Once a "model real estate company," Jinhui Holdings has disclosed its first financial report following an "incident of risk."
The annual report data shows that in 2023, Jinhui Holdings' operating income was 34.249 billion yuan, a year-on-year decrease of 3.0%; its gross profit was 2.529 billion yuan, a year-on-year decrease of approximately 51.2%; the loss attributable to the owners of the company was 581 million yuan, with a comprehensive loss of 434 million yuan for the year.
Over the past year, Jinhui Holdings has seen a contraction in revenue from multiple business lines. The most fundamental property development and sales revenue recorded 33.814 billion yuan last year, a decrease of about 3.1% year-on-year, mainly due to the reduction in the total construction area delivered by the group during the period.
Income from management consulting services decreased by 16.3% year-on-year to 17.5 million yuan, primarily due to the reduction in the scale of projects developed by joint ventures and associated companies that provide management consulting services. Rental income increased, including regular rental income from commercial properties such as office buildings, shopping malls, and shopping streets, which increased by 6.8% year-on-year to 416 million yuan for the fiscal year 2023.
While revenue shrank, Jinhui Holdings' cost scale actually increased. The group's property development and sales costs mainly include construction costs, land acquisition costs, and capitalized interest, which increased by 5.2% year-on-year to 30.138 billion yuan last year, mainly due to the additional provision for inventory depreciation. The gross profit at the end of the period was 2.528 billion yuan, and the gross margin decreased from 14.7% to 7.4% for the fiscal year 2023.
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In addition, Jinhui Holdings' financing costs increased last year, rising by 25.3% from 236 million yuan in 2022 to 295 million yuan. As of the end of the reporting period, in terms of profit indicators, the loss attributable to the owners of the company was 581 million yuan, with a comprehensive loss of 434 million yuan for the year.
This is the first time since its listing that Jinhui Holdings has "turned from profit to loss," and what more affects the company's future path is the debt problem it is currently facing.
Jinhui Holdings recently announced that the company has not yet paid the principal of a US dollar bond with a principal amount of 300 million US dollars due on March 20, 2024. This US dollar bond was issued on September 14, 2021, with a bond size of 300 million US dollars, a coupon rate of 7.8%, and a bond term of 2.5 years.
"The company is still actively working to resolve the issue and maintain active communication with noteholders, seeking to implement the best solution to ensure the protection of the interests of all stakeholders," Jinhui stated, adding that the above situation will not have any potential significant impact on the group's business operations.
From the latest financial report disclosures, Jinhui Holdings is under considerable short-term debt repayment pressure.By the end of 2023, Jinhui Holdings' debt balance decreased from 378.158 billion yuan in 2022 to 292.84 billion yuan, a reduction of approximately 22.2%. The total short-term debt amounted to about 139.40 billion yuan, while the cash and bank balances at the end of the period were only 70.729 billion yuan. The cash on hand has significantly decreased compared to 123.195 billion yuan in 2022, and it is insufficient to cover the short-term debt repayment needs.
Furthermore, last year, the scale of Jinhui Holdings' current assets shrank by 24.7% from 1317.89 billion yuan at the end of 2022 to 992.34 billion yuan, mainly due to the completion and delivery of properties leading to a reduction in properties under development, and a decrease in annual cash and bank balances.
Jinhui Holdings stated that last year, the central government adopted active and effective measures that provided strong support for the stable and healthy development of the real estate market. Faced with the current market environment, the group strictly adhered to financial discipline, maintained reasonable liquidity, reduced leverage levels, optimized capital structure, and the debt balance at the end of the period decreased by 22.2% year-on-year. The weighted average debt cost was 5.99%, slightly lower than the previous year.
Looking ahead, Jinhui expressed that the implementation of the whitelist system and the proposal of the "three no less than" assessment indicators reflect the attitude of the central bank and major banks in strengthening financial support for the real estate market. This is conducive to increasing market liquidity, reducing the financing costs for real estate companies, and stimulating the demand of individual homebuyers. In terms of regulatory policies, there is still room for localized optimization in first-tier cities and strong second-tier cities.
"Although the overall policy environment is conducive to the stable development of the real estate market, the market still faces some challenges and risks," Jinhui stated. The company will continue to maintain a prudent development strategy, with "ensuring delivery" as the bottom line, to achieve high-quality development. It is believed that the real estate industry is expected to gradually stabilize and fulfill its role as a key industry for stable investment and growth, ushering in a broader development prospect.