On the afternoon of April 28th, the old-fashioned housing company OCT held a 2019 annual results conference online.

Chairman Duan Xiannian did not attend, but was attended by Vice Chairman Yao Jun, Director President Wang Xiaowen, Deputy Chief Accountant Feng Wenhong, Director of Investment Management Department Wang Wenjin, Director of Tourism Management Department Wang Gang, Board Secretary Guan Shan, etc. doubt.

The annual report disclosed that in 2019, OCT achieved operating income of 60 billion yuan, an increase of 25% year-on-year; net profit attributable to shareholders of listed companies was 12.3 billion yuan, an increase of 17% year-on-year. As of the end of 2019, the company's total asset value reached 379.6 billion yuan, an increase of 28% year-on-year. OCT wrote in its annual report with satisfaction that "all indicators have hit record highs."

This is naturally a good-looking annual report, the asset-liability ratio is maintained below 75%; the average financing cost is 4.56%, which is at a low level in the industry; the current currency funds are 37.486 billion yuan, an increase of 10 billion yuan over the same period last year, and the cash flow is more stable.

But for this veteran housing company, the market expects more. In 2015, OCT announced that it would expand its business scope from the "tourism + real estate" model to the development model of "culture + tourism + urbanization" and "tourism + Internet + finance". Although the revenue of the cultural tourism sector exceeded the real estate business for the first time, it was not enough stable.

OCT is still in the middle of transformation.

Cultural travel revenue exceeds real estate for the first time

"I have never felt that OCT is not just a real estate developer, but a comprehensive development enterprise of cultural tourism." At the performance meeting, Yao Jun emphasized again. With OCT as the main business, and to be a “themed park leader and leader in the tourism industry”, OCT will generate revenue from the cultural and tourism business sector for the first time in 2019 over the real estate development sector.

According to the annual report, in terms of its main cultural tourism business, in 2019, 18 scenic spots, 24 hotels, 1 travel agency and 2 open tourist areas under the OCT, received a total of 52.09 million tourists, an increase of 12% year-on-year. Successfully achieved operating income of approximately 30.263 billion yuan, an increase of approximately 58.96% year-on-year, accounting for approximately 50.42% of total revenue, an increase of 10.89 percentage points year-on-year.

The real estate business segment, which had previously dominated the market, has experienced a significant decrease in the proportion of revenue. It achieved an operating income of about 29.134 billion yuan, accounting for only 48.54% of the total revenue. According to the 2019 Interim Report, the real estate business contributed 12.126 billion yuan in operating income, accounting for 68% of the total; the cultural travel business contributed 5.724 billion yuan, or 32%.

Revenue of the cultural tourism sector increased significantly in the second half of the year, mainly due to the fact that the majority of tourists received in the second half of the year. According to data from the Interim Report, OCT received a total of 17.82 million tourists in the first half of the year. In addition, the OCT newly added cultural tourism projects such as Beijing Happy Valley Phase V, Shenzhen Happy Valley "Western Mining Town", Nanchang Maya Paradise and Shunde Happy Coast PLUS, etc., all of which will also be opened around the summer of the second half of the year.

However, while the revenue of the cultural tourism business has increased significantly, the cost has also risen significantly. In fact, the business sector that can really bring benefits to OCT is still real estate development. The annual report disclosed that the cultural tourism sector contributed a gross profit of approximately 12.3 billion yuan in 2019, and the gross profit margin was approximately 40.63%, while the real estate sector contributed a gross profit of approximately 21.7 billion yuan, and the gross profit margin was as high as 74.6%, far higher than the revenue from the cultural tourism sector business. .

In the new year, the operation of the cultural tourism business may be more difficult. As a direct consumer-oriented industry, the cultural tourism sector is the most directly and severely affected by the epidemic. According to Wang Gang, director of the Overseas Chinese Town Tourism Management Department, the new crown pneumonia epidemic has caused the company's tourism sector to significantly reduce operating efficiency. Actually only 30% of the same period last year.

Even though it is now approaching May, the opening status of scenic spots, hotels and other places under the OCT is still not ideal. "From the data of the previous week, the toll scenic spots have only returned to about 20% of the same period last year. The hotel is slightly better, but only 30% level in the same period last year. "

Operating cash flow is negative year after year

The cultural tourism business, which requires a lot of capital investment, must rely on the profitability of the real estate business to provide support. OCT also knows this.

In 2019, OCT achieved a contracted area of 2.52 million square meters, an increase of 22% year-on-year; realized contracted sales of 86.3 billion yuan, an increase of 45% year-on-year.

While real estate business has achieved rapid growth, OCT has also not been easy to take land. In 2019, there are 47 new land acquisition projects in OCT, with an additional land area of more than 6 million square meters and an additional planned construction area of more than 12 million square meters, mainly distributed in popular sectors such as the Guangdong-Hong Kong-Macao Greater Bay Area and the Yangtze River Delta, of which 28 cases Plots are acquired at reserve prices. The land value is 74.46 billion yuan, the equity consideration is 49.4 billion yuan, and the land-to-sales ratio is 57%.

As of the end of 2019, the inventory balance of OCT was 185.3 billion yuan, accounting for 49% of total assets, mainly distributed in Shenzhen and the Greater Bay Area, Nanjing, Ningbo, Chengdu, Nanchang, Hangzhou and other hot cities, accounting for up to 85%.

According to Wang Xiaowen, in order to ensure the balance of annual income, OCT continuously improves the structure of resource reserves and the structure of products, and largely supplements relatively short and fast residential projects and proportions.

On the other hand, OCT has also made great efforts to promote the real estate development cycle. Wang Xiaowen said that in terms of project development and construction, speed, as well as product launches and sales, the OCT has benchmarked outstanding enterprises in the industry. Among them, Chaozhou Pure Water Bank, Zhaoqing Pure Water Bank, Nanjing Fengzi River and other projects successfully achieved New breakthroughs in sales and repayments in that year.

However, even so, the rapidly advancing strategic layout and continuous large-scale investment projects have still brought considerable financial pressure to OCT. OCT has had negative net cash flow in operating activities for many consecutive years. In 2017, 2018, and 2019, the cash flow of OCT business activities was -7.7 billion yuan, -100.45 billion yuan, and -5.188 billion yuan, respectively.

Feng Wenhong explained that this situation is related to OCT's current leap-forward development strategy. At the same time, the company has attached great importance to the problem of operating cash flow, and has been continuously improving this state.

"On the one hand, we have accelerated the sales rebate. In 2019, we received cash of 92.7 billion yuan in sales of goods and provision of labor services, an increase of 40% over the same period of the previous year; Cooperation in the form of creditor's rights has effectively solved the uncertain risks and speed of the project. At the same time, some fast-turnover projects have been transferred into equity or asset sales to obtain income and cash protection.