Powerlong Real Estate (1238) H2 2023 earnings summary

Executive summary

• FY2023 revenue fell 27.0% YoY to RMB22.904bn; net loss was RMB2.577bn versus net profit of RMB1.614bn in 2022.

• Contracted sales totaled RMB27.524bn across 1,979,982 sq. m.; saleable land bank was 17.39mn sq. m. with estimated value of RMB200.6bn.

Financial highlights

• Property sales revenue declined 33.0% YoY to RMB17.737bn; rental and commercial operation and management income rose 6.0% to RMB4.082bn.

• Gross profit fell 75.2% to RMB2.453bn; gross margin was 10.71%, down 20.8 percentage points, including property project impairment provisions.

• Operating loss was RMB1.846bn; adjusted core loss was RMB904mn and core loss attributable to owners was RMB1.148bn.

• Basic and diluted loss per share was RMB0.641, versus earnings per share of RMB0.099 in 2022.

Outlook and guidance

• 2024 priorities include increasing sales, reducing debt, timely project delivery, cost control and stable operations; no numerical earnings guidance was stated.

• RMB63bn of saleable resources was planned for launch in 2024; 68.5% was in the Yangtze River Delta and 61.8% was residential.

• Land strategy remained prudent, focused on the Yangtze River Delta and selective premium regions under the “1 + N” approach.

• Liquidity measures included accelerating sales proceeds and receivable collections, extending debt maturities, pursuing offshore restructuring, asset revitalization and improving occupancy and rental rates.