Low-cost Strategy Achieving Great Results, Brand Expansion Promoted Continuously
Financial and Business Highlights
v Revenue amounted to RMB6.23 billion, representing a year-on-year increase of 13.2%
During the Reporting Period, the Company recordedanoperating revenue of RMB6.23 billion, representing a year-on-year increase of 13.2%. Due to the increase of fair value gains on investment properties over last year,theprofit before income tax increased by 15.8% toRMB1.57 billion. Influenced bythe higher settlement amounts for non-wholly owned subsidiaries in the real estate projects,the profit attributable to equity holders of the Company was RMB779.99 million, representing a decrease of 2.4%.Influenced bythe transformation and renovation of certain projects of the investment property segmentandincrease in preliminary expenses of newly-added projects of the Company,the core operating results after tax from the Company’s principal business (excluding gains from change in fair value) decreased by 16.81% over the same period last year to RMB659.09 million. Earnings per share were RMB0.23. The Board has recommended the payment of a final dividend of RMB0.06 per share for the year ended December 31, 2014 (RMB0.06 per share for 2013).
In 2014, the Company forged ahead, accelerating the three expansion strategies including capital expansion, brand expansion and the low-cost expansion. The development cycle of the projects of development properties was significantly shortened, while the Company insisted on the low-cost expansion strategy and the size of land reserve kept increasing; investment properties were in active response to the changes in the market, while the Company continuously enhanced its comprehensive operating capability; brand expansion has been continuously promoted, while the brand output of convention and hotels achieved great performance; the innovative financing set up a new record, providing a strong support for the Company’s developmentand stable operation.
Reviewing the 2014 annual results, General Manager of Beijing North Star Mr. ZENG Jin stated: “Facing a complicated and constantly changing market, the Company aims at establishing a first-class integrated real estate operating enterprise in China. Under the three expansion strategies, the Company actively adapts to changes in the market, forging ahead and making bold changes and innovations, continuously increasing the operating level and enhancing the sustainable development capability.”
In respect of development properties, the Company sped up the turnover of property development, adopting targeted marketing strategies, focusing on the sales of major projects. During the Reporting Period, the sales amount of the project of Bihai Fangzhou Villa reaching RMB370 million; the Mapo project achieved complete structural roof-sealing and had been prepared for appropriate timing for sale. As the biggest urban complex in China, Changsha North Star Delta project took the lead in regional sales performance. During the Reporting Period, project’s sales amount and sales areas reached RMB2.16 billion and 179,000m2(altogether 1,382units). In addition to consolidate the promoting of projects in Beijing and Changsha, the Company successively acquired Changsha North Star Central Park Project, Wuhan Optics Valley Future City Project, Hangzhou Xiaoshan Project and Beijing Shunyi Qianjin Xincheng Project through cooperative development and acquisitions.The newly increased land reserve amounted to 1,680,000m2, achieving the rapid land expansion under the low-cost strategy.
In respect of investment properties (including hotels), the Company responded to the changes in the market by adjusting its operating measures on a timely basis and actively expanding the operational concepts. The Company fully utilized the edges in diversified businesses and strong correlation of the investment properties (including hotels), and effectively defended the operational risks brought by the market changes. The Company’s operations presented many highlights:During the reporting period, North Star Convention and Exhibition successfully completed the work of service safeguards for major foreign affairs activities of China including the Asia-Pacific Economic Cooperation (APEC) summit, CIFTIS (China Beijing International Fair for Trade in Services) as well as Beijing Municipal People's Congress and Beijing Municipal Committee of the Chinese People’s Political Consultative Conference. The Company’s status in the industry becomes more prominent while its international influence increases with each passing day. As of the end of 2014, The Company signed agreements of 7 advisory and entrusted operational management projects through the management output of income-generating properties. In respect of office building business, the Company enhanced the multi-project co-sale strategy to continuously and steadily improve occupancy rate and rental, which has become an important source of profit for investment properties (including hotels) segment. In 2014, the Company’s investment properties (including hotels) recorded an operating revenue of RMB2.11 billion. The profit before tax was RMB555.55 million.
In respect of commercial properties, facing the impact of e-commerce on traditional retailing and the constantly changing residents’ consumption demand, the Company adjusted the marketing strategy in a timely manner, researching into the combination of e-commerce and traditional operation to meet consumers’ demand for one-stop services. During the Reporting Period, the Company’s commercial properties recorded an operating revenue of RMB288.65 million, and the profit before tax amounted to RMB5.01 million.
Looking forward, the real estate market will develop steadily and healthily through supporting the demands for owner-occupied and upgraded housing, and exercising macro-control measures in accordance with the place in the general tone of classified guidanceand adaptation of local condition. The State will foster the consumption growth points in an accelerate manner, which will become a driving force of strong economic growth. In the policy and context of overall in-depth reform, development, expansion and improvement of tourism and leisure consumption, culture and sports consumption, consumption in relation to provision for the aged, housekeeping and health, as well as emerging consumption, these all will provide a wider space for industry development.
Mr ZENG Jin was confident of the company’s development in 2015 and concluded:“ Facing the new normal of the economy and the new structure of reforms, the Company will be driven by reformation, pushing forward development by innovation. The Company, emphasizing the importance of technology means represented by Internet and big data,is going todevote great efforts to research the combination of the new economy and the Company’s traditional businesses, andto inject impetus to the development and extension of traditional services.Meanwhile, the Company adhered to implementation of the development strategy of capital expansion, brand expansion and low-cost expansion, particularly the innovative financing in capital expansion, the high-end service in brand expansion and the cooperation and mergers in low-cost expansion, give full play to the strength of the capital market and create a new development pattern of heavy-asset investment-oriented business and light-asset service-oriented business.”