Shenzhen Investment Limited (SEHK stock code: 00604.HK, hereinafter referred to as “Shenzhen Investment”) convened 2023 annual results announcement on the morning of 28 March in Shenzhen 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, attended the presentation.

In 2023, Shenzhen Investment realized revenue of HK$15.83 billion; gross profit was HK$5.11 billion, with overall gross profit margin of 32%. Due to the fact that most of the projects sold did not meet the carryover conditions and the sales of inventories were less than expected, coupled with the combination of factors such as losses from associates and an increase in finance costs, the Company suffered a loss attributable to equity shareholders HK$261 million. Taking no account of the net effect of changes in the fair value of the Group ’s investment properties and financial assets owned by the Group, as well as the effect of results of associated companies, the profit attributable to equity shareholders of the Company would have been HK$1.92 billion. The Board resolved to pay a final dividend of HK7.0 cents per share for 2023 in cash as a return to shareholders.

2023 BUSINESS REVIEW

Focus on the principal business, steady development of industrial-city operations

In 2023, the real estate sales of the Group grew against the market trend, achieved contracted sales of approximately RMB26.6 billion, a year-on-year increase of 38%, exceeding the annual target. Among them, Upper Coast, with a sales amount of RMB13.3 billion for a single property, became the double champion in 2023 with the largest number of units put up for sale and the largest transaction amount in the country. The Group focuses on “Double Excellence” products and services, project construction progressed steadily. Due to the fact that most of the projects sold did not meet the carryover conditions, sales revenue booked of approximately was HK$9.59 billion, marking a decline as compared to the previous year.

During the Year, the Group adding 454,000 square meters of new land reserves, with the added value of RMB15.4 billion, which have further supplemented our quality land reserves. The land reserve area was approximately 6,742,000 square meters, of which the Guangdong, Hong Kong and Macao Greater Bay Area accounts for 66%.

Focus on operation, brand effect to play effectively

During the Year, the Group actively expanded comprehensive urban operation business, property management revenue was approximately HK$2.79 billion. The net expanded contracted area of Shum Yip Operations was approximately 12.19 million square meters, a total GFA under management of 80.47 million square meters.

In terms of urban and public construction services, the Group promoted the renewal of two property management urban projects with price increases; expanded 66 high-quality public construction projects such as Shenzhen Library and the Art Museum; the Bijiashan Sports Park was put into operation. In terms of commercial operation services, Upperhills ’ customer flow of the year exceeded 40 million visits and sales exceeded RMB5 billion; the first Galeries Lafayette department store in South China opened grandly; Women and Children Tower was renovated; self-operated hotel brand “Jingju” has been launched; Mandarin Oriental Shenzhen was awarded a five-star rating by Forbes Travel Guide.

At the same time, the Group took various measures to enhance the efficiency of inventory operation and promote the enhancement of asset value and rental income growth. During the Year, the Group realized property investment income of approximately HK$1.42 billion, representing a year-on-year increase of approximately 19% over last year; the overall occupancy rate was 88%, showing a stable and improving trend. Hotel operation revenue achieved a historic breakthrough, realizing revenue of approximately HK$465 million, a significant increase of 62%.

Focusing on innovation with continuously releasing development momentum

During the Year, the Group actively layout modern agriculture, the scale of our agricultural industry continues to expand, build modern agricultural parks in Shenzhen Shantou, Nan’ao and Xinfeng to a high standard, realized an agricultural income of approximately HK$506 million. Scientific and technological innovation achieved good results, Jinghua, a subsidiary of the Group, continued to promote human-computer interaction technological innovation, successfully developed a colorful touch-screen line control, achieved manufacturing operating income of approximately HK$471 million.

Focusing on empowerment and promoting sustainable business development

Excellent performance in ESG. The Group have maintained an A rating in the MSCI-ESG Index with scores far exceeding the industry average in the issues related to “green building” and “product safety and quality”, and selected by the State-owned Assets Supervision and Administration Commission of the State Council for the “ESG Pioneer 100 Index of State-owned Listed Companies”. 

Financial management creates value, under the current difficult financing environment and rising costs for real estate enterprises outside China, the Group actively raised funds and signed a HK$5 billion medium – and long-term loan; Strengthened loan cost management, controlling the average composite interest rate of bank and other borrowings at an annual interest of 4.4%. Meanwhile, the Group vigorously promoted the securitization of assets and successfully issued two Quasi-REITs products, with a total issuance scale of approximately RMB2.29 billion and an issuance interest rate of 3.6%.

Capital operation is being promoted in order, Shum Yip Operations obtained the filing notice from the CSRC in February 2024, which was the first batch of property management companies that passed the filing of the CSRC since the new filing regulations were implemented in March 2023. In prospect, Shum Yip Operations will pay close attention to the capital market, complete the issuance of IPO at the right time, and carry out the mergers and acquisitions of the property service industry chain when appropriate in accordance with the plan for the use of proceeds.

2024 BUSINESS PLAN

Promoting the steady development of the principal real estate business. the Group ’s total available-for-sale value will exceed RMB30 billion. The Group will take liquidity as the main consideration to accelerate the turnover and sales to recycle capital as early as possible. The Group currently holds approximately 1.73 million square meters of stock properties, and will continually promote the effective revitalization and value release of the inventory assets to achieve a balance between the scale of the Group ’s asset management and profits. Meanwhile, the Group will make targeted investments and strive to realize the transformation of resources of urban renewal projects and coordinated benefits projects.

Accelerating the construction of a new development model. The Group continue to build up branding capabilities and increase business scale with an asset-light model, try to get Shenzhen state-owned high-quality resources for Shum Yip Operations, and strive to exceed 100 million square meters of the management scale as soon as possible, entering the first tier of the industry in China. Relying on benchmark projects such as UpperHills, the Group will improve the ecological chain of the business circle, and acquire more commercial resources. The Group will take development opportunities and transforming to a new model of asset managements.

Accelerating the scale-up of innovation platforms. The high-tech agriculture business will accelerate the creation of an integrated industrial system of breeding, propagation, promotion and trading, and continue to build modern agricultural industrial parks with high standards. The Group’s advanced manufacturing has clearly taken Jinghua Electronics as the breakthrough point to promote the optimization of product structure and technology innovation, expand the development of overseas markets and customers and achieve rapid expansion of overseas business. The Group will play the role of capital attraction, strengthen capital operation through market-oriented means, accelerate the upstream and downstream layout of the industry chain, and cultivate the ecology of synergistic development of the industry.

Strengthen risk control of enterprises. The Group will attach great importance to financial security, by strengthening the integrated management of funds, continuing to optimize the capital and debt structure, strengthening the control of costs and expenses, formulating a reasonable investment strategy, strengthen the management of equity participating enterprises to ensure high-quality development of enterprises.

Facing new situations and tasks, the Group will promote stability and development with progress, seek transformation through breakthroughs after building-up, make new contributions to the high-quality transformation and development of the Group with more passion, higher fighting spirit, and more pragmatic style!