Home » The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

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China.com Finance, October 23 News On the evening of October 22, the Greater Bay Area Cultural Tourism Co., Ltd. (hereinafter referred to as the “Greater Bay Area Cultural Tourism”) submitted a form to the Hong Kong Stock Exchange. Guotai Junan International is the sole sponsor. China.com Finance learned that before this, China Cultural Tourism Group officially changed its name to “Greater Bay Area Cultural Tourism Co., Ltd.”. According to the Jones Lang LaSalle Industry Report, there were 5,938 cultural tourism property developers in China in 2019.

  

CDC Finance found that China Cultural Tourism Group had submitted three forms before, and the website of the Hong Kong Stock Exchange showed that they were all invalid. The history of cultural tourism in the Greater Bay Area began in 2006. Its first resort property development project started in 2012 and was completed in 2015. Its other resort property development projects, such as Overseas Chinese Mansion, Yuehu Bay, Yuequan Bay, Impression Spring Commercial Street, Yushan Lake, Yue Mansion, Yulong Bay low-rise bungalows, Shanhu Mansion, Yuxi Bay and Yulong Bay high-rise apartments Buildings. In May 2018, it acquired Guangdong Quanlin and participated in the operation of Ibino Quanlin Resort.The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

The Greater Bay Area Cultural Tourism Prospectus stated that it is a developer of a resort property located in a cultural tourism experience location, the property is mainly located in Jiangmen. According to Jones Lang LaSalle’s industry report, based on the total contracted sales of residential properties (including holiday properties) of Jiangmen and Guangdong real estate companies in 2020, the Greater Bay Area Cultural Tourism ranks fifth and 220th, respectively, in the relevant regional markets The market share is approximately 4.5% and 0.04%, respectively. In addition, the Greater Bay Area Cultural Tourism also engages in a series of cultural tourism businesses, such as providing cultural tourism resort-related services (including hotel services, scenic spot consulting services and scenic spot management services), hotel consulting and management services, and travel agency services.

Cultural tourism in the Greater Bay Area mainly focuses on two businesses, namely resort property development and cultural tourism business. Among them, holiday property development is its core business. As of August 31, 2021, the total construction area of ​​the Greater Bay Area cultural tourism land bank is approximately 1.3 million square meters, including approximately 0.2 million completed construction areas available for sale or held for operation or held for investment and lease Square meters; the building area under development is approximately 0.1 million square meters; and the building area held for future development or investment is approximately 1.0 million square meters, accounting for approximately 14.5%, 8.3% and 77.2% of the total land bank respectively.The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

In terms of cultural tourism business, Dawan District Cultural Tourism operates the Epernong Spring Resort located in the golden town of Quanlin. Part of the period, Najin Valley Scenic Area and the supporting facilities in Quanlin Golden Town. The Greater Bay Area Cultural Tourism also provides one-stop scenic spot consulting services for the planning, design and development of Yingde Chocolate Kingdom (a cultural tourist attraction owned by Aoyuan Group), and scenic spots management services for Quanlin Happy World Park.The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

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In terms of other cultural tourism business, Greater Bay Area Cultural Tourism manages eight hotels owned by third parties in accordance with its own standards and procedures, provides hotel consulting services on the planning and development of six hotels owned by third parties, and runs a travel agency company. The Greater Bay Area Cultural Tourism was acquired in June 2018 and owns 65% of it.

Before the IPO, China Aoyuan held 28.0%; Cypress Capital held 27.5%; Tan Jiawei held 20.8%; Lin Jintang held 4.5%;The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

In terms of financial data, according to the prospectus, from 2018 to 2020, the Greater Bay Area Cultural Tourism will achieve revenues of 335 million yuan, 736 million yuan, and 968 million yuan. The revenue from January to May of 2021 is 319 million yuan, and the revenue for the same period in 2020 is 52.21 million yuan. Net profits for the same period were 72.48 million yuan, 104 million yuan, 154 million yuan, and 15.332 million yuan.

It is worth noting that the revenue of cultural tourism in the Greater Bay Area increased from 335 million yuan to 968 million yuan from 2018 to 2020, a compound annual growth rate of about 70%; the net profit attributable to the parent increased from 72.48 million yuan to 154 million yuan in the same period, an increase More than doubled. In the first five months of 2021, cultural tourism revenue in the Greater Bay Area was 319 million yuan, six times that of the same period last year.The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

From the perspective of income structure, cultural tourism in the Greater Bay Area is highly dependent on the sale of vacation properties. During the reporting period, the revenue from the sale of vacation properties accounted for 79.8%, 80.7%, 87.7%, 39.3% and 87.1% of the total revenue, respectively. The contribution rate of holiday property sales increased from 79.8% in 2018 to 87.7% in 2020, and 87.1% in the first five months of 2021. The cultural tourism business accounted for 20.2%, 19.3%, and 12.3% respectively from 2018 to 2020, and both accounted for less than 20% in 2019 and 2020. On the whole, cultural tourism in the Greater Bay Area still focuses on selling houses in traditional businesses.The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

From 2018 to 2021, the overall gross profit margin of cultural tourism in the Greater Bay Area was 44.8%, 43.3%, 37.9%, and 27.2%, respectively. Among them, the gross profit margin of holiday property sales continued to decline, from 47.3% in 2018 to 37.0% in 2020, and further to 26.7% in January-May 2021, a decrease of 20.6 percentage points. Regarding the overall gross profit margin lower than 30% for the first time in three and a half years, the Greater Bay Area Cultural Tourism explained that it was mainly due to the different types of properties sold and delivered, and the adjustment of the average selling price of certain resort property development projects that were not yet sold after completion. The average selling price of holiday properties sold and delivered during the corresponding period decreased.

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During the same period, the gross profit margin of the cultural tourism business was approximately 34.7%, 43.0%, 44.3% and 30.6%, respectively.The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

The major customers of cultural tourism in the Greater Bay Area are mainly individual customers of resort properties and corporate customers of consulting services and tourism products. For the three years ended December 31, 2020 and the five months ended May 31, 2021, the top five customers together accounted for approximately 11.2%, 8.8%, 3.1% and 5.9% of total revenue, respectively. It accounted for approximately 4.5%, 5.6%, 0.8% and 1.4% of total revenue in the same period.

The major suppliers of cultural tourism in the Greater Bay Area (excluding land purchases) are mainly construction contractors engaged to carry out construction works on a project basis. For the three years ended December 31, 2020 and the five months ended May 31, 2021, the five largest suppliers together accounted for approximately 68.4%, 52.2%, 34.9% of total purchases (excluding land purchases) and 55.6%, the largest supplier accounted for approximately 26.2%, 25.2%, 15.0% and 22.7% of the total purchases (excluding land purchases) for the same period in each year.

The prospectus shows that cultural tourism in the Greater Bay Area has a very close relationship with China Aoyuan. On the one hand, China Aoyuan holds a 28% stake in Greater Bay Area Cultural Tourism through its wholly-owned subsidiary, Yuejing. On the other hand, the former chairman and executive director of Greater Bay Area Cultural Tourism, Lin Jintang (holding 4.5% of the shares), served as executive director of China Aoyuan from September 2009 to May 2012; non-executive director and chairman Ruan Yongxi is China Olympic Assistant to the Group President of the Park and Director of the Group’s Strategic Investment Center.

In addition, Aoyuan Group is one of the five largest cultural and tourism customers in the Greater Bay Area, accounting for approximately 4.5%, 5.6%, 0.5% and 1.4% of total revenue respectively, and is also one of the suppliers. Greater Bay Area Cultural Tourism mainly provides scenic spots and hotel consulting and management services for Aoyuan Group, while Aoyuan Group provides management services for the Greater Bay Area Cultural Tourism Sales Office, marketing and consulting services for commercial properties, and leasing in Quanlin A piece of land in Golden Town is used to operate the Najin Valley Scenic Area and lease a property for office use.The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

The Greater Bay Area Cultural Tourism stated that the introduction of Aoyuan Group as a strategic investor will benefit the overall strategic development of the Group and achieve synergies in the development of resort properties and cultural tourism business.

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In addition, it is worth noting that the Greater Bay Area Cultural Tourism disclosed the “three red lines” data in the prospectus. The pro forma data are: the debt-to-asset ratio after excluding the advance receipts is 67.8%, the net debt ratio is 5.4%, and short-term cash debts. The ratio is 2.6. According to the regulatory standards of “the asset-liability ratio after excluding advance receipts should not be greater than 70%,” “the net debt ratio should not be greater than 100%,” and “the cash short-term debt ratio should not be less than 1 time”, the Greater Bay Area cultural tourism reached the standard.The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

The Greater Bay Area Cultural Tourism stated in the prospectus that it is estimated that the profit and total comprehensive income for the year ended December 31, 2021 will be lower than those for the year ended December 31, 2020, mainly due to the estimated gross profit margin from the sale of resort properties The decrease was due to the decrease in the average selling price per floor area of ​​the pre-sale and expected delivery properties during the year.

In addition, the Greater Bay Area Cultural Tourism also pointed out risks in the prospectus, saying that it has a large amount of debt and may generate additional debt in the future, which may have a material adverse effect on the financial situation and operating results. The Greater Bay Area Cultural Tourism maintains a fairly high level of borrowing to provide funding for resort property development projects. As of 2018, 2019, December 31, 2020, and May 31, 2021, the outstanding bank and other borrowings were approximately RMB 102 million, RMB 578 million, RMB 138.6 million, and RMB 366 million, respectively. .The Hong Kong Stock Exchange of Cultural Tourism in the Greater Bay Area: Revenue is highly dependent on the sales of holiday properties, and the gross profit margin continues to decline for the first time in three and a half years, below 30%

From the perspective of industry development, the Chinese cultural tourism market has boomed in the past ten years. From 2012 to 2020, the number of Chinese cultural tourism projects has more than quadrupled, from 2,259 to 9,747, with a compound annual growth rate of approximately 20.1%.

As of the end of 2020, the total number of star-rated hotels in China was 8,423, with an operating income of approximately RMB 122.2 billion. As a popular tourist destination in recent years, Guangdong Province will have an average daily rent increase of 3.4% year-on-year. Driven by increased spending power, the proportion of overnight visitors continues to rise. From 2020 to 2023, the number of overnight visitors will grow at a compound annual growth rate of approximately 17.0%.

The Greater Bay Area Cultural Tourism stated that in the face of fierce competition, considering the unique characteristics of resort properties, they are confident that they have sufficient land resources for sustainable development, and are optimistic about maintaining a stable market share in the next few years.

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