A succession of policies over the past year has delivered a signal of adjustment to markets. Under the guidance of policies, accelerating strategic transformation and returning to management has become the foundation of private enterprises.
As an industrial investment platform of CMIG (China Minsheng Investment Group), CMIG Jiaye has paid more attention to the scale and quality and balanced the benefits and risks under the operating condition of its own strategic contraction, in an effort to constantly improve the investment operation and management level while shrinking the assets with a positive attitude.
In the situation of stagnant investment market as a whole, the unaudited data of CMIG Jiaye in 2018 indicates that the operating revenue reached 9.63 billion yuan, the net profit of parent company1.35 billion yuan and its asset-liability ratio was 61%.
It can be seen from this data that under the general circumstance of the industry which is not optimistic, CMIG Jiaye still maintains a high operating efficiency and a relatively stable scale of assets and liabilities.
Three major industries create value
It has been more than four years since the establishment of CMIG Jiaye. Looking back on the great achievements made by CMIG Jiaye over the past four years, we may acclaim it as bright spot. In 2015-2017, the cumulative net profit of parent company of CMIG Jiaye was nearly 10 billion yuan; By the end of 2018, the combined assets of CMIG Jiaye totaled over 83.2 billion yuan and its net assets 32.5 billion yuan, which prompted a benign interaction between financial capital and the real industry and thus to constantly create value for shareholders.
It is no accident that CMIG Jiaye has made such achievements. In the past few years, based on the advantages of brand and resource of CMIG,CMIG Jiaye, following the general trend of national economic transformation and industrial upgrading as well as the strategic objectives of “building an investment platform for combination of industry and finance in the greater real estate industry”, actively explores the pattern for the development of financial property and its value-creation ,deploys medical health and industry investment in environmental protection in order to balance the benefits of both short-term and long-term. Additionally, the major investment sectors of CMIG Jiaye has been in full bloom in the wake of good post-investment management and operation improvement.
Since its establishment four years ago, based on the investment strategy and matching ratio of the real estate industry, CMIG Jiaye has successively joined hands with Sunshine City, SRE Group, Yida China through mergers and acquisitions and investment in the secondary market.
Among them, Sunshine city, a national brand enterprise taking the development of real estate as its main business, has completed the national layout of "3+1+X". In 2018, its sales exceeded 100 billion yuan, making itself the first newly-emerging housing enterprise with revenues of 100 billion yuan.
With the help of CMIG Jiaye, the scale and influence of SRE Group and Yida China have been elevated to a new level. Nowadays, SRE Group has grown up to be a global enterprise with diversified businesses and a host of valuable projects. While Yida China relies on the influence of shareholders' brands and abundant resources to continuously acquire large-scale and influential projects and thus to accelerate the realization of the national layout.
In addition to real estate, the medical service sector is also one of the promising directions of CMIG Jiaye. Since entering the investment field of medical service at the end of 2016, CMIG Jiaye has held a total of 6 comprehensive and specialized hospitals, the main projects of them locating in such regions as the Yangtze River Delta, Pearl River Delta, and Shandong. Besides, the hospitals invested by CMIG Jiaye are well-equipped with about 3,000 available beds and department settings. It takes the leading position in terms of floor area, number of beds, equipment configuration and discipline development and has reached cooperation with the public top three hospitals in Beijing, Shanghai, Guangzhou and Shenzhen to create the core competitive mode of "large-special and small-general dept." with the help of superior expert resources. In terms of investment in specialized hospitals, the main layout is the specialized hospitals featuring rehabilitation and tumor, as represented by Guangzhou fuda tumor hospital.
CMIG Jiaye has also been paying close attention to the development tendency of global medical technology and massive health frontier. It has invested in cutting-edge technological projects supported by national policies, namely the surgical robots through equity participation and first obtained CFDA Class III licenses for rapid cancer screening in China as well as projects such as New Zealand An Fa Biological Project.
The investment network of CMIG Jiaye is not confined to this. In September 2017, it made a strategic investment in the science, engineering, technology and environment and rapidly deployed the work of environmental protection, mainly focusing on such environmental protection segments as water quality monitoring, water area management, hazardous waste treatment and soil remediation.
At the end of 2017, CMIG Jiaye entered into the most promising market segment in the environmental protection industry and reached FLI cooperation with the top three companies in terms of UK market share specializing in the soil remediation, working together on solutions to the problem of contaminated soil remediation and engineering services by virtue of years of experience and mainstream techniques in the project engineering of soil and groundwater remediation. Currently, FLI has completed more than 1,000 projects in more than 40 countries around the world.
Subsequently, CMIG Jiaye entered into the industry of hazardous waste disposal through cooperating with Jihui Remondis, an environmental industry group engaging in the comprehensive utilization and disposal of professional waste resources. Equipped with the advanced Sino-German combined technology, the enterprise has been approved to dispose of hazardous wastes, with the disposable categories up to nine and a total amount of 100,000 tons/year. In addition, it boasts the advantage of superior customer resources and steady supply channels of hazardous wastes in Shanghai Chemical Industry Park.
The real estate investment appears steady in 2008
As the concentration ration of industry intensifies, real estate has bid farewell to the era of barbaric growth and the return on investment in the industry has gradually returned to normal, all these showing signs of economic slowdown in the industry, which, nevertheless doesn’t mean the loss of opportunities. From the perspective of CMIG Jiaye, as long as it accurately grasps the cyclical opportunities in the potential segments, steady returns can still be obtained.
CMIG Jiaye revealed that in 2018, among the composition of net profit of its parent company, real estate business accounted for 400 million yuan, while projects of real estate investment 940 million yuan.
The marvelous achievements are largely attributable to two Hong Kong listed companies, the SRE Group of owned by CMIG Jiaye and Yida China.
Faced with pressures from external environmental , SRE Group adhered to the development model called “two-wheel drive”, namely the real estate development plus real estate investment and then successfully formed a closed-loop of the model integrating real estate with finance, accordingly, with steady income in real estate management and desirable investment income in financial real estate.
Last year, SRE Group accelerated the sales and cash return of domestic projects and overfulfilled the annual operational indicators of the projects in Chengdu Shenyang, Jiaxing, creating regional benchmark products; Overseas projects were promoted in an orderly manner, the bay area project in San Francisco went smoothly, and the phnom penh project in Cambodia was completed and sold in advance. A batch of high-quality projects were also reserved in the Yangtze river delta, the Guangdong-Hong Kong-Macao Greater Bay Area and second-tier cities, in an effort to actively explore the mode of "industry + real estate".
In order to optimize the asset structure, the SRE Group took a series of strategic exit action. Schofield, the second investment project in Sydney, Australia, exited the investments with a net margin of 22% after tax. In the UK, two properties in London, 12 Moorgate and 41 Tower Hill achieved considerable income; In addition, these projects have been successfully withdrawn (partially withdrawn) or in foreign cooperation, including the projects in Beijing, Shanghai, Shenzhen, Caolu, Changsha and Meilan Lake hotel. The model of financial real estate characterized by investment, financing, management and withdrawal has gradually become a closed loop.
Unlike SRE Group, Yida China focuses on expanding its asset-light scale and strengthening the abilities of industrial development in 2018. It continues to expand industrial bandwidth, focusing on eight major industries such as software and service outsourcing, and has formed a unique business model and industrial advantages. Besides, it has developed and operated nearly 40 business park projects in 20 cities across the country and gathered more than a thousand corporate clients and partners coming from nearly 100 Fortune 500 companies and hundreds of top 100 enterprises.
By the end of last year, Yida China had acquired a land area of 1.64 million square meters and reserved a number of high-quality industrial and urban projects in second-tier cities to bring greater driving force for development; A total of 4 million square meters was newly contracted and entrusted to operate for a whole year; Upon the completion of the merger and acquisition of Dalian tiandi project, the land withdrawal of Dalian yellow river and the opening sales of the estuary project were realized. And as Dalian tiandi project contributed 4.5 billion yuan of capital for the whole year, the company’s demands on cash flow were effectively guaranteed.
Balance risks and benefits
In the New Year, the macroeconomic forecast remains less optimistic and every enterprise is still struggling with such difficult problems as how to deal with the more complex economic situation and the more stressful market environment
In view of the current market environment, CMIG Jiaye has deployed the work in advance. In the year of 2018, CMIG Jiaye will optimize asset allocation through various ways and actively promote the withdrawal of stock assets and gain good achievements and returns respectively from withdrawal and investment: the project of Jiasheng De and surgical robot in the medical and health sector have been withdrawn in the fourth quarter of 2018; The projects, invested by CMIG Jiaye in the core area of ho chi minh city, Vietnam, have been withdrawn at a premium.
In addition, in order to promote the implementation of new business strategy, CMIG Jiaye plans to set up two funds: one is to refocus on the core domain of real estate financing and set up a real estate fund by relying on the superior resources of each shareholder and the professional competence and performance of jiaye investment team in the field of real estate investment; the other is to establish an equity investment fund by virtue of the rich investment experience accumulated in the field of equity investment, as well as good reputation and market recognition. In the strategic conception of CMIG Jiaye, these two funds will become the hidden power for the company's future development.
In the future, CMIG Jiaye will further accelerate the strategic adjustment to balance the benefits and risks and promote the optimization of asset allocation while accelerating the launch of a new round of strategic implementation to promote new driving force for future development by the asset-light operation model.