Thirty years since its establishment, Longfor Group has always been a "maverick" in the real estate industry.
On the one hand, Longfor has lived within its means in terms of foreign strategy for a long time, and has never carried too heavy a "burden".
Not long ago, a piece of news aroused market attention: Longfor Group repaid 1.7 billion yuan in debt ahead of schedule, and has basically paid off all domestic corporate bonds due within the year. Not only that, Longfor also announced that it plans to pay off the syndicated loan due in early 2024 within this year.
On the other hand, with a stable financial situation and the ability to expand its investment balance sheet, Longfor has shifted the focus of its development to endogenous growth, focusing on the conversion rate of endogenous growth, the efficiency of takeovers, and the increase in endogenous gross profit margins.
Under the "one Longfor" ecosystem, Longfor Group has built three major business segments: development, operation, and service, and five "1+2+2" channels: one development channel: real estate development; two operation channels: commercial investment, long-term lease Apartments; two service channels: property management and smart building.
Regarding the development plan of each waterway, Chen Xuping, chairman and CEO of Longfor Group, once said: "Starting this year, we will focus on the goal of positive operating cash flow for the entire group. In the future, we will not rely on the increase in financing liabilities to drive the company's business growth, but The growth of the company is driven by the return of cash flow from various channels.”
In this context, the two channels of property management (Longfor Zhichuang Life) and smart construction (Longfor Longzhi) that focus on service-based asset-light operations have attracted market attention. Under the new situation of major changes in the relationship between supply and demand in the real estate market, these two business areas featuring high quality, digitalization, and strong operations have become "strategic fulcrums" for real estate companies to develop in the future.
On August 18, Longfor Group announced its 2023 interim results. Among them, in the first half of 2023, Longfor Zhichuang’s living income was 6.67 billion yuan, and its profit increased by 39% year-on-year; Longfor Longzhi has acquired more than 50 construction and management projects, with a total construction area of over 9 million square meters.
At the moment when the supply and demand relationship in the real estate market has undergone major changes, real estate companies are facing multiple challenges, and the steady development of Longfor may bring more inspiration to the industry.
Road choice: seek progress while maintaining stability, and anchor the new channel
In the real estate industry that once emphasized scale as king, pursued building images and stories, and was keen on radical development, Longfor Group seems to have always maintained a margin of thinking and strategic initiative.
In terms of margin thinking, as a real estate company that has repaid debts in advance many times, Longfor's financial situation is quite stable. As of the end of the reporting period, Longfor Group had 72.43 billion yuan in cash in hand; the three red line indicators continued to be in the green gear, and the asset-liability ratio after excluding advance receipts was 61.9%, a year-on-year decrease of 6 percentage points, the lowest in the past five years; The account period is further extended to 7.19 years.
In terms of strategic initiative, Longfor Group has achieved its goal: "Relying on the return of cash flow in various channels to drive the company's growth." In the first half of 2023, after excluding the impact of changes in fair value, the core profit attributable to Longfor Group shareholders increased year-on-year 0.6% to 6.59 billion yuan.
It is worth mentioning that the positive growth of Longfor's core net profit occurred when the industry as a whole was in a downturn, and about 60% of listed real estate companies were expected to lose money. This shows that Longfor has initially realized a high-quality development model with low leverage, low cost, strong operations, and positive cash flow.
In the past, real estate companies had a large investment scale, were highly dependent on external financing, and had a single model. The characteristics of "high leverage" contained huge financial risks.
As China's economy continues to recover through transformation and upgrading, China's real estate market has ushered in a new situation where major changes have taken place in the relationship between supply and demand, and the industry has entered a new stage of steady development.
Endogenous growth potential and development resilience are the core indicators for evaluating a real estate company in the future. Therefore, the operating business that can create stable cash flow has become more and more valuable to real estate companies.
Longfor obviously realized this earlier, and began to sort out and restructure its own business, forming a new pattern of "1+2+2" five major channels in the three major business segments, pursuing the endogenous positive operating cash flow In order to bring more guarantees for the stability and growth of its own operation.
As Longfor Group has intensively cultivated the two major tracks of property management and intelligent construction, and accumulated know-how in the industry, its growth engine has officially changed its track. In the first half of 2023, Longfor Group's service business, which mainly focuses on property management and smart construction, and others, will generate RMB 5.84 billion in tax-exclusive revenue, a year-on-year increase of 13.0%. The service business and other gross profit margin was 31.9%, an increase of 8.3 percentage points over the same period of the previous year.
Anchoring the new channel, Longfor Group has embarked on a brand-new growth path that it aspires to. Then, on the property track, how does Longfor Zhichuang Life achieve continuous growth? In the arena of generational construction, why does Longfor Long Zhizao accelerate the development of a new blue ocean?
Strategic fulcrum: focus on the base of science and technology, and give full play to the ecological synergy advantages of "one Longfor"
By making efforts in property management and intelligently building two major asset-light and high-potential waterways, Longfor has created a "strategic fulcrum" based on "digital technology".
Based on this strategic fulcrum, Longfor will cultivate deeply around the city and give full play to the synergistic benefits of waterways. This process is like toppling dominoes, driven by multiple advantages in the "One Dragon Lake" ecology, resulting in a series of incremental chain reactions.
Specifically, by transforming the three major advantages of Longfor Group's brand reputation, technological strength and business accumulation, Longfor Zhichuang Life creates a new sample of future "living" and realizes brand upgrading and occupation.
In terms of brand reputation, "owner satisfaction has exceeded 90% for 14 consecutive years" shows that Longfor Zhichuang Life has a good reputation inherited from Longfor Group.
Over the past 11 years, Longfor has launched the "Good Living Plan" every year as scheduled, and the cumulative investment has reached several hundred million yuan. Property service is the key point of contact between the "one Longfor" ecosystem and the customer base. The good reputation formed by high-quality services and operations will continue to feed back the development of Longfor Smart Life.
In terms of scientific and technological strength, benefiting from the support of Longfor Group's underlying technologies including industrial Internet, Internet of Things, artificial intelligence, and middle-end shared service function modules, Longfor Zhichuang Life has realized the reconstruction of property management and business management formats with digital intelligence.
In terms of business accumulation, under the "one Longfor" ecosystem, the service radius of Longfor Zhichuang Life's property management and commercial operations has continued to expand. According to public information, as of the first half of 2023, Longfor Zhichuang Life has operated and served 81 shopping centers, with an area of 7.62 million square meters under management. In addition, Longfor Zhichuang Life has signed commercial operation service contracts with 141 shopping mall projects, which means that there are more shopping malls that will open and land in the next five years.
Longfor Zhichuang life service Ali pro-orange space
With a good brand reputation + intelligent capabilities + extended service radius, the steady growth of Longfor Zhichuang Life can be said to be expected.
In the same way, with the complete ecology and rich experience of Longfor Group in the real estate field, Longfor Longzhi has been a "scarce resource" in the era of smart cities since its birth, and its differentiated advantages are prominent.
Based on the precipitation of Longfor's entire digitalization over the years, including the precipitation of construction capabilities, Longfor Longzhi Manufacturing can provide customers with full-cycle, full-format, one-stop digital services. Specifically, there are five business modules, covering from early research and judgment to whole process generation Construction, scheme design, integrated decoration construction and digital services. Few of the agent construction industries can provide such an all-round, full-cycle, full-chain one-stop service.
At present, the construction of smart cities in China has entered the deep water area, and the construction of smart cities is the trend of future urban development. Longfor Longzhi is deeply involved in the digital transformation of high-energy cities. More than 90% of the construction and management projects are distributed in the core first- and second-tier cities, and the commercial value continues to expand.
Both are collaborative service models under the "one Longfor" ecosystem, Longfor Intelligent Life and Longfor Longfor both realize channel synergy benefits based on deep urban cultivation. With the growth of these two major businesses, "digital technology" outlines the upward trajectory of more growth curves of Longfor Group.
A new direction: Riding the wind and waves with digital intelligence technology as the sail
"One Dragon Lake" is a typical example of ecological synergy between real estate companies. Among them, property management and smart construction are classified together as service channels, illustrating their potential connection:
Through the main line of "service", Longfor Group connects end users and ecological partners in series. In this ecosystem, smart properties and smart construction together constitute the "two wings" that accelerate the city's digital transformation.
From this, we can also see that the two major service channels of Longfor Group have good growth potential.
On the one hand, the use of "digital technology" to empower services conforms to the trend of the times. In the "National Economic and Social Development 14th Five-Year Plan and Outline of Long-term Goals in 2035", "digitalization" and "smart construction" are mentioned to a new height, as an important content to promote new urban construction and comprehensively improve urban quality .
On the other hand, Longfor Intelligent Life and Longfor Intelligent Manufacturing are the gathering points of Longfor Group's innovative spirit - neither of them chose to be a follower in the traditional field, but insisted on leading industry innovation with digital intelligence technology.
Firstly, Longfor Intelligent Life continues to cultivate digital intelligence technology to broaden its service boundaries.
It is the trend of the times that property technology empowers property enterprises to expand their service boundaries. In recent years, with the gradual acceleration of the investment in the construction of leading material enterprises in technology, the leading material enterprises have basically completed the construction of digital infrastructure.
The innovation of digital technology has promoted the intelligent, platform, digital and ecological transformation of the property management industry and the agent construction industry, which has improved the efficiency and quality of the property management industry and the agent construction industry, and increased competitiveness and added value.
In terms of technology investment and construction, Longfor Smart Life has always been a leader, and its exploration of smart engines is showing an intuitive and positive impact.
In the first half of 2023, Longfor Zhichuang Life used new digital technologies to create an overall solution for smart spaces. Through the self-developed smart technology platform, Longfor Zhichuang Life penetrates artificial intelligence, AIoT and smart applications into various application scenarios.
Specifically, Longfor Zhichuang Life has derived digital products such as Cangluan Smart Building Management System, Mingniao Smart Energy Management System, Zhulong Smart Security Management System, and Tianma Smart Traffic Management System.
Taking the Cangluan Smart Building Management System as an example, according to the operational data of Longfor Zhichuang Life, the Cangluan Smart Building Management System can effectively improve the efficiency of front-line property staff. Through project comparison, it can reduce 76.1% of inspection time and increase 62.5% % ticket processing speed. This proves that the application of digitalization and intelligent achievements is bringing cumulative increase in service capabilities to Longfor Smart Life.
Secondly, Longfor Long Zhizao takes "smart construction" as the entry point to guide the agent construction industry to a new perspective.
As a rising star who just "turned one year old", Longfor Longzhi did not follow the traditional path, but responded to the policy of improving the level of urban intelligence, organically integrating new concepts such as "digitalization" and "smart construction", and blazed a trail. A new direction called "intelligent creation".
Looking forward to the future, urban development will shift from extension to quality improvement, and the transformation of smart cities will accelerate, which will bring more demands for urban construction and renewal, as well as higher requirements for urban management and service levels, providing real estate management and agent construction industries with a new growth trajectory.
The combination of Longfor Group's innovative spirit, brand power, development ability, operation ability, and healthy financial structure is expected to form a "spillover effect" and accelerate its business scale growth, thereby reaping more dividends from industry development.
Source: Songuo Finance