Since the announcement of the transition, soho china (00410) has experienced a continuous decline in financial data. Last year net profits fell to only $538 million, a decline of 87 per cent over the same period. In the first half of this year, the situation began to shift sharply, with net profits of $599 million attributed to shareholders in listed companies, an increase of 345. 34 per cent over the previous year。
On the afternoon of 17 august, soho china held a mid-term performance release in hong kong and, as of 30 june, the company had achieved a turnover of 727 million yuan (the same unit), an increase of 85. 23 per cent over the same period; the net profits attributed to shareholders in listed companies soared to 599 million yuan; essentially 0. 115 per share; special dividends are proposed for all shareholders。
It is worth noting that after the elimination of the non-recurring costs of $360 million arising from the early repayment of offshore debt, the equity shareholders of the company should have a net profit of approximately $959 million. Soho china's main business is real estate development, leasing, operation and management. There were no significant changes in main camp operations during the first half of the year。
Financial intelligence has learned that the increase in income in the first half of the year was due mainly to the gradual completion and commencement of rental of the group investment property and to the rising rental rate, which led to an increase in property rental income。
At the end of the period, soho had cash of approximately $3. 38 billion, and the ratio of net lending to equity interests attributed to the company was about 37 per cent. Its ceo zhang xin said: “in the face of the devaluation of the renminbi, we are not interested in holding too much cash in our hands.”
Rental income increased by about 60 per cent
In the first half of the year, company rental income was about $700 million, an increase of about 60 per cent over the same period. This represents an increase of 90. 35 per cent over the previous year. The māori rate is approximately 77 per cent, an annual increase of 2 percentage points。
By the end of june of this year, the company had invested in property rental rates of about 85 per cent, including the recently completed iris point soho and the offshore beach soho. Soho china states that there has been a marked increase in the rental rate of the soho and soho projects at the rainbow point completed last year. (b) the rent rate for the office segment of soho on the iris has increased from 30. 6 per cent at the beginning of the year to 62. 0 per cent; the office component of soho on the outer beach began renting in october last year, with a rental rate of 92. 5 per cent by the end of june and nearly full。
In addition, the rental rate for the office space of oho was increased to 85. 5 per cent. By the end of june of this year, the average rental rate had reached 85. 1 per cent, mainly in the rental of investment property。
It is noteworthy that in the first half of the year, soho china reduced its external debt to total debt from about 56 per cent at the end of last year to about 6 per cent at the end of june. In response, soho china indicated that it had paid off in advance $644 million and hk$ 4,050 million in offshore syndicated loans and that all outstanding principals on foreign priority instruments had been redeemed in advance totalling approximately $253 million。
Pan-suk-soo has assets to sell
In march this year, at the soho china performance fair, pan-suk-soo publicly announced that soho-china had decided to seize the opportunity of rising house prices in beijing and shanghai and to sell non-core assets that were relatively mature under the banner and were in a better position to rent. Today, soho china has sold soho century square to chinese people for $3. 297 billion, a move once perceived by marketers as a compromise for the post-transitional decline in performance。
At a performance session on 17 august, ceo zhang xin indicated that the group would also sell three non-core projects in shanghai, namely, the soho, the soho and soho square, respectively. Of these, soho tianshan square will be completed by the end of this year. According to the data, the rentable area of the vacant soho was approximately 1282 million square metres, and the rental income for the first half of the year was $654. 71 million. The rentable area of soho in the iris is approximately 70042 m2, with rental income of $27,649,000 for the first half of the year。
Since the announcement of the transition, soho china's financial data has been declining continuously. According to the financial report, the once 10 billion firm had a turnover of only 995 million yuan in 2015, a decrease of about 84 per cent compared to 2014。
Over the past four years, their pre-tax net gains amounted to $18,195 million, $12,470 million, $6,689 million and $1,407 million, respectively, representing annual declines of 31 per cent, 46 per cent and 79 per cent, respectively. The share of equity shareholders fell to only $538 million in 2015, a decline of 87 per cent over the same period。
Soho china's explanation for the decline in performance is that the company's business model is shifting from development sales to self-government, and they want sustained cash flows from their own property to become the backbone of the company's future profitability。
In the first half of this year, soho china did not have new investment properties. At the end of june this year, the company held approximately 1. 2 million square metres of the total surface of the completed beijing and shanghai offices, consisting mainly of eight projects located in the core business areas of beijing and shanghai cities. Three other building projects are in progress, namely, the soho in beijing and the soho tianshan square in shanghai and the kubei project. After completion of the construction project, soho is expected to hold a high-quality investment property of approximately 1. 7 million square metres in total building space and 1. 2 million square metres in rentable areas。
Ceo zhang xin 3q for soho's future
At the meeting, ceo zhang xin indicated that the old way of property development was over and that the direction represented by 3q would be the future of soho。
According to the ministry of economy and finance, 3q is a new business model for soho, with sub-leases sold to exploit the potential of leasing operations。
According to information received, soho china launched soho 3q shared office products in february last year and had opened 16 centres in beijing and shanghai by the end of july, providing 13,633 seats. It is expected that by the end of the year, the total number of seats will be approximately 16,000, all in soho chinese own property. It is noteworthy that by the end of july the average rent rate for soho 3q had reached about 70 per cent。
Soho 3q, using the popular soho chinese explanation, rents out its writing office in short rents, booking, choosing places, making payments, etc., all of which are completed online. Tenants can rent for one week, one month, rent an independent office, a desk, make appointments, pay for them on their mobile phones at any time, and have access to meals, coffee, photocopying, etc. In addition to office space, soho3q will provide office furniture and other amenities。
