Diversified Financing Channels and Timely Bond Repurchase Help to Further Optimize Group’s Debt Structure
HONG KONG, July 6, 2020 /PRNewswire/ — China South City Holdings Limited ("China South City" or "the Group"), the leading large-scale integrated logistics and trade center developer and operator in China, has announced the annual results of the Group for the year ended 31 March 2020 ("FY2019/20" or the "Year").
Over the past year, both domestic and international economic situations were complicated, along with the outbreak of the COVID-19 pandemic. China South City adhered to its "trade and logistics+" model and participated in the real economy. The Group also welcomed favorable policies, which allowed China South City to experience rapid development. Meanwhile, China South City responded promptly to the government’s call for COVID-19 prevention and control, by proactively reducing rental amounts for our tenants. Furthermore, the Group’s wholly-owned subsidiaries specializing in warehousing and logistics business took the initiative to open its available warehouses for anti-epidemic items and supplies. With a firm foundation, comprehensive structure and sophisticated system, the Group’s contracted sales for the first three quarters maintained a steady increase. Despite the impact of COVID-19 in the fourth quarter of the Year, the contracted sales of the Group were HK$13.514 billion.
Based on its high-quality land bank and cost-effective cost control, the Group achieved a gross profit margin of 45.7% and a core profit margin of 15.7% in FY2018/19, which is a leading level in the industry.
China South City has made great efforts implementing professional operational management. The strategic deployment of "Emphasizing Tenant Recruitment and Strengthening Operations" has achieved strong results. It not only improved the operational efficiency of the project, but also successfully ensured a stable source of income of the Group and played a key role in future sustainable development. As each project matures over time, the business has a diversified and steadily increasing revenue stream. During the Year, the coronavirus pandemic extensively and severely affected domestic commercial and livelihood activities after the Lunar Chinese New Year. Despite this difficult period, the Group still recorded a total recurring income of HK$2,411.9 million, representing an increase of 4.2% (excluding the impact of renminbi depreciation, the growth would be 8.2%). Growth would have been even higher if it wasn’t for the pandemic.
During the Year, revenues from property leasing and property management, logistics and warehousing services, and outlet operations amounted to HK$1,344.1 million, HK$404.9 million and HK$440.2 million, respectively. Revenue from property leasing and property management increased 8.0% year-on-year. With more projects commencing operation, the Group expects its recurring income to continue to grow and provide a stable cash flow. Meanwhile, revenues generated from logistics and warehousing services increased 40.0% year-on-year. The operation of outlets also maintained an upward trend in revenue compared with the same period last year.
During the Year, the Group remained prudent in its financial management to maintain multichannel financing for better cash management and debt structure. In the offshore market, the Group made a US$60 million senior notes tap issuance in June 2019, a US$150 million senior notes new issuance in December 2019, a US$200 million senior notes tap issuance in January 2020, a US$225 million issuance in February 2020 and a US$125 million tap issuance in June 2020. Domestically, the Group issued RMB600 million of medium-term notes in April 2019, and an aggregate amount of RMB1.4 billion of company bonds in August 2019. The Group continued to maintain the smooth development of multiple financing channels in both domestic and offshore capital markets, selected the best options based on market conditions and optimized the overall debt structure.
In addition, during the Year, the Group was granted a number of domestic long-term bank loans amounting to RMB4.83 billion by various banks with terms from five to 15 years. These loans will significantly extend the loan terms and increase the flexibility of working capital. On top of the repayment of the original loans due, they allow the Group to acquire additional liquidity by making full use of property valuation. At the same time, the Group also continuously repurchased US dollar bonds overseas. To date, the Group has repurchased US$154 million of bonds, which not only saved costs, but also further optimized the debt structure.
To cope with the complicated domestic and international environment, the Group continued to strengthen its management team during the Year to ensure an optimal mix of management resources and operational capabilities, to deliver its business strategies. In April 2020, the Group appointed Mr. Wu Guangquan as the executive director of the Company. He is responsible for the management of the Group’s resources integration, business development strategy and daily operations. Under the leadership of the Board, the senior management team will continue to lead the Group to create greater value for shareholders.
In the year 2020, with uncertainties in the international environment and COVID-19, China South City will continue to focus on real business and closely follow the direction of government policies, in order to facilitate an overall business upgrade. In particular, after years of development, projects in Zhengzhou, Xi’an, Shenzhen, Nanchang, Nanning and other cities have already gained numerous advantages such as well-equipped facilities, wide-ranging industries and unbeatable accessibility. With the introduction of more brands and the emergence of new industries, the number of visits and traffic flow will be further boosted, while the projects in Chongqing, Hefei and Harbin are set to grow rapidly due to improvements in the transportation and ancillary infrastructure. The simultaneous growth of each project will lay a solid foundation for the healthy development of China South City.
While ensuring the growth of the principal business, China South City keeps strengthening its capital operation via broadening financing channels, strictly controlling costs, prioritizing efficacy and making full use of the constructive role of the capital markets for resources allocation. The Group will also enhance tenant recruitment, operational capability and quality of projects as a whole. It will further refine specific management work divisions and products to facilitate the upgrade and development of the Group. Meanwhile, China South City will adhere to its unique "Trade and Logistics+" business model, which optimizes its business ecosystem and produces the best value.
China South City has been striving towards the development strategy of "Integrating Industries into Projects, Building Beautiful New ‘City’ Conducive to Work and Life". Leveraging its wealth of experience throughout the years, China South City has positioned itself as world-class integrated trade and logistics center, digital center, innovation center and living center, and is committed to being an incubator for strategic emerging industries that align with the national strategy and economic transformation, which will uncover new growth points in the real economy.
The management expects the Group to deliver its annual contracted sales target of HK$16 billion for the financial year ended 31 March 2021. In respect of recurring business, the Group will strive to keep its growth momentum and develop diversified and stable revenue streams.
About China South City Holdings Limited
China South City Holdings Limited (SEHK: 1668) is the leading large-scale integrated logistics and trade center developer and operator in China by gross floor area. It strives to provide professional integrated logistics and trading platforms with comprehensive value-added ancillary services — including one-stop logistics and warehousing services, outlet operations, furnishing market operations, property management, E-commerce services and convention and exhibition services — to assist small-to-medium enterprises in modernizing the way they conduct business. Capitalizing on China South City’s proven operational capabilities and extensive experience in co-operating with local governments to support urbanization and industrial upgrade throughout China, it has developed an extensive network with eight projects in different 1st tier cities, provincial capitals and municipality across the nation, including Shenzhen, Nanchang, Nanning, Xi’an, Harbin, Zhengzhou, Hefei and Chongqing. China South City is a constituent of the Hang Seng Composite MidCap Index.
For more information, please visit the Company’s website at www.chinasouthcity.com.
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