20.84 billion from the previous year with a notable 28.8% rise in core profits. final dividends were skyrocketed by 142% to 0.191 Yuan.
Specialization values: making it in ten years First listed in Hong Kong in 2010, Sunac China maintains a healthy pace of growth in every annual indicator, ranking 11th in China’s league table of domestic housing sales last year as a first-tier player. The company succeeded by sticking to clear and enduring strategic goals, with regional focuses in Beijing, Shanghai, Tianjin, Chongqing and Hangzhou for its premium property lines which cultivated customer loyalty and goodwill.
Hammering out quality and turnover The vast expanses in China mean that acquisition is seldom the biggest challenge for developers, but the old adage about "location, location, location" still applies for those seeking to sell at good prices and with a quick turnover. Sunac China operates a fastidious acquisition strategy, seldom bidding but packing punches for every blow. Having secured healthy cash flows and manageable gearing ratios, the company handpicked 19 quality lots which well-align with its internal standards and developmental strategies out of a pool of 340. With a plentiful and valuable land
Risks and cash flows better managed
Shanghai Rose Garden bank under its belt, Sunac China insists on the crucial step of producing high quality products that will fly off the shelves. The company possesses a comprehensive executive structure for project operations and management, intent on perfecting every step during the construction cycle. Every internal unit needs to conduct full benchmarking, with customer satisfaction surveys factored into the evaluative procedure. This ensures that every chain in the workflow will be satisfactorily completed under manageable conditions and strengthens the company's capacity to sustain both quality and turnover.
Double sales champion in 2013 The quality-turnover product approach was exemplified by the West Chateau project in Beijing's
Haidian district, a royally scenic zone noted for its three hills and five parks. The development won double accolades in the capital city, with the largest sales value transacted in a single-build project for both residential units and general commodity units in 2013.
Growing cash flow, shrinking gearing ratio, and a 142% shareholder's dividend In its tenth year in 2013, Sunac China finds itself in a new era where domestic developers are hard pressed to source new capital. Compared to 2012, the company grew its cash reserves markedly, by 31% to approximately RMB16 billion. Net gearing ratio is dipped by 12% accordingly. Owners raked in a profit of approximately RMB3.18 billion, a 22% rise; as a note of gratitude for shareholders' long-term support, proposed
Sunac China has recorded steady and sustained growth since its listing. Amidst some criticism of a ggre ssive b id d ing, it ha s nonetheless limited its focus on its five core regions over the decade as it fashioned itself into a leading premium developer. The results so far have reinforced the company's strategies: sound urban planning, brand positioning, and a focus on building premium products. As noted by the company’s Chairman, CEO and Executive Director Sun Hongbin in the results announcement, the outlook in 2014 is going to be less positive and market diversification will continue to intensify, which will exert greater pressure to regions where supply and demand are largely in disequilibrium, thus different management strategies that address to the regional issues are to be implemented. Looking ahead, the company will “remain adherent to the strategy of regional focus and quality development”, while having healthy cash flows secured and risk aversion elevated, “enrich the company’s land bank and ensure risks are in manageable conditions in a prudent manner”.
Advertorials of Sunac China Holdings Ltd (1918.HK) published in elite HK Chinese and English newspapers upon completion of its 2013 Annual R...