$LONGFOR GROUP (00960.HK)$ At the end of August, listed hous...

$LONGFOR GROUP(00960.HK)$ At the end of August, listed housing companies handed over their first half report cards one after another, and the summary highlighted the word “difficult.” In the past, the development-based business model was challenged, and the shortcomings of the “high debt, high leverage, and high turnover” three-way model were completely revealed. Apart from private housing enterprises that lost money in bulk, even some state-owned state-owned enterprises and mixed ownership housing enterprises were not spared.

Under a weak market, housing enterprises are generally shrouded in haze due to poor performance, but there are also a few private housing enterprises that have bucked the trend, such as Longhu. According to the Longhu Mid-Year Report, net profit attributable to shareholders was 8.06 billion yuan from January to June this year, an increase of 7.7% over the same period last year, and the core net profit attributable to shareholders increased to 6.59 billion yuan over the same period last year. In the current market environment, Longhu Group can achieve positive growth in core net profit. How can it be achieved?

“Low leverage” operation, no significant pressure to repay debts during the year

When most housing enterprises choose a fast and easy way to make money, Longhu is one of the few housing enterprises in the industry that maintain sobriety and restraint. On the path of exploring new development models, the advantage of “low leverage” operation is highlighted, and a steady financial market has also become a prerequisite for Longhu to have strategic initiative.

In terms of solvency, there was no significant debt repayment pressure during the year, and it is a green tier enterprise. In the first half of 2023, Longhu had cash of 72.43 billion yuan and total interest-bearing liabilities of 207.09 billion yuan. In the first half of the year, the short-term cash debt ratio in Longhu was 1.96 times. Excluding pre-sale supervision funds and restricted funds, the short-term cash debt ratio was 1.27 times; the ratio of short and long term debt was 4.59 times. Furthermore, the net debt ratio is 57.2%, a slight decrease from 2022; the balance ratio after excluding advance receipt is 61.9%, and it has been a green company for 7 consecutive years.