In 2019, despite a challenging operating environment, the group achieved satisfactory operating results in its efforts to further increase the value of its properties and revenue from its major businesses. During the year under review, the audited revenue increased to approximately RMB71.3 million, representing an increase of approximately 15.6% as compared to last year. The increase was mainly due to the non-recurring revenue from sales of the residential properties. The Group’s profit attributable to equity shareholders of the Company was approximately RMB37.3 million, which represented an increase of approximately 1.9% as compared to the last year. Despite the decrease in gross profit and valuation gains on investment properties, the slight increase in profit for the year was primarily due to the increase in other net income as a result of the Group’s receipt of a one-time non-recurring income and decrease in distribution costs and administrative expenses. Basic earnings per share of the Group was approximately RMB0.08. The Board recommends the payment of a final dividend of RMB2.03 cents (equivalent to HK2.22 cents) per ordinary share for the year ended 31 December 2019.
During the year under review, the rental income from the Group’s property leasing business was approximately RMB39.6 million (2018: RMB43.5 million). The Group’s properties are located in Chengdu, Sichuan province and Kunming, Yunnan province in the PRC. As at 31 December 2019, the property portfolio comprises three commercial buildings, namely Everbright Financial Center, part of Everbright International Mansion and Ming Chang Building, with a total gross floor area (“GFA”) of approximately 88,529 square meter (“sq.m.”) and residential properties, namely part of Dufu Garden, with a total GFA of approximately 440 sq.m. The decrease in rental income was mainly due to the increase in vacancy rate in the commercial buildings.
Property Management Service
In order to maximize the value of the properties, the Group has a professional property management team to provide property management services for its properties, namely Everbright Financial Center and Everbright International Mansion. Revenue from the Group’s entirety property management services was approximately RMB15.5 million during the year under review (2018: RMB18.3 million). During the year, the decrease in revenue from property management services was due to the decrease in the non-recurring value added property management services income. Total GFA under the Group’s management was approximately 69,216 sq.m., a decrease of 7.0% as compared with the last corresponding year (2018: 74,406 sq.m.).
Sales of Properties
The Group’s residential properties are located at Dufu Garden, Chengdu, Sichuan province in the PRC. As at 31 December 2019, two of the units had been sold at proceeds of approximately RMB16.2 million (2018: Nil).
The Group’s investment properties mainly consist of land and buildings which are owned or held under leasehold interest to earn rental income and/or for capital appreciation. The total value of the investment properties was RMB922.4 million for the year ended 31 December 2019 (31 December 2018: RMB900.9 million). The valuation gain on investment properties for the year ended 31 December 2019 amounted to approximately RMB26.4 million (2018: approximately RMB33.8 million), representing a decrease of approximately RMB7.4 million as compared to last year. The decrease indicates the slowdown of property market in the PRC.
Looking ahead to 2020, the world’s political and economic environment will be highly uncertain. There will be greater changes while the growth rate of the global economy is forecasted to decline, leading to severe downward pressure for China. Intensity of adjustments and fine-tuning of national economic policies may increase. Nevertheless, the trend that China’s economy will grow positively in the long run remains unchanged. The PRC Government adheres to the principle of “seeking further development amid stability”, stabilizing the macro-economy and monetary policy in China. As the supply from domestic real estate market is in off-season, the growth in total sales amount slows down. It is expected that adjustments in policies together with measures will effectively and gradually rise the market demand, the overall operation of the real estate market will remain steady and affirmative.
Through continuous revision of economic structure as well as furthering the policy of reform and opening in China, the office occupancy rates in urban areas in Chengdu and Kunming shall remain stable. To ensure the standard of the property management business with market competitiveness, the Group will enhance the strategic advantages by making its existing strategies for commercial leases more flexible and ameliorating its overall risk management. Also, the Group will actively improve the quality of its services, be customeroriented, optimize the structure of the Group’s self-owned assets and the system of quality control. The Group will strive to uphold the excellent and stable relationship with long-term customers to assure certain and substantial recurring income, operating profits plus high occupancy rates.
The Group will endeavor to adhere its strategic position in investing in commercial buildings, explore potential overseas markets prudently and optimistically seek for business opportunities with expansion in markets such as London, the United Kingdom. To improve the Group’s corporate competitiveness through balancing its domestic and overseas investments portfolio, furthermore, to enrich the Group’s property portfolio by acquiring properties which have a healthy net initial return and good prospect for commercial leasing with a view in the best interests of the shareholders as a whole.
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