Aoyuan management team introduces 2018 annual results

Financial Highlights

*excluding non-recurring profits and loss items and their related tax expenses, comprising fair value gain on investment properties, net exchange differences and gain on change in fair value of derivative financial instruments, etc.

(18 March 2019 – Hong Kong) China Aoyuan Group Limited (“Aoyuan” or the “Company”, Stock Code: 3883) announced today its audited annual results for the year ended 31 December 2018.

Robust Sales Growth with High Earnings Sustainability

In 2018, Aoyuan recorded contracted sales of RMB91.28 billion with y-o-y growth of 100%, emerging as one of the fastest growing PRC developers. In addition, Aoyuan achieved 125% of its full-year target of RMB73.0 billion. The compound annual growth rate of contracted sales from 2016-2018 reached 89%. Attributable contracted sales maintained at relatively high level of 85%. Contracted sales in December 2018 rose to RMB17.39 billion, setting another record high for single-month sales.  As of 31 December 2018, contracted sales that were yet to be recognized as revenue amounted to approximately RMB110.0 billion, which will be gradually recognized in the next 2 years, representing high earnings sustainability.

During the year, Aoyuan attained robust growth in both revenue and profit. Revenue increased by 62% y-o-y to RMB31.01 billion. Gross profit increased by 88% y-o-y to RMB9.63 billion with gross profit margin of 31.1%. Net profit increased by 51% y-o-y to RMB2.94 billion. Core net profit increased by 63% y-o-y to RMB3.07 billion. Aoyuan maintains a stable and generous dividend policy. To thank Aoyuan’s shareholders and investors for their support, the Board of Directors recommended a final dividend of RMB36 cents per share (equivalent to HKD42 cents), representing a dividend payout ratio of 40%.

Well-balanced Regional Layout with Niche Focus on Greater Bay Area

Aoyuan adheres to a well-balanced regional layout with a niche focus on the Guangdong-Hong Kong-Macao Greater Bay Area. As a key player in the Greater Bay Area, Aoyuan has been included in the Hang Seng Stock Connect Big Bay Area Composite Index. In 2018, Aoyuan acquired a total of 64 quality projects with newly added saleable resources of approximately RMB164.5 billion. Average land cost was approximately RMB2,418 per sq.m., which is helpful to maintain reasonable land cost and stable margins. As of 31 December 2018, total GFA of Aoyuan’s land bank was approximately 34.10 million sq.m. (attributable: 80%) with total saleable resources of approximately RMB365.0 billion, sufficient for development needs in the coming three years.

Aoyuan continued to push forward its redevelopment projects. Currently Aoyuan has 16 major redevelopment projects with planned total GFA of approximately 9.80 million sq.m. The estimated saleable resources are approximately RMB145.2 billion. Estimated saleable resources of approximately RMB66.0 billion brought by 9 redevelopment projects are located in Guangzhou, Zhuhai, Foshan, Dongguan and Hong Kong, etc., providing additional sales growth momentum.

Outstanding Financing Capability with Continued Credit Rating Upgrades

With emphasis on diversifying its financing channels, Aoyuan has shown its outstanding financing capability in both onshore and offshore markets. In 2018, Aoyuan successfully issued RMB3.9 billion 3-year onshore corporate bond through public and private issuance. In addition, Aoyuan successfully raised approximately US$1.5 billion through syndicated loans, bilateral loans and USD bonds in offshore markets, with average borrowing cost below 7%, which was lower than comparable peers. In 2019, Aoyuan opened the Asia USD bond market and subsequently launched the first fully marketed 3-year PRC property high yield issuance since Q4 2018. Aoyuan has fully utilized its foreign debt quota of US$1 billion obtained from the National Development and Reform Commission (NDRC), while the successful new issuance of 3-year and 4-year USD bonds further extended its debt maturity profile.

Aoyuan’s credit ratings were further upgraded for its prudent financial management and improving debt structure. As of December 31 2018, the net gearing ratio was at reasonable industry level of 58.9%; Aoyuan’s liquidity was sufficient with total bank balances and cash amounting to approximately RMB39.62 billion. Following the upgrades of corporate rating and rating outlook from all 3 major international rating agencies, namely Fitch, S&P and Moody’s in 2016-2018, Aoyuan’s outlook has been further upgraded by Moody’s to “positive” in February 2019, reaffirming that Aoyuan’s comprehensive strength is well recognized by all sectors.

Outlook for 2019

Aoyuan management commented, “In 2018, through proactive planning and responsive adaptation to market changes, Aoyuan continued to achieve breakthrough with outstanding performance in both sales and operating results. Aoyuan is named among ‘Forbes Asia’s Fab 50’ and  ‘Fortune China 500’. During the year, Aoyuan officially changed its name to ‘China Aoyuan Group Limited’ and one of its sub-groups, namely Aoyuan Healthy Life (3662.HK), has been also successfully listed on the Main Board of The Stock Exchange of Hong Kong Limited in March 2019, enhancing its business structure of ‘one core business with vertical development’. Looking forward, Aoyuan will adhere to its focus on the Greater Bay Area as well as cultivate major regions and cities, so as to consolidate and expand its market share. Aoyuan is committed to attaining rapid and high-quality growth, while strengthening its internationalized position in the RMB100 billion sales club, thus delivering fruitful returns to shareholders and investors.”

2018 annual results investor presentation