In the first half of this year, the company with the most outstanding performance in the land market was undoubtedly the "China Construction" real estate company.
According to incomplete statistics, in the first half of the year, China Construction series real estate companies have acquired 52.5 billion in land, which is 1.5 times that of China Resources , becoming the invisible king of land acquisition.
Taking a closer look, China Construction Real Estate's sales will reach 569.8 billion in 2021, and its ranking will rise to fourth, surpassing Poly.
A glimpse of the whole thing tells you the whole story. The powerful strength behind China Construction’s land acquisition is truly astonishing.
So, what are the advantages of Chinese architecture ? Can it become a competitive alternative to traditional real estate companies?
1
Revenue is 1.89 trillion,
has the strength to serve as the "Big Mac" of central enterprises
China Construction Group Co., Ltd. (referred to as "China Construction") has the longest history of professional operation in my country, the earliest market-oriented operation, the highest degree of integration, and the world's largest One of the largest investment and construction groups, ranking 13th among the world's top 500 companies and 3rd among China's top 500 companies, second only to PetroChina and Sinopec .
Chart 1: The top ten of the Fortune China 500 in 2021
Source: Fortune magazine, compiled by Amity Real Estate Research Institute.
In 2021, China Construction Group 's total assets reached 2.38 trillion, with revenue of 1.89 trillion, a year-on-year growth of 17.1%. The value of newly signed contracts reached 3.5 trillion, ranking first among the eight major construction enterprise groups.
Chart 2: The operating performance of my country’s eight major construction companies in 2021
Data source: Annual reports of each company, compiled by Amity Real Estate Research Institute.
In terms of business structure, China State Construction's main businesses are divided into housing construction, infrastructure construction, real estate development, survey and design, etc.
Of the 1.89 trillion revenue in 2021, the housing construction business accounts for 61%. Investment in infrastructure construction and real estate development accounted for 22% and 17% respectively.
Chart 3: China Construction Operating Income Structure in 2021
Source: Corporate annual report, compiled by Amity Real Estate Research Institute. In terms of the organizational structure of
, China State Construction has 8 listed companies and more than 100 holding subsidiaries, mainly focusing on its main business.
Among them, the housing construction business and the infrastructure business have a high degree of organizational overlap, and are mainly operated by subsidiaries such as China Construction Eighth Engineering Bureau, China Construction Xingye, China Construction Decoration , and China Construction Equation. The real estate business of
is mainly carried out through the China Overseas Real Estate brand and the China Construction Real Estate brand (the real estate subsidiary of the Eight Major Engineering Bureaus).
In addition to traditional businesses, China Construction is also exploring diversified new businesses such as construction technology and green buildings.
Overall, China State Construction can be called a "Big Mac" enterprise group with a large business scale and a well-established organizational structure.
2 China Construction acquired 52.5 billion in land in half a year, and
sales in 2021 of 569.8 billion exceeded Vanke
In addition to having an absolute advantage in the field of housing construction, China Construction is also an invisible "aircraft carrier" in China's real estate sales market.
As an important revenue-generating and profit-generating sector, China State Construction has always attached great importance to the real estate business. It began to show significant strength in 2019, with the average annual growth rate remaining at around 25%. In 2021, real estate business revenue will reach 330.9 billion, accounting for 17%.
Chart 4: Real estate development and investment business income from 2017 to 2021
Source: Company announcement, compiled by Amity Real Estate Research Institute.
China Construction owns two major real estate brands, China Overseas Real Estate and China State Construction Real Estate, and also holds a 38% stake in China Overseas Hongyang. These are collectively referred to as "China Construction Group" real estate companies.
China Shipping Group is a 56%-controlled subsidiary of China Construction Group. It consists of China Shipping Real Estate, China Shipping Properties , etc., specializing in real estate development and operation. Real estate sales in 2021 will be 371 billion, ranking fifth in the real estate industry.
In addition to China Overseas Real Estate, the eight major engineering bureaus also directly established real estate subsidiaries.
The real estate subsidiaries of various engineering bureaus also achieved good sales results in 2021. The total sales of the five subsidiaries are 125.86 billion, roughly in the TOP30.
Chart 5: Real estate sales of subsidiaries of China State Construction Group in 2021
Source: Company announcement, compiled by Amity Real Estate Research Institute.
If China Ocean Hongyang's 71.2 billion is taken into account, the total sales of China Construction real estate companies in 2021 will reach 569.8 billion, which will exceed Poly; considering its high proportion of equity, the equity sales may equal Country Garden , becoming "Invisible" industry number one.
Chart 6: Sales of China Construction Real Estate Enterprises VS Traditional Real Estate Enterprises in 2021
Source: Kerui et al., Amity Real Estate Research Institute.
Entering 2022, in an environment where state-owned enterprises generally play a leading role in acquiring land, China Construction real estate enterprises are acquiring land at an even faster pace.
In terms of the amount of land acquired, according to incomplete statistics, the total amount of land acquired by China Construction real estate companies, including China Shipping , has so far exceeded 52.5 billion, making them the entities with the largest amount of land acquisition.
Among them, China Overseas Real Estate's equity land acquisition from January to June was 24.4 billion yuan, ranking fourth after China Resources, C&D, and Greentown .
The real estate companies under the eight major engineering bureaus have become more active. They have won popular land parcels at high premiums in land auctions in cities such as Beijing and Shanghai, and have actively acquired the rights and interests of some joint land parcels, spending a total of 28.1 billion.
Although the construction segment is China Construction’s main source of operating income, its real estate development and investment business contributes nearly half of its profits.
The reason lies in the relatively high gross profit level of the real estate business, which reached 21.1%. At the same time, the real estate business has reached a certain scale, accounting for 17% of revenue, making it one of the three main businesses of China Construction.
China Overseas Real Estate, in particular, is known as the profit king in the industry. Its net profit margin has remained above 25% all year round, and it will still be 17% in 2021. It contributes more than 40 billion in consolidated profits to China Construction every year.
Chart 7: Gross profit margin of China's construction business segment in 2021
Source: Company announcement, compiled by Amity Real Estate Research Institute.
Although the profit margin of the real estate industry is also declining, for central enterprises, the low financing costs and low threshold for land acquisition are a good opportunity for counter-cyclical layout.
's good financial situation and the credit endorsement of central state-owned enterprises also mean that China Construction Department does have the ability to expand against the trend.
3 House construction revenue accounts for 61%,
dominates the national landmark buildings
China Construction has an absolute advantage in the field of house construction, representing the highest level in the field of house construction in China.
In life, 1 in every 25 Chinese people use a house built with Chinese architecture.
In the market, China State Construction has invested in the construction of more than 90% of skyscrapers above 300 meters, 3/4 of key airports, 3/4 of satellite launch bases, 1/3 of urban comprehensive pipe corridors, and 1/2 of nuclear power plants.
China Construction has undertaken a large number of landmark projects in various fields such as public buildings, offices, airports, hotels, science and education, sports, human settlements, medical care, embassies, industry, national defense and military.
CCTV Headquarters, Shanghai World Financial Center, Shenzhen China Resources Spring Bamboo Tower, Guangzhou Chow Tai Fook Center and other marvelous buildings are all designed by China Construction. It’s no wonder that netizens nickname China as the “ infrastructure maniac.”
Chart 8: China Construction’s housing construction business income from 2017 to 2021
Source: Corporate annual report, compiled by Amity Real Estate Research Institute.
As the largest construction business in China, housing construction revenue has long accounted for more than 60%.
In 2021, China Construction's housing construction business revenue reached 1.15 trillion, a year-on-year increase of 14.7%, and the value of newly signed contracts reached a new level, exceeding 2 trillion.
’s rich experience in difficult housing construction business and huge housing construction business scale have become China Construction’s most eye-catching business card, and also laid a solid foundation for it to develop other businesses.
4 Infrastructure business increased by 78% month-on-month,
is expected to issue infrastructure REITs
In addition to housing construction and real estate development business, China State Construction has developed rapidly in the infrastructure field through engineering construction and project investment, relying on talent and management advantages, and completed many classic projects project.
Chart 9: China Architecture - Classic Infrastructure Projects
Source: Company official website, compiled by Amity Real Estate Research Institute.
With the implementation of the national new infrastructure strategy and the 14th Five-Year Plan, the infrastructure business is the fastest growing and most powerful business in China Construction.
In the past two years, China State Construction's infrastructure business has almost maintained an annual growth rate of 30%, which has effectively boosted the growth of the group's overall business and brought more possibilities to China State Construction's business development.
In 2021, China's construction and infrastructure business achieved operating income of 410 billion, and the value of newly signed contracts was 843.9 billion, a year-on-year increase of 24.4%.
Chart 10: Year-on-year growth rate of newly signed contracts in China’s construction and infrastructure business from 2019 to 2021
Note: Abnormal data fluctuations from January to February 2022 will not be displayed.
Source: Company announcement, compiled by Amity Real Estate Research Institute.
In 2022, China's construction and infrastructure business will continue to develop. As of May, the cumulative value of newly signed contracts was 337.7 billion yuan, a year-on-year increase of 34.6%.
html In the single month of 15, the value of newly signed contracts in the infrastructure business was 84.9 billion yuan, a year-on-year increase of 54%, and a month-on-month increase of 78%, maintaining high growth year-on-year.At present, infrastructure public offering REITs are experiencing continuous benefits and are accelerating their issuance, and will become an important source of incremental funds for infrastructure investment.
According to the judgment of professional institutions, the impact and changes of public REITs on the construction and related industries will exceed that of the PPP of that year. If REITs reinvest all of their recovered funds, they can leverage infrastructure investment that is approximately 2.25 times the amount of funds raised.
Therefore, if China State Construction can take advantage of the benefits of public REITs, its infrastructure business may grow at a faster pace.
Summary
In the past year, central state-owned enterprises have frequently acquired land in the local auction market, leaving a positive presence.
Behind China State Construction's land acquisition, the credit and financial strength of central state-owned enterprises cannot be underestimated, but it also implies that their business structure is stable and their profit structure is optimized, which is the kingly business logic.
If China Ocean Hongyang's 71.2 billion is taken into account, the total sales of China Construction real estate companies in 2021 will reach 569.8 billion, which will exceed Poly; considering its high proportion of equity, the equity sales may equal Country Garden , becoming "Invisible" industry number one.
Chart 6: Sales of China Construction Real Estate Enterprises VS Traditional Real Estate Enterprises in 2021
Source: Kerui et al., Amity Real Estate Research Institute.
Entering 2022, in an environment where state-owned enterprises generally play a leading role in acquiring land, China Construction real estate enterprises are acquiring land at an even faster pace.
In terms of the amount of land acquired, according to incomplete statistics, the total amount of land acquired by China Construction real estate companies, including China Shipping , has so far exceeded 52.5 billion, making them the entities with the largest amount of land acquisition.
Among them, China Overseas Real Estate's equity land acquisition from January to June was 24.4 billion yuan, ranking fourth after China Resources, C&D, and Greentown .
The real estate companies under the eight major engineering bureaus have become more active. They have won popular land parcels at high premiums in land auctions in cities such as Beijing and Shanghai, and have actively acquired the rights and interests of some joint land parcels, spending a total of 28.1 billion.
Although the construction segment is China Construction’s main source of operating income, its real estate development and investment business contributes nearly half of its profits.
The reason lies in the relatively high gross profit level of the real estate business, which reached 21.1%. At the same time, the real estate business has reached a certain scale, accounting for 17% of revenue, making it one of the three main businesses of China Construction.
China Overseas Real Estate, in particular, is known as the profit king in the industry. Its net profit margin has remained above 25% all year round, and it will still be 17% in 2021. It contributes more than 40 billion in consolidated profits to China Construction every year.
Chart 7: Gross profit margin of China's construction business segment in 2021
Source: Company announcement, compiled by Amity Real Estate Research Institute.
Although the profit margin of the real estate industry is also declining, for central enterprises, the low financing costs and low threshold for land acquisition are a good opportunity for counter-cyclical layout.
's good financial situation and the credit endorsement of central state-owned enterprises also mean that China Construction Department does have the ability to expand against the trend.
3 House construction revenue accounts for 61%,
dominates the national landmark buildings
China Construction has an absolute advantage in the field of house construction, representing the highest level in the field of house construction in China.
In life, 1 in every 25 Chinese people use a house built with Chinese architecture.
In the market, China State Construction has invested in the construction of more than 90% of skyscrapers above 300 meters, 3/4 of key airports, 3/4 of satellite launch bases, 1/3 of urban comprehensive pipe corridors, and 1/2 of nuclear power plants.
China Construction has undertaken a large number of landmark projects in various fields such as public buildings, offices, airports, hotels, science and education, sports, human settlements, medical care, embassies, industry, national defense and military.
CCTV Headquarters, Shanghai World Financial Center, Shenzhen China Resources Spring Bamboo Tower, Guangzhou Chow Tai Fook Center and other marvelous buildings are all designed by China Construction. It’s no wonder that netizens nickname China as the “ infrastructure maniac.”
Chart 8: China Construction’s housing construction business income from 2017 to 2021
Source: Corporate annual report, compiled by Amity Real Estate Research Institute.
As the largest construction business in China, housing construction revenue has long accounted for more than 60%.
In 2021, China Construction's housing construction business revenue reached 1.15 trillion, a year-on-year increase of 14.7%, and the value of newly signed contracts reached a new level, exceeding 2 trillion.
’s rich experience in difficult housing construction business and huge housing construction business scale have become China Construction’s most eye-catching business card, and also laid a solid foundation for it to develop other businesses.
4 Infrastructure business increased by 78% month-on-month,
is expected to issue infrastructure REITs
In addition to housing construction and real estate development business, China State Construction has developed rapidly in the infrastructure field through engineering construction and project investment, relying on talent and management advantages, and completed many classic projects project.
Chart 9: China Architecture - Classic Infrastructure Projects
Source: Company official website, compiled by Amity Real Estate Research Institute.
With the implementation of the national new infrastructure strategy and the 14th Five-Year Plan, the infrastructure business is the fastest growing and most powerful business in China Construction.
In the past two years, China State Construction's infrastructure business has almost maintained an annual growth rate of 30%, which has effectively boosted the growth of the group's overall business and brought more possibilities to China State Construction's business development.
In 2021, China's construction and infrastructure business achieved operating income of 410 billion, and the value of newly signed contracts was 843.9 billion, a year-on-year increase of 24.4%.
Chart 10: Year-on-year growth rate of newly signed contracts in China’s construction and infrastructure business from 2019 to 2021
Note: Abnormal data fluctuations from January to February 2022 will not be displayed.
Source: Company announcement, compiled by Amity Real Estate Research Institute.
In 2022, China's construction and infrastructure business will continue to develop. As of May, the cumulative value of newly signed contracts was 337.7 billion yuan, a year-on-year increase of 34.6%.
html In the single month of 15, the value of newly signed contracts in the infrastructure business was 84.9 billion yuan, a year-on-year increase of 54%, and a month-on-month increase of 78%, maintaining high growth year-on-year.At present, infrastructure public offering REITs are experiencing continuous benefits and are accelerating their issuance, and will become an important source of incremental funds for infrastructure investment.
According to the judgment of professional institutions, the impact and changes of public REITs on the construction and related industries will exceed that of the PPP of that year. If REITs reinvest all of their recovered funds, they can leverage infrastructure investment that is approximately 2.25 times the amount of funds raised.
Therefore, if China State Construction can take advantage of the benefits of public REITs, its infrastructure business may grow at a faster pace.
Summary
In the past year, central state-owned enterprises have frequently acquired land in the local auction market, leaving a positive presence.
Behind China State Construction's land acquisition, the credit and financial strength of central state-owned enterprises cannot be underestimated, but it also implies that their business structure is stable and their profit structure is optimized, which is the kingly business logic.
