HONG KONG SAR - Media OutReach - 31 August 2021 - Logan Group Company Limited (stock code: 3380.HK) has announced its 2021 interim results. In the first half of the year, despite the global spread of the coronavirus pandemic, China's economy managed to continue its steady recovery. The Group proactively implemented business development plans in accordance with real estate industry trends and policies, strengthened the "two stability and one new" business orientation and applied the "four-wheel-driven" strategy, together with its "precise investment, fine management, refined products, meticulous service, capable team, sincerity and responsibility" strategies, achieving satisfactory growth in performance and starting a new model of development.
Financially sound – Maintained "green line" status. Ratings continued to improve with debt ratio and financing costs reduced
Logan Group adhered to its long-term sustainable development and prudent financial strategies, continued to consolidate stable cash flow and a sound capital structure. As at 30 June 2021, its net gearing ratio had decreased to 60.8%, asset/liability ratio (after deducting receipts in advance) had decreased to 69.0%, and cash to short-term debt ratio had risen to 1.85 times. The "three red lines" indicators were further optimized, with all maintaining positions within the green line.
The Group's international credit rating was further upgraded. Fitch confirmed the rating as "BB", with the outlook upgraded to "positive". Moody's upgraded the rating to "Ba2", Standard & Poor's maintained the rating at "BB". Lianhe Ratings Global and China Chengxin (Asia Pacific) rated the Group as "BBB-" and the domestic credit rating maintained the highest "AAA" level, demonstrating the Group's achievements were highly recognized by the capital market.
In the first half of the year, Logan Group's diversified financing channels remained unobstructed, with new financing costs decreased by 15% to 4.6%, the weighted average borrowing interest rate was 5.4% at the end of the period, the debt structure continued to be optimized, the financing costs continued to decline, and the liquidity was reasonable and abundant, which further enhanced the Company's long-term development competitive strength.
Stable operation -- Steady growth of revenue and profit, and continuous stability of profitability
As a result of the Company's refined products, meticulous service, abundant saleable resources and strong strategic execution, Logan Group maintained a stable operation. In the first half of the year, the Company's attributable contracted sales amounted to approximately RMB73.64 billion, representing a year-on-year increase of 59%, and the Company has already achieved 51.0% of its annual sales target. Revenue amounted to RMB35.17 billion, representing a year-on-year increase of 13.3%. Core profit attributable to owners of the Company amounted to RMB5.58 billion, representing an increase of 4.6% compared with the same period last year, helping Logan Group maintain a steady growth on top of a high base level.
In the first half of the year, Logan Group strengthened its fine management, continuously improved the efficiency of development management and control, and shortened the average time period from land acquisition to presale for new projects to 6.6 months. The Company's per capita efficiency continued to improve thanks to its lean team structure. During the period, the per capita contribution to attributable contracted sales increased by 60.0% year-on-year to RMB25.46 million, and the per capita contribution to core profit was about RMB1.93 million.
In the context of a general decline in industry profit margins, the gross profit margin of the Company was 27.0% in the first half of the year, a slight decrease of 3 percentage points compared with 2020, which was significantly less than the average decline of the industry. The Company's profitability and competitive advantage remains stable, with attributable net profit margin of 17.6%, and the core net profit margin was 16.7%.
Develop new business model -- Focus on four major business segments and provide professional services through a diversified industry chain
Amidst new trends in the industry, Logan Group enhanced its position as the "city's comprehensive service provider" and will continue to focus on four major business segments of "residential development, urban redevelopment, commercial operations, and industrial operations", to improve the development ability and overall competitiveness. Meanwhile, Logan Group has developed new business models based on the property industry chain, to elevate professional services quality. The Group has four business segments, which are design, construction, landscape, and decoration, with complete supporting structure and talents, established business development and clear business models.
Logan Group's professional services are highly recognized by the industry. It has a "Grade" A qualification in Design Institute as well as general contractor of construction, and "Grade B" qualification in municipal public engineering projects. In the first half of the year, customer satisfaction in landscape services and construction services were 93% and 88% respectively, which are industry-leading levels.
In the foreseeable future, Logan Group will take advantage of its professional services, continuously increase market share and market value, through a diversified industry chain and professional qualifications.
Precise investment – Reasonable structure of land bank and sustainable urban redevelopment
Logan Group focuses on valuable core metropolises in China, based on its regional penetration strategy, and precise investment. In the first half of the year, the Group acquired GFA of 3.63 million sq.m through public tendering, auction and listing. The land price was less than 40% of relevant projected selling price. Logan Group develops regional expansion efficiently with excellent performance in the Yangtze River Delta metropolitan area, covering 7 cities and 27 projects, with a total saleable resources of approximately RMB50 billion.
Urban redevelopment business has been a differentiated segment which requires less capital with more potential, with sustainable competitive advantages. For the six-month period ended 30 June 2021, the urban redevelopment business covers 11 cities, 125 projects with GFA of 46.26 million sq.m. In total, 93% of which is located in the 7 core cities of the Guangdong-Hong Kong-Macao Greater Bay Area.
Logan Group's abundant premium land bank provided a solid foundation for the Group's long-term sustained growth in results. For the six months ended 30 June 2021, the Group had a total land bank of 85.56 million sq.m. The Group focuses on high-performing cities and the saleable resources in first-tier and second-tier cities accounted for 94.0%. The land bank structure remained reasonable. The near-term land bank area was 39.3million sq.m., accounting for 46.0% of total land bank. And the near-term saleable resources reaches RMB 532 billion, which guarantees development within next 3 years. The area of urban renewal land bank accounted for 54.0% of total land bank, with great value potential, sustainable conversion, and long-term profitability.
Sincerity and responsibility -- Contribute to common prosperity, actively participate in public welfare and charity, continue to give back to society
While steadily developing, Logan Group has effectively fulfilled its corporate citizenship responsibilities, actively participated in public welfare and charity, and continued to give back to society. In July 2021, there was a severe flood in Henan province. Logan Group quickly responded to emergency assistance and jointly donated RMB10 million via Logan Charity Fund to support flood prevention and disaster relief.
With 26 years of social responsibility and public welfare experience, Logan Group's public welfare undertakings cover 9 provinces, 38 counties and districts across the country and has carried out more than 560 public welfare projects. The Group teamed up with Logan Charity Fund to donate a total of RMB1 billion across education, rural revitalization, pandemic prevention efforts and disaster relief, industrial poverty alleviation, environmental protection, and community services. The Group won the China Charity Outstanding Contribution Award and ranked 9th and 11th in the 2021 China Charity List and Forbes China Charity List respectively.
Logan Group strives to ensure product quality, corporate governance, green development, public welfare investment, employee care, etc. to continuously improve the level of sustainable development. The Group has been rated "BB" in ESG ratings by MSCI and is included in the Hang Seng ESG 50 Index. The Group has also won the China Real Estate Enterprise ESG outstanding property developers. In 2021, Logan successfully issued overseas green bonds, marking a new milestone in its ESG development strategy.
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30 Aug 2021
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