Chairman's message
Chairman

In 2017, the property policy of the Government continued to be guided by the concept that "houses are for residence and not for speculation". With this overarching guideline, different policies have been implemented in different cities. Some progress has been seen as the growth of the average prices of new properties in hundred of cities continued to decline as compared with the previous periods and the prices appeared to be stabilising. The markets of major cities have became increasingly steady as the Government austerity policy was further tightened, while the spending power remained strong in third- and fourth-tier cities with a less restrictive policy implementation, which boosted the area sold nationwide. We believe that the control measures can lead the property prices back to a reasonable level, balance related supply and demand and regulate transactions in an orderly manner in the property market. We also believe that the confidence of home buyers and protection of consumer rights will be enhanced. For industry players, effective operating guidelines on compliance with the national policy are also provided.

Despite new restrictive policy measures were launched frequently in 2017, by leveraging insight gained after more than two decades of experience, Hopefluent managed to seize available opportunities and attain growth. We integrated and further developed the businesses across various sectors through execution of innovative strategies. We are also resolved to keep abreast of market dynamics and operate the business prudently and proactively.

Turnover of Hopefluent reached HK$4,672 million in 2017, representing an increase of 18% from HK$3,966 million in 2016. Profit attributable to owners of the Company increased by 11% from HK$302 million to HK$337 million.

Internet Drives Traditional Property Real Estate Agency Service Business to New Heights

We have succeeded in integrating the Internet with the Group's traditional businesses. Through building online new media service platforms such as iHouseKing (www.ihk.cn), Hopefluent Real Properties, He Ji Mai Lou and HFmoney (www.hfmoney.com) and integrating them with its marketing channels, we achieved synergies by optimising the information distribution of all the Group's businesses, thereby enabling customers to obtain the most comprehensive market information and the Internet promotion information at their convenience anytime and anywhere. This improved access to information significantly increased the efficiency of both purchase and sales transactions, in turn boosted the profit from the primary property real estate agency service business and further enhanced the Group's diverse services and integrated competitive strength. In 2017, our turnover from the primary property real estate agency service business reached a record high at HK$2,929 million, a year-on-year increase of 18%. Outstanding results for the year were achieved in major cities including Guangzhou, Foshan, Dongguan, Hefei and Jinan, with a total of more than 1,000 property projects in these cities, and laid a solid foundation to the good result for the year.

Accelerated Expansion of the Presence of Secondary Property Real Estate Agency Services Business

While the competition of the secondary property real estate agency service industry has been intensifying, the Group has spared no effort to expand its business. It has continued its focus on providing professional property sales and leasing services to the public through its quality service teams and expanded the presence of this business with its brand exposure and reputation for reliability. In 2017, the turnover from the secondary property real estate agency services business amounted to HK$1,075 million, a year-on-year increase of 14%. The Group has also increased the number of branches to approximately 438, providing agency services in relation to the lease and sale of residential properties, shops and offices. The Pearl River Delta region has continued to be the core business region for the Group generating revenue whereas other cities have been the focus of expansion for this business.

Financial Services Business a New Highlight of Growth

The Chinese Government has escalated its supervision over the financial services sector to ensure the security of related services, so that financial technology can benefit all citizens of the country under effective regulation. Hopefluent continues to conduct its business in line with national policy to operate business in strict compliance with the law and in line with standards to safeguard the users of its financial services. We appreciate that urban families have different needs including consumer spending, community services, wealth management, family financial management and more, thus the Group has focused on the consumption and financial needs of those families and has steadfastly provided comprehensive value-added financial services to address these needs. In August 2017, the Group has joined hands with Ping An Bank to launch a banking custody system, with the aim to facilitate the healthy development of the consumer financial services segment in order to promote the development of inclusive finance and to provide better services in return to the trust of users. In 2017, the Group's financial services business recorded a satisfactory year-onyear increase of revenue of 30% with a turnover of HK$146 million. The Group will further expedite the development of its financial services business in the future.

Ongoing Optimisation of Property Management Business

The Group optimised all segments of its comprehensive property management services portfolio and provided customised management services for its properties to suit the unique characteristics of each property. These efforts have been widely appreciated by its customers. To date, the Group has provided property management services for 300 residential, office and commercial properties in Guangzhou, Shanghai, Tianjin and Wuhan with a total gross floor area under management of 30 million square metres. The property management business continued to be one of the growth drivers of the Group in 2017 and contributed a turnover of HK$522 million, a year-on-year increase of 21%.

Conclusion

While maintaining the current competitive advantages in its four core businesses, Hopefluent has also endeavoured to facilitate the development of all businesses to maximise synergies, so as to reinforce the Group's leadership position as an integrated property services operator in China.

The Chinese Government's increasingly stricter supervisory policy is an important factor for maintaining a sound and healthy society as well as the orderly development of the market, while ultimately presenting brilliant prospects for the long-term development of the nation. Furthermore, the Group has a high degree of concern over the high-profile Guangdong-Hong Kong-Macau Greater Bay Area cross-city state project and Guangzhou being the origin and base of Hopefluent, is also a key city in the strategic initiative. The Group is looking forward to the large-scale infrastructure projects to begin operation soon and the future development of smart industries to further drive the booming industrial development and economic growth within the area, which will in turn benefit the growth of its primary and secondary property real estate agency services businesses. At the same time, the Group has joined forces with Poly Real Estate Group Co., Ltd. (保利房地產(集團)股份有公司) ("Poly Real Estate") (SHA: 600048) based in China to form a proposed joint venture including their respective primary and secondary real estate agency services businesses with the aim to benefit from strategic synergies. As Poly Real Estate is a renowned brand in most of the cities in China, the Group hopes through the combined advantages to optimise the allocation of its resources and thereby advance Hopefluent's business in strides.

With the positive influence of a number of national policies and driven by the development of different strategic initiatives and infrastructural projects, Hopefluent is confident that the Group's businesses will continue to show strong progress. With its extensive experience and trustworthy reputation in the industry over the past years, its solid relationship with its business partners through continuous cooperation and its strong confidence and enthusiasm in the prospects of the industry, we believe the Group can achieve further successes in all business segments. Furthermore we will strive our utmost to create the greatest value for customers and generate the best returns for shareholders.

On behalf of the Group and the Board, I would like to thank all of our employees for their selfless dedication and diligence as their every effort has contributed to today's brilliant achievements of the Group. I would also like to express my sincere gratitude to all our shareholders, business partners, customers and investors for their support and trust over the years, which is the driving force to motivate the Group to raise our business to new heights in the future.