Dear Shareholders,
On behalf of China New City Group Limited ("Company") and its subsidiaries (collectively, the "Group"), I am pleased to present the annual results of the Group for the year ended 31 December 2023.
RESULTS
In 2023, the Group recorded an increase in revenue and the capital structure was optimised. During the year, the Group's revenue was approximately RMB1,297 million, representing a year-on-year increase of approximately 119.2%; gross profit was approximately RMB368 million, representing a year-on-year increase of approximately 213.6%; loss attributable to owners of the Company was approximately RMB404 million, representing an increase of approximately 6.6% as compared to that of 2022. As at the end of 2023, the total equity of the Group reached approximately RMB4,841 million, and the carrying amount of cash reached approximately RMB384 million. The Group recorded a loss per share attributable to ordinary equity holders of the parent of approximately RMB20.1 cents. The board of directors (the "Board") of the Group does not recommend the payment of any final dividend for the year under review.
MARKET AND BUSINESS REVIEW
During the year under review in 2023, the overall real estate market in China exhibited a development trend of "high from the beginning, low in the middle and stable at the end". In the first half of the year, the market showed short-term rebound as driven by the positive effects from favourable policy support. However, with the release of demand early in the year, home buyers' sentiment toward home ownership and market performance dropped rapidly during the second quarter. As such, the central government and all local governments enhanced policy support in the latter half of the year. Nevertheless, home buyers lacking confidence and the cautious attitude of market investors constituted a drag on the growth of the overall market demand.
Against this backdrop, the Group will continue to adhere to a prudent operating attitude and ensure financial solidity advantage. Leveraging on its diversified industry layout backed by strong urban development and operation services as well as industry resources integration capabilities, the Group is committed to empowering urban renewal and continuously unleashing the future vitality of cities, while facilitating the economic greater circulation and development of China's economy. The diversified business segments of the Group such as commerce, hotels, and cultural tourism have begun to thrive, we will strictly follow national policies, and continuously expand into other areas such as urban renewal, industry-city integration, future communities and rural revitalisation.
1. Commercial Property Development
Over the past year, the Group has more than 10 projects for sale, mainly located in cities and regions across Zhejiang Province/ Yangtze River Delta region, and maintained a steady growth in contracted sales. For the year ended 31 December 2023, the Group recorded contracted sales amount of approximately RMB1,547 million for the year, with contracted sales area of approximately 100,000 sq.m. and an average price of contracted sales area of approximately RMB15,500 per sq.m..
2. Commercial Operations
After more than ten years of dedication and implementation in the commercial property industry, the Group has gained rich experience in commercial property development and advanced operating philosophy. Currently, the projects in operation are mainly concentrated in Zhejiang Province/Yangtze River Delta region, including Xiaoshan Zhong An Plaza, Yuyao Zhong An Plaza, Yiwu Zhong An Plaza, Zhonganli Jia Run Mansion and Xixi Future Industrial Park.
The commercial sector has focused on the preparations for the opening of Xiaoshan Zhong An Plaza, and it will be perfectly presented in conjunction with the 25th anniversary of the Group. Under the pressure of the current business environment, China New City's headquarters and various industries shall share resources, empower and support, and assist the development of the commercial sector.
We will continue to extend our business layout and actively explore a steady and healthy development path with growth potentials and opportunities. We are committed to becoming "the leader of pioneering China's innovative lifestyle", and have currently established a commercial product system centred on "personalised theme business, high-end landmark business, quality life operation, and self-operated brand management". Through collaborative cooperation between sectors with synergies and empowerment being created, we strive to build a strong business ecosystem, and create a differentiated brand matrix.
In 2024, we will focus on cultivating community commercial complex and continue to improve the efficiency of our original business operations. Currently, we have been working closely with the local governments on future community projects in Zhejiang Province. In respect of brand incubation, we will also focus on building our brand chain layout.
3. Hotel Management
Currently, there are four hotels in operation of the Group, namely Ningbo Bright Hotel, Huaibei Bright Hotel, Hangzhou Qiandao Lake Bright Resort Hotel and Zhong An Holiday Inn Hangzhou Xiaoshan with a total of 1,356 guest rooms and an operating area of approximately 210,000 sq.m.. In terms of hotel operations, we carried out refined management in 2023 based on the principles of "cost reduction, quality improvement and efficiency upgrade" focusing on key concepts such as "cost-effectiveness, local atmosphere and emotional value". On the other hand, we actively explored idle space for revitalisation to optimise space efficiency of our hotels, and implemented comprehensive marketing strategies among all employees in order to increase our market share for revenue generation.
In 2023, the Group recorded a revenue of approximately RMB258 million, representing a year-on-year increase of approximately 16.7%, and the hotel occupancy rate was approximately 70% in 2023, representing an increase of 14% as compared to that of 2022. The average price of a guest room increased from RMB463 per room in 2022 to RMB479 per room in 2023, representing a year-on-year increase of 3.5%. Both volume and price of the Group's hotel operation business increased after the pandemic.
In 2024, we will focus on expanding the scale of hotel management and building a development strategy for modular operations of internal businesses while maintaining the continuous improvement on the efficiency of the four hotels:
PROSPECTS AND DEVELOPMENT STRATEGIES
The Group will continue adhering to the strategy of "upgrading old businesses while developing new business chain" by focusing on improving return on assets, and enhancing operation efficiency through the application of operational management and digital technology. We also strive to enhance our investment return by optimising the organisational structure for continuous cost reduction. Meanwhile, we will utilise our existing business base to promote expansion in scale via light asset model and implement new business model to extend and optimise our business chain so as to achieve the vision as a business operator of "creating new and better living".
ACKNOWLEDGEMENT
On behalf of the Board, I would like to express my sincere gratitude to the continuing support and trust of shareholders of the Group and business partners as well as the dedicated efforts of all the staff of the Group!
The People's Republic of China, 26 March 2024
