On March 17, the 2022 financial report of Longfor Group (00960) was released: during the period, the company’s turnover reached 250.565 billion yuan (unit: RMB, the same below), a year-on-year increase of 12.2%; the profit attributable to shareholders was 24.362 billion yuan, a year-on-year increase 0.5%, and the total annual dividend is 1.13 yuan per share. In 2022, due to the downturn of the industry and the impact of the liquidity crisis of real estate companies, when most real estate companies suffer losses, Longfor Group’s performance can achieve steady growth, which shows its solid background.
Zhitong Finance APP believes that Longfor Group has excellent performance in investment power, financial strength, multi-channel development and other dimensions, and has built its ability to go through cycles.
First, Longfor Group has been deeply cultivating key high-energy cities for a long time, and its stable investment power has increased its growth space.
Longfor Group has always insisted on focusing on cities, and its business layout has returned to key cities and core areas including first-tier and main second-tier cities. In 2022, the contract sales of Longfor Group will be 201.59 billion yuan, and the total sales floor area will be 13.047 million square meters. The contract sales in the Yangtze River Delta, Bohai Rim, West China, South China and Central China were 77.58 billion yuan, 41.40 billion yuan, 39.39 billion yuan, 25.13 billion yuan and 18.09 billion yuan respectively, accounting for 38.5%, 20.5% and 20.5% of the company’s contract sales respectively. 19.5%, 12.5% and 9.0%. It can be seen that the Yangtze River Delta and the Bohai Rim are the key layout areas of Longfor Group.
The long-term adherence to the strategy of deep urban cultivation reflects the robustness of Longfor Group’s strategic strength. In this direction, the company pays more attention to product quality and the quality of newly added land reserves than scale growth. On December 31, 2022, the group’s sold but unsettled contracted sales amounted to 227 billion yuan, with an area of about 14.8 million square meters, laying a solid foundation for the continued and stable growth of Longfor Group’s future core profits.
Second, the financial market is stable, and its excellent financing ability promotes its financial strength. In 2022, Longfor Group will continue its stable and self-disciplined genes, continue to strictly control the amount of debt and optimize the debt structure, and be able to maintain the “three red lines” green level for 7 consecutive years, which is enough to show the company’s restraint in using capital leverage. As of December 31, 2022, Longfor Group’s asset-liability ratio (excluding advance receipts) was 64.8%, the net debt ratio was 58.1%, and the short-term cash debt ratio reached 3.52 times. The solvency continued to be stable, and a higher safety margin was established.
It is worth noting that within 2023, Longfor Group has no due overseas debts. Based on Longfor’s good credit performance, up to now, the three major rating agencies, Standard & Poor’s, Moody’s, and Fitch, have given Longfor Group investment-grade ratings, making Longfor Group one of the few high-quality real estate companies that have received full investment-grade ratings from domestic and foreign institutions.
As the industry enters a new stage of development, stable financial conditions and financing capabilities have become the core competitiveness of real estate companies, and capital has also begun to tilt towards high-quality real estate companies. Longfor Group has been favored by virtue of its stable financial situation and development potential, and has successfully issued “first orders” in multiple industries to keep financing costs low. The excellent financing ability of Longfor Group has consolidated its strong financial strength and become an important support for its continuous operation.
Third, the multi-channel leader has significant advantages, and the synergistic effect of “one Longfor” is gradually emerging. Over the years, with the firm deployment of the “Space as a Service” strategy, Longfor Group has formed three major business segments of development, operation and service, covering real estate development, commercial investment, long-term rental apartments, property management and smart construction, etc. “One Dragon Lake” ecosystem. While the business ecology continues to enrich, it also brings the diversity of profit models and the enhancement of cash flow.
In 2022, Longfor’s revenue from operations and service businesses will exceed 10 billion yuan. Among them, the operation business is mainly composed of commercial investment, long-term rental apartments and other businesses, and the annual rental income will be 11.88 billion yuan. The service income composed of such businesses as 11.67 billion yuan, and the operating profit composed of operations and service businesses reached 27%. The profit structure of Longfor Group is more optimized.
It can be seen that the operation business and service business have become an important means for Longfor Group to add profit points and resist risks. The joint real estate development business and the three major business segments work together to contribute stable income and profits to Longfor Group.
In general, under the guidance of a sound strategy, Longfor Group has taken the lead in the competition through its stable investment and development capabilities in deep cultivation areas, low-cost financing and sales receivables to increase cash in hand, consolidated financial strength, and multi-channel business. Incubation and construction To build the “One Longfor” brand, the three dimensions are outstanding, which makes the development of Longfor Group take into account both growth and safety.