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LVGEM (China) Announces 2020 Annual Results Author: CHINA LVGEM

Early Release of Baishizhou Profit

Net Profit and Net Assets Doubled Growth


(30 March 2021, Hong Kong) LVGEM (China) Real Estate Investment Company Limited (“LVGEM (China)” or the “Company” or together with its subsidiaries, the “Group”; stock code: 00095.HK) today announced the audited consolidated results of the Company and its subsidiaries for the year ended 31 December 2020.


For the twelve months ended 31 December 2020, the Group achieved total revenue of approximately RMB5,424.8 million (2019: RMB6,902.4 million), representing a decrease of approximately 21.4% year-on-year, which was attributable to the suspension of the launch of Block A of LVGEM Mangrove Bay No. 1 in consideration of profit maximisation. Gross profit was approximately RMB2,665.7 million (2019: RMB4,430.4 million). Gross profit margin was approximately 49.1% (2019: 64.2%), the fluctuation was mainly due to the revenue recognized under different project portfolio. Profit for the year was approximately RMB3,451.1 million (2019: RMB1,750.0 million), representing a growth of approximately 97.2% year-on-year. The significant increase in the profit for the year was mainly due to the fact that at the time of the Group has obtained 80% equity interests of Baishizhou Urban Renewal Project in August 2020, the 25% equity interests in Baishizhou which acquired in October 2019 has been revaluated at fair value, contributing other gain of approximately RMB3,893.6 million. Profit attributable to owners of the Company was RMB3,453.4 million (2019: RMB1,749.9 million), representing a growth of approximately 97.3% year-on-year. Basic earnings per share was RMB68.03 cents (2019: RMB35.12 cents), representing a growth of approximately 93.7% year-on-year. The Board did not recommend the payment of a final dividend for the year ended 31 December 2020.


Baishizhou Urban Renewal Project Developing Beyond Expectations

100% Contract Signing Rate for Phase I Attained

The Group has focused on the development of key districts in core cities of the Greater Bay Area for more than three decades. Started as a construction company, LVGEM (China) has established as a pioneer in the urban renewal field by upholding the strategic vision of dual-core business layout and leveraging the two-way expansion model for acquiring land reserve resources, accumulating asset advantage of extra high value in the Greater Bay Area for years. Its real estate projects and commercial projects that were deployed mainly in the core cities and core districts of the Greater Bay Area such as Shenzhen, Zhuhai and Hong Kong. During the year, the Group continued to push forward the urban renewal projects in Shenzhen, Zhuhai, Hong Kong and Dongguan and achieved significant results. In January 2020, the Group attained the qualification for the Guanlan Liguang Land Development Project in Lunghua District, Shenzhen City, and initiated the contracting process in June. In August 2020, 55% of equity interests in the Shenzhen Baishizhou Urban Renewal Project, the so-called “Grand Urban Renewal Project in Shenzhen”, was injected into the Group following the injection of 25% equity interests on 28 October 2019. Up to now, the Group has a total of 80% equity interests in the project. Phase I of the project was 100% contracted and it is expected that the Group will complete the confirmation of the operating entity of Phase I and commence its construction within 2021. The commencement of construction and sales of the project will be a huge growth drives for the Group.


Abundant land reserves and urban renewal projects progressing steadily

As of 31 December 2020, the Group has land reserves of approximately 6.48 million square meters, approximately 80% of which are located in major cities in the Greater Bay Area such as Shenzhen, Hong Kong, Zhuhai and Dongguan. Moreover, the scale of land reserves in which the controlling shareholders have control was approximately 7.70 million square meters, including projects in Nanxi, Zhuhai and Zhang Mu Tou, Dongguan, all of which are located at core locations in Guangdong-Hong Kong-Macao Greater Bay Area. The Group has ample and valuable land reserves which will be able to satisfy the Company’s needs for steady expansion and long-term development.


Focus on core areas in core cities of the Greater Bay Area

Build a benchmark smart city with “Technology + Real Estate”

As the core business, the real estate development and sales projects of the Group are mainly located in the core areas of core cities of the Greater Bay Area. During the year, the quality real estate projects of the Group received overwhelming market response once again, total subscripted sales amounted to approximately RMB 5,144.0 million. Benefited from the good product strength and brand influence, the projects, including LVGEM Amazing Plaza in Shenzhen, LVGEM Joyful Town in Zhuhai and LVGEM International Garden in Huazhou, received hot subscriptions and market response and were in good sales results. In the future, the Group will continue to focus on the development in the Greater Bay Area and strive for excellence in developing new benchmark smart cities by implementing the “technology + property” strategy, in order to empower and add values to cities and develop an upgraded and excellent residential and living community with unique and quality design, thereby driving the continued steady growth of cost-effectiveness

and business scale of the Group.


“Two-pronged” driving the Group’s development

Comprehensive services becoming more mature

The “two-pronged” business model of “residential + commercial” is an integral part of the Group’s development pattern. During the year, the Group holds over 25 quality commercial property projects comprising a total gross floor area of approximately 800,000 square meters, mainly represented by two commercial brands, namely “NEO” and “Zoll”, including Shenzhen NEO Urban Commercial Complex, Hong Kong LVGEM NEO, LVGEM Zoll Chanson Shopping Mall, LVGEM 1866 Zoll Shopping Mall, LVGEM Zoll Hongwan Shopping Mall, LVGEM Zoll Mangrove Bay No.1 Shopping Mall, LVGEM Zoll International Garden Shopping Mall, LVGEM Zoll Jinhua Shopping Mall, LVGEM Zoll Yuexi Shopping Mall, Dongguan LVGEM Zoll Shopping Mall and other shops and investment properties.


As for comprehensive services, for the year ended 31 December 2020, the revenue from commercial property investment and operations of the Group amounted to approximately RMB620.2 million, while the comprehensive services of the Group generated revenue of RMB292.0 million, mainly attributed to the significant decrease of revenue from hotel operations in the first to third quarters of the year due to the pandemic. The situation basically returned to normal in the fourth quarter. In addition, the total gross floor area of property management services provided by the group during the year was approximately 2.97 million square meters. As the property management services and value-added services become more mature, it is expected that the property management company will contribute sustainable revenue growth for the Group in the future.


Steady financing cost with ample fund flow

Facing the challenging macro environment, the Group adopted diverse domestic and overseas financing means in their highest and best use during the year and actively prepared for the refinancing schemes to secure sufficient capital for the Group’s development. The Group’s average financing cost was 7.1% (2019:6.3%), which still maintained at a healthy level.


“Three Red Lines” Meet two requirements out of three

During the year, the Group actively improved its financial structure and adapted itself to the national regulatory requirements of “three red lines” for real estate enterprises. The liabilities to assets ratio after excluding receipts in advance and net gearing ratio was 61.8% and 76.2%, respectively, which were within the targets levels. The Group will continue to further explore financing channels, consolidate its financial strengths, enrich its cash flow and improve its operational efficiency through domestic and overseas financing, while making use of domestic and overseas financing platforms flexibly and improving the efficiency in the use of funds, thereby further supporting the rapid business expansion and development and achieving stable growth in operating results.


Future Prospect

Looking ahead, the Group will seize the tremendous opportunities arising from the development of the Greater Bay Area and capitalise on favourable policies and benefits of population inflow, with a view to developing the smart city benchmark and striving to establish the Company as a new smart city developer and operator that is dedicated to the construction of the Guangdong-Hong Kong-Macao Greater Bay Area with its own ample land reserve resources, thereby bringing better life experience to the residents, infusing vitality to urban renewal and development as well as delivering long-term and sustainable returns to shareholders, investors and society.

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