Business operations


Market Review for the 2022 Year

In 2022, the real estate industry in Mainland China faced numerous challenges. To begin with, the volatile global economic environment and adjustments in industrial layout placed downward pressure on the domestic market. Coupled with the peaks and troughs resulting from COVID-19, many industries were hit hard and consumer spending was curtailed, all of which seriously affected an already weakened real estate sector and dragged down various industry indicators. Despite the prompt actions taken by the Mainland government at year-end, clarifying the status of the real estate industry as the pillar of the economy, it will take time for the industry to recover. The sales of commercial housing in the country have declined by approximately 30% year-on-year, and investment in real estate development nationwide has plummeted. Under this environment, the Group has spared no effort in avoiding risk, though the general market conditions have inevitably affected the Group’s results and revenue.

Business Review of the Group

For the year ended 31 December 2022, the Group’s turnover reached HK$1,517 million, down approximately 43% from the same period last year (2021: HK$2,669 million), with loss attributable to shareholders totaling HK$580 million (2021: loss attributable to shareholders of HK$545 million. Basic loss per share was HK86.1 cents (2021: basic loss per share: HK80.8 cents per share). The Board of Directors did not recommend the payment of a final dividend for the year ended 31 December 2022.

Turnover from the property real estate agency services business amounted to approximately HK$1,426 million, and accounted for 94% of the Group’s turnover, while turnover from the financial services business was approximately HK$91 million, and accounted for 6% of the Group’s turnover. Total new home sales in 2022 amounted to approximately HK$380 billion in which approximately 217,000 transactions were handled, and encompassed a total gross floor area of about 19.6 million square meters.

i. Property Real Estate Agency Services Business

Turnover of this segment fell by 43% from approximately HK$2,489 million in 2021 to approximately HK$1,426 million, which was mainly because the real estate industry continued to face severe conditions in Mainland China. Uncertainties surrounding the economy and pandemic, debt risks of real estate companies, and market contractions constrained the development of the local real estate market this year. Even though the Mainland government launched a number of policies at the beginning of the second half of 2022 to “stabilize the economy, market and employment” and support the healthy development of the industry, the downward trend of the industry persisted. The Group’s property real estate agency services business was inevitably affected. In a challenging operating environment, business operating costs increased, and revenue fell below expectations. During the review year, the Group re-organized its cooperation model with Poly. It acquired 43.9% equity interest in Hopefluent China, which was held by Poly, and disposed of its interest in Poly Consultancy Group to Poly. Details of which have been disclosed in the circular dated 26 May 2022. In addition, the Group continued to look for resources to better address its development needs. It is believed that the increased shareholding in the Group by Country Garden Services can strengthen the Group’s property agency and property value-added service businesses, and create opportunities for resource sharing and information exchange. The Group has also maintained its focus on meeting the needs of homebuyers. It has explored the digital operation and sustainable service model via the “AI house tour” platform in order to help its property real estate agency services business “enhance both its strength and capacity for growth”. Currently, the Group’s property real estate agency services business covers more than 80 large and small cities and handles over 1,100 agency projects. The Group has around 160 secondary branches.

ii. Financial Services Business

Domestic and global macroeconomic conditions were unstable, and the financial services business continued to face a shrinking market. During the year, the Group focused on serving existing high-quality customers, and screened real estate companies and high-net-worth individuals with strong investment and financing needs through more rigorous vetting procedures. Risk control remained as the core focus of the operations. In the future, the Group will closely monitor market developments and adjust the positioning and strategies of its financial services in a timely manner to facilitate steady progress. During the year under review, total transaction value of the Group’s financial services business amounted to approximately HK$512 million, with a turnover of approximately HK$91 million (2021: approximately HK$180 million).

Prospects for 2023

From a series of austerity policies formulated at the end of 2022, it is not difficult to see that stable economic development will be a priority of the Mainland government in 2023. Real estate will undoubtedly remain as the pillar of the national economy, and its recovery will play a key role in economic development. The Mainland government has consequently implemented an array of measures and austerity policies. Firstly, various financial tools have been launched to support the supply side, allowing developers to obtain more funds through financing to launch more projects. Secondly, policies regarding property financial restrictions and purchase restrictions have been optimized, while mortgage policies have also been adjusted to stimulate consumer sentiment. Coupled with a number of related measures, the government has strived to stabilize market confidence, and fully support the prosperity of the market from both the supply and demand sides. At the same time, municipalities have also enhanced the flexibility of their local policies in line with different market conditions so as to accelerate the pace of market recovery. As the haze of the pandemic gradually disappears, the linking of city clusters and metropolitan areas will resume. The stability of the real estate industry will be driven by “leading economic zones”. Recent market data have indicated that the Mainland China economy has come out of its trough, and that sales in the real estate market have picked up. The Group’s performance will likely rebound in the coming year. Going forward, the Group will further penetrate key cities and consolidate its business foundation, while retaining and promoting its existing customer base. It will also search for more business opportunities through the digitalization of operations. The Group will remain pragmatic and strive to generate long-term and promising returns for shareholders.