As of January 17, 2025, Poly Developments has released its earnings forecast, unveiling insights into the company's financial performance for the year aheadAccording to the projections, the company anticipates achieving a revenue of approximately 312.8 billion yuan, accompanied by a net profit attributable to shareholders of about 5.016 billion yuanThis outlook positions Poly as a significant player in the real estate industry, despite the challenges posed by market fluctuations.

The reasoning behind the expected decline in revenue is elaborated upon in the earnings announcement, which notes that the decrease is primarily attributable to a reduction in the scale of project handovers during the yearFurthermore, profit metrics are expected to fall due to both a decline in project handover scales and gross profit marginsIn addition, circumstances in the current market have prompted the company to consider impairment provisions for certain projects, adding another layer to the financial complexities it faces.

Despite the industry turbulence impacting profitability levels, Poly Developments remains one of the few firms in the sector that has succeeded in generating positive earnings

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This is particularly remarkable considering that, according to statistics compiled by Dongfang Caifu, 58 of the 84 listed real estate companies in A-shares reported a decrease in revenue, with an alarming 40 of these firms incurring losses in the previous year’s third-quarter reportsPoly Developments distinguishes itself by maintaining its profitability in such a challenging environment.

Poly Developments has emerged as a model of stability amid operational pressuresThe company's success can largely be attributed to its strategic management tailored to navigate through cyclical industry dynamicsIn early 2022, the company published a white paper highlighting what it termed the “five transformations” within the real estate sector: depoliticization, industrialization, specialization, enhancement of public functions, and a differentiated competitive landscapeThis foresight illustrates the company’s proactive stance in adjusting to prevailing challenges.

As part of its strategy to manage inventory levels, Poly Developments initiated significant de-inventory measures, leading to a 4.4% reduction in inventory to 831.4 billion yuan by the end of the first half of 2024. Cumulatively, the company has successfully de-inventoried approximately 1.35 trillion yuan worth of stock, a feat that, while constricting profit margins, is deemed manageable within investor and capital market expectations.

In the first three quarters of 2024, survey data revealed that Poly Developments maintained a gross profit margin of 15.9%, albeit with a year-on-year decrease of 3.5 percentage points, alongside a net profit margin declining by 2.1 percentage points to 6.7%. Comparatively, the average gross profit margin across the real estate sector has shrunk towards the 10% benchmark, underscoring Poly's performance as superior within its competitive peer group, while solidifying its leadership status among state-owned enterprises.

Accelerating its de-inventory process has prompted Poly Developments to focus on cost reduction and efficiency enhancement, achieving consistently low operating expenses up to the third quarter of 2024. The total expenditure in operating expenses has been reported at 10.5 billion yuan with a favorable expense ratio of 5.78%, underscoring the company's management prowess.

Looking ahead, Poly Developments remains a promising entity in the real estate landscape

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The firm is on track to maintain the top position in sales, having achieved 323 billion yuan in sales revenue in 2024, expanding its competitive advantageA noteworthy aspect of this success is that the lion's share of Poly's revenue is derived from key first and second-tier cities.

In its home base of Guangzhou, data from CRIC indicates that Poly Developments topped the charts with 40.8 billion yuan in equity turnover, 52.8 billion yuan in all-caliber turnover, and 51.9 billion yuan in operational turnover for the yearRemarkably, this placed Poly ahead of competitors by a substantial margin, notably leading by over 6 billion yuan in equity turnover compared to the nearest rival.

Furthermore, Poly secured second place in Shanghai with reported sales of 36.5 billion yuan and fifth place in Beijing, with sales reaching 17.1 billion yuanThroughout the previous year, Poly Developments sustained a commendable investment intensity, acquiring numerous high-potential land parcels in major cities

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In 2024, the company achieved 68.3 billion yuan in all-caliber expansion and 60.2 billion yuan in equity expansion, ranking it second in the industry, and cumulatively opening up to 392.8 billion yuan over the past three years, cementing its position as a leader in land acquisition.

Examining the land acquisition structure, an analysis reveals that in the past year, 94% of Poly's expansions occurred in first and second-tier cities, with first-tier cities alone accounting for 74% of total acquisitionsThis continued focus on essential urban areas over three years illustrates the company’s commitment to targeting markets with higher certainty and stability.

Concurrently with its stable operational practices, Poly Developments has maintained robust financial indicatorsAs of the end of September 2024, the company's debt-to-asset ratio stood at 74.89%, representing a decline of 3.47 percentage points over three years, indicating a consistent trend in debt reduction.

Additionally, Poly has only 12.7 billion yuan of public debt maturing within a year’s timeframe

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In a significant achievement, it has cleared all foreign dollar bonds, setting it apart as the only leading real estate company to achieve this milestone, thereby enabling Poly to engage in business with a more favorable financial condition.

Poly Developments’ strict adherence to financial discipline has not only bolstered its marketability but also led to a reduction in financing costsAt the end of December last year, the firm issued corporate bonds, achieving historically low rates of 2.2% and 2.4% for 3-year and 5-year maturities, respectively.

In a market where dividend distributions have become scarce, Poly Development has bucked the trend by increasing its dividend payout ratio since 2023, thereby enhancing returns for its investorsMoreover, the company has actively engaged in market value management through share buybacks and shareholding increases by major stakeholders, showcasing its commitment to corporate responsibility expected of a state-owned enterprise.