Merchants Shekou, "A Good Hand Smashed"? Revenue And Net Profit Decline Behind The Transformation Pains

Shenzhen last year, "50 million squatted" luxury residential investment Shekou, and approved a luxury project.

In November 22nd, the investment project in Qianhai, Shenzhen was awarded for approval. The lowest unit price of the 456 residential units was 86 thousand / 110 thousand, or highest.

Under the support of the parent company's China Merchants Group resources, merchants have been taking low cost for many years, and the land cost has dropped for three years. In Shenzhen, there are lots of high-quality plots and many luxury projects have been developed.

However, it is difficult for the company to match top-level resources. In the first three quarters of this year, its performance was poor, and its revenues and net profits continued to decline. Sales in October were not as good as peers.

The turmoil of personnel for several years is a painful pain for the company to grow steadily. In recent years, investment has been in personnel changes, high level to middle level frequent changes, structural adjustment is relatively large, which has a great impact on the company's business, and the results are volatile.

Until October, the new chairman and general manager of the business was stable, and a series of new measures were being pushed forward. Could these new changes lead the company back to the top ten of the industry?

Decline in performance

In the large central business developers, the performance of merchants' Shekou is particularly volatile, not as smooth as that of China and poly.

In the third quarter of 2019, the company achieved a revenue of 8 billion 856 million yuan, a year-on-year decrease of 30.77%, and a net profit of 195 million yuan attributable to shareholders of listed companies, a sharp decline of 83.21% over the same period last year.

In the first three quarters of 2019, the company achieved operating income of 25 billion 540 million yuan, down 24.39% from the same period last year, and the net profit attributable to shareholders of listed companies was 5 billion 93 million yuan, down 38.46% from the same period last year.

Bank of China International analyst Jin Wei believes that the decline in revenue is mainly due to the uneven distribution of completion time and delivery time, and the current transfer area is relatively small. The four quarter is expected to rebound in scale. The decline in performance is greater than the decline in revenue, due to the entry of part price fixing low margin items into the settlement period, and the increase of the three cost rates, the future settlement structure is expected to be improved.

Relying on the advantages of the parent company's soil storage, Merchants Shekou has large land in the big bay area, especially in Shekou and Qianhai, Shenzhen.

However, the land superiority did not appear prominently in sales, and the sales of Shekou in October slowed down significantly. In October, sales of 17 billion 60 million yuan, a decrease of 27.3%, lower than that of the mainstream 50 Housing enterprises average monthly 36.1%.

To add insult to injury, the transformation of merchants' Shekou is difficult.

A few years ago, China Merchants Shekou proposed the layout of the "new port, central and post city" mode of industrial new town, which is aimed at the port development, industrial park follow-up, supporting the development of new urban areas, so as to achieve the overall development of the film area.

Management abacus played well, on the one hand, through the group "input" low cost land, the company's stock real estate business has a competitive advantage; on the other hand, through the merger and upgrading of non-traditional real estate business, so that the company's business diversification, so that the incremental can hedge the traditional real estate cycle fluctuations.

However, the problems brought by the PPC mode (the "former port - central post city") are difficult to reflect in terms of performance, with a long cycle and slow turnover.

In the three business of Shekou Shekou, the company has great expectations for the performance of the transformation business due to the most competitive nature of the park.

Xu Yongjun, chairman of China Merchants Shekou, once said at the 2015 performance meeting that it is estimated that the proportion of community operation business will drop to 70% or even 60% in 3 to 5 years, and the operation of the park will be increased to 30%, and the proportion of cruise operation will reach 10%.

But a few years ago, the cold data made people sob.

According to the 2017 earnings report, the revenue of the company's Park sector was 6 billion 197 million yuan, accounting for only 8.29% of the business revenue. The proportion of the revenue from the cruise board also dropped from 0.78% in 2017 to 0.65% in 2018, which is far from the company's expectations three years ago.

In the first half of this year, the earnings data also showed that the income of the community business sector, the business sector of the park and the cruise industry sector were 12 billion 410 million yuan, 4 billion 10 million yuan and 270 million yuan respectively, representing an increase of -29.8%, 31.3% and 2.7% respectively, accounting for 74.4%, 24% and 1.6% of the total revenue respectively.

The growth rate of the garden and cruise board is still not as high as expected, and the community plate has dropped by 29.8%. To achieve Xu Yongjun's "de real estate", the time is not yet ripe.

The management of Shekou Shekou admitted in half a year, "there is imbalance in the process of comprehensive development and the throes of transformation."

Entering the climbing stage

Less than expected performance, it will inevitably be linked to the company's "internal affairs" in recent years.

Since its restructuring and listing, merchants have been trying to make the company change its face, but in the eyes of the outside world, investment has lost its original "flesh and blood".

Over the past few years, the original real estate management team has almost gone, the Shekou industrial area integration personnel also largely lost.

In 2018, the regional business team of hushekou took the lead in a round of adjustment, but the adjustment was more like a unexpected big upheaval.

Among them, Yang Tianping, vice president of hushekou, Wang Xi, general manager of East China, He Fei, regional general manager of Shenzhen, Xiao Rui, regional general manager of Southern China and Liang Huijun, general manager of central China, have left. The relevant managers are required to perform their duties simultaneously, and the department leaders also need to re compete for posts.

At the beginning of this year, the headquarters of hushekou was integrated from 16 departments to 9 departments. 5 regions were changed to 9 regions, 56 management posts were reduced to 29 management positions, and Jiang Tiefeng, a powerful figure, was transferred back to headquarters from East China.

In the middle of the year, former chairman Sun Chengming retired and Xu Yongjun took over as chairman. In October, global recruitment of general manager of Shekou started, and Jiang Tiefeng was finally promoted from within.

At present, the company's business, operation and personnel are still adjusting and adapting. Familiarity with merchants in Shekou suggests that after the integration of merchants, the original corporate culture is being lost and new culture and systems have not yet been established.

In response to this year's performance conference in March, Xu Yongjun said: "from 2015, the whole set of incentives, ESOP, 2016 to virtual investment, equity incentive plan, and 2017 to the project and investment, as the first to actually follow the investment of central enterprises, investment Shekou is constantly improving staff incentive mechanism."

It is still the background and resources of its central enterprises and state assets. Yuan Hao, a research analyst at Huachang real estate, thinks that Huai Shekou is actively changing in many dimensions after its reorganization, management reform, upgrading turnover and accelerating integration. The company sits on a second line of high-quality soil storage, especially in the big bay area of Guangdong, Hongkong and Macau, with high gold reserves, and has the advantage of "marketization + non marketization".

As a central enterprise, investment Shekou has more advantages in finance and capital. In November 21st, Merchants Shekou announced that it was promoting the commercial real estate trust fund of China Merchants Bank (China Merchants housing fund) to issue REITS and listing on the stock exchange. Recently, it has formally submitted the application for the listing of the housing stock, and will arrange to sign the relevant agreement on the listing of the housing stock.

Prior to November 13th, according to the information disclosed by the Hong Kong stock exchange, China Merchants housing fund has been heard through the listing. The fund is initiated by Merchants Shekou, and 00978.HK is the manager of the housing estate. China Merchants land is China Merchants Shekou Holdings subsidiary.

Under the support of a series of personnel arrangements and parent company resources, can the business of inviting Shekou return to the glory of the past "Bao Bao Jin"?