Dual-Wheel Drive Boosts Steady Operations, Safe Base for New City Holdings Strengthened

Entering the earnings season for listed companies, as a series of real estate companies successively announce their mid-term results, the real estate sector has once again attracted considerable attention from the market.

Standing at the new cycle of industry development, what are the opportunities for the entire real estate industry? What deep-seated changes have real estate companies ushered in?

Let's look for answers through the recently released mid-term financial report of Seazen Holdings.

1. Focusing on stable operation and consolidating the financial security foundation

Looking at Seazen Holdings' semi-annual report card, the word "stable" can be said to run through it.

First, it is the stability of operations.

It is undeniable that the industry is still under adjustment pressure, but overall, during the reporting period, Seazen Holdings has maintained a relatively stable operating condition.

Especially in the face of industry demand pressure, Seazen Holdings has focused on sales and capital recovery, ensuring a balance between volume and price, continuously strengthening cash flow management, and improving operational efficiency.

In the first half of the year, Seazen Holdings achieved a contract sales amount of about 23.554 billion yuan, with a contract sales area of about 3.2622 million square meters; at the same time, it realized a recovery of 24.7 billion yuan, with a recovery rate of 105%, ensuring the stable and smooth flow of the company's cash.

At the same time, as the delivery of commercial housing is increasingly valued, the delivery capability has also become an important reference for observing whether the operation of real estate companies is stable.It can be observed that Seazen Holdings places great emphasis on ensuring delivery and considers it a top priority in operational management. The company adheres to the principles of "ensuring delivery, safeguarding livelihoods, and maintaining quality." In the first half of the year, it intensively delivered over 57,000 residential units in major cities such as Shenzhen, Nanjing, and Suzhou. Its continuous fulfillment of delivery capabilities further demonstrates Seazen Holdings' commitment to customer promises and the maintenance of operational stability.

Secondly, there is financial stability.

This is reflected, on one hand, in the company's optimization of financial leverage.

The company has been reducing interest-bearing debt in an orderly manner, continuously improving its debt structure.

As of the end of June 2024, the company's financing balance was reduced by 1.3 billion yuan compared to the beginning of the year, and the interest-bearing debt of joint ventures and associated companies also decreased by 1.256 billion yuan compared to the beginning of the year. The company maintained a low net debt ratio, only 47%, indicating its sound financial fundamentals.

The robust financial condition is also inseparable from a series of actions taken by Seazen Holdings around debt repayment and efficient, low-cost financing.

In terms of debt repayment, in the first half of the year, Seazen Holdings has repaid 1.97 billion yuan of domestic and foreign public market bonds as scheduled.

In terms of financing, as a model real estate company, Seazen Holdings maintains smooth and diverse financing channels. In May of this year, the company successfully issued 1.36 billion yuan in medium-term notes, which is the second time in 2024 that it has received policy support from the private enterprise bond financing support tool, following the successful issuance of four full guarantees from the China Bond Insurance Corporation.

In addition, relying on the stable cash flow characteristics of Wu Yue Plaza and the quality asset attributes, in the first eight months of this year, Seazen Holdings has obtained an additional 12 billion yuan in financing secured by Wu Yue Plaza.

It is worth mentioning that the company has a good credit status with major banks and other financial institutions, with a total credit limit granted by major banks reaching 105.9 billion yuan. Currently, the company and its subsidiaries have only used 27.5 billion yuan of the credit, showing that the company still has ample financing space.On the other hand, the financial robustness of Seazen Holdings is also reflected in its ample cash on hand and good operating cash flow.

Looking at the former, ample cash on hand provides a safety cushion for the company's daily operations and short-term debt, reducing dependence on external financing. As of the end of June, Seazen Holdings had a cash balance of 15.782 billion yuan.

In terms of the latter, a good operating cash flow indicates the company's continuous "blood-making" ability, ensuring smooth circulation at the operational level. In the first half of the year, Seazen Holdings' net operating cash flow was 2.088 billion yuan, maintaining a positive value for six consecutive years.

It can be said that financial robustness not only provides a solid foundation for Seazen Holdings' current operations but also creates favorable conditions for its future sustainable development.

2 · The dual-wheel drive continues to show advantages, opening up new tracks to expand growth space

After the in-depth adjustment of the industry, the market now pays more attention to the sustainable operating ability of real estate companies. From this point of view, Seazen Holdings has shown its attractive business layout and business model.

The first core focus is the company's dual-wheel drive model.

Seazen Holdings adheres to the long-term strategic model of "residential + commercial" dual-wheel drive, and has a comprehensive layout in key city clusters and cities across the country. Its business covers real estate development, investment, and commercial operation management, forming product synergy and strategic depth.

Based on this, it also effectively ensures that the company can maintain business balance and stability under different market conditions.

At present, the advantages of the company's dual-wheel drive strategy continue to highlight. It is not difficult to find from performance indicators that the commercial segment is playing an increasingly important role in Seazen Holdings' performance, providing the company with continuous and stable cash flow.In the first half of the year, the contribution of commercial management performance continued to increase, with the company achieving a total commercial operation revenue of 6.212 billion yuan, a year-on-year increase of approximately 19.44%. The property rental and management revenue excluding tax reached 5.804 billion yuan, accounting for 17% of the company's operating revenue.

Additionally, the gross margin of property rental and management business of Seazen Holdings remained at a high level. In the first half of the year, the gross profit from property rental and management business was 4.191 billion yuan, which increased from 43% of the company's total gross profit last year to 57%; the gross margin of property rental and management business reached 72%.

As of the first half of the year, Seazen Holdings has achieved a layout of 137 large and medium-sized cities and 201 complex projects, with the opening area of Wuyue Plaza reaching 15.2798 million square meters, and the occupancy rate reaching 97.24%. As an important carrier of Seazen's commercial map, Wuyue Plaza continues to release operational vitality and performance growth momentum.

At the same time, Seazen Holdings is also actively leveraging synergistic effects and resource advantages, continuously expanding its development track by establishing a real estate agency construction and management business platform "Seazen Construction Management".

Relying on the strategic layout and resource accumulation of the parent company, Seazen Construction Management has basically achieved a national layout. This fully verifies Seazen Holdings' ability to use its own resources in the incubation of new businesses, and can continue to cultivate new business growth points.

With the industry's continuous exploration of new models for real estate development, Seazen Holdings is continuously adapting to market changes and consumer demands, opening up new growth points, and helping itself to move steadily and far.

3. Conclusion

Through this mid-term report card of Seazen Holdings, it is not difficult to find that Seazen Holdings has shown strong flexibility and operational resilience in the industry adjustment cycle.

Looking forward to the future, with the continuous promotion of the policy side, stabilizing expectations, promoting demand, and optimizing supply, it is expected that the real estate market sales will show marginal improvement, and the industry will enter a recovery cycle. In this process, with its stable operational ability, continuously consolidated balance sheet, and expected performance growth momentum, it is believed that Seazen Holdings' performance in the capital market will also have more highlights.