Chairman's Statement

Following a strong rebound in the global economy in 2021, the pandemic situation overseas is still severe and complex. Due to the new threat from COVID-19 variants, along with the aggravating effects of inflation, debts and income inequality, the recovery of emerging markets and developing economies might be jeopardised, and global growth has apparently entered into a period of slowdown. In 2021, the People's Republic of China (the "PRC" or "Mainland China") entered into a post-pandemic era of Coronavirus Disease 2019 ("COVID-19 pandemic") and faced various challenges such as complicated and grim international situations and the domestic spread of the pandemic. The PRC has adhered to the general principle of prudent development, coordinated scientifically the pandemic prevention and control as well as economic and social development, strengthened the cross-cyclical adjustment of macro policies, enhanced support on real economy, thus the development of national economy has continued to recover. In 2021, the aggregate gross domestic product ("GDP") of the PRC exceeded RMB110 trillion, up by 8.1% as compared to the previous year, which was a 10-year record high. China's contribution to the world's economic growth was expected to reach approximately 25%, with its economic growth ranking among the best in the world's major economies. The PRC's GDP per capita amounted to RMB81,000, with per capita disposable income of residents increasing by 9.1% in nominal terms as compared to the previous year.
In 2021, under the policies that "housing is for living in, not for speculation" and "property policies should be city-specific", the PRC government regulated the national real estate market comprehensively and accurately. The real estate industry has undergone a series of policy changes and upgrades from indepth regulation to stability maintenance, ensuring that the goals of stabilising land prices, housing prices, and market expectations will be realised. In the first half of the year, after the Ministry of Housing and Urban Rural Development of the PRC and the People's Bank of China set up the "three red lines" for property developers (i.e. liability-to-asset ratio (excluding receipt in advance) shall not exceed 70%; net gearing ratio shall not exceed 100%; and cash to short-term debt ratio shall not be less than 1), "Real Estate Loan Centralised Management", "Two Concentration of Land Supply" (implemented for the first time in 22 key cities; referring to the centralised issuance of sales announcements and the centralized organisation of sales activities), "Real Estate Tax Reform Pilot" (referring to the announcement "Decision on Authorising the State Council to Implement Real Estate Tax Reform Pilot Work in Some Areas (Draft)"), and other policies were launched to restrain both supply and demand from various aspects. In the second half of the year, the policy direction gradually shifted to moderate adjustment to the credit and strived to ensure the stable development of the real estate market by shortening the lending cycle, lowering interest rates, and reasonably issuing development loans. According to the data throughout 2021, the total investment in real estate development across Mainland China amounted to approximately RMB14.76 trillion, representing a growth of 4.4% as compared to the previous year; the gross floor area ("GFA") of commodity housing sold were approximately 1,794 million square metres ("sq. m."), representing a growth of 1.9% as compared to the previous year; and the sales revenue of commodity housing sold were RMB18.19 trillion, representing a growth of 4.8% as compared to the previous year. Under the multiple control mechanisms, the real estate market in the Guangdong-Hong Kong-Macao Greater Bay Area (the "Greater Bay Area") has gradually returned to rationality and has become generally stable. In 2021, the average price of commodity housing in nine major cities of Guangdong increased by 14% year-on-year. In particular, the average selling price of commodity housing in Foshan, Shenzhen, Zhongshan, Dongguan and Guangzhou grew by more than 10%, while the average selling prices in cities such as Zhuhai, Huizhou and Jiangmen also saw steady increases.


During the year under review, the Group was engaged in property development and investment businesses. The Group currently holds a number of property development projects and certain investment properties in Guangdong Province and the Greater Bay Area.
In 2021, the Group recorded a revenue of approximately HK$6,006 million (2020: HK$4,000 million), representing an increase of approximately 50.1% from the previous year. The Group recorded a profit attributable to owners of the Company for the year under review of approximately HK$1,402 million (2020: HK$1,682 million), representing a decrease of approximately 16.6% from the previous year. For the year under review, profit attributable to owners of the Company before taking into account of the net fair value gains on investment properties and the relevant deferred tax expense was approximately HK$1,098 million (2020: HK$210 million).
During the year under review, the increase in revenue was mainly attributable to the increased GFA of properties sold as compared to the previous year. For details of the Groups property sales in 2021, please refer to the section headed "Business Review" in the Management Discussion and Analysis. Apart from the profit from property sales, the decrease in profit attributable to owners of the Company for the year under review was mainly attributable to the fact that the investment properties on the Southern Land of the Shenzhen GDH City Project were measured and carried at fair value for the first time last year. The aggregated fair value gains on investment properties contributed approximately HK$1,472 million to the Group's profit after tax for last year, and it amounted to approximately HK$304 million for the year under review, representing a significant decrease from that of 2020.
The Board recommends the payment of a final dividend of HK10.00 cents per share for the year ended 31 December 2021 (2020: HK1.53 cents). If approved by the shareholders of the Company at the forthcoming annual general meeting, the said final dividend will be paid on or about 21 July 2022.

Business Review

The Group conducted its business as planned in 2021 and achieved satisfactory results.
The Group actively took effective countermeasures to speed up the destocking process, so as to quickly respond to the huge impacts on the real estate market caused by the COVID-19 pandemic. Through extensive contacts, cooperation and exchanges with project-related industries and business resources, the Group actively innovated and adjusted the operation methods of various businesses, implemented flexible operation strategies, expanded business channels, optimised customer structure, and actively broadened sources of income and reduced expenditure. It also implemented lean management, systematically carried out full-cycle, full-chain, closed-loop total cost control, and continuously optimised the project's product portfolio, thereby accentuating its competitive advantages. In 2021, the first phase of property sales of the Shenzhen GDH City project contributed approximately 60,553 sq. m. of the aggregate GFA of properties contracted for sale, representing approximately 52.8% of the GFA available for sale. On the basis of the cooperation between Luohu Government of Shenzhen and the Shanghai Diamond Exchange ("SDE"), the Group entered into a property leasing services agreement with 廣東粤海天河城(集團)股份有限公司 (GDH Teem (Holdings) Limited) ("GDH Teem"), a fellow subsidiary of the Company. Pursuant to the agreement, GDH Teem shall grant the Group the right to use the name of "天河城" for the shopping mall under the Shenzhen GDH City Project and shall provide high-quality tenant procurement services. Its Guangzhou Laurel House Project, Ruyingju Project and Baohuaxuan Project in Guangzhou have completed the delivery of all residential units, and the occupancy rate of the commercial property "GD•Delin (粤海‧得鄰)" in the Guangzhou Laurel House Project has reached 91.8% in 2021. Its Chenyuan Road Project, Jiangmen Ganhua Project, Zhuhai Jinwan Project, Zhongshan GDH City Project, and Foshan Laurel House Project have all officially commenced pre-sale during the year, with the total GFA contracted (including completed properties held for sale and properties held for sale under development) amounting to approximately 157,000 sq. m. in total. The superstructure of the properties of the Huizhou Dayawan Project was under construction. It is expected to commence pre-sale in the second quarter of 2022 and complete the filing for completion of construction in 2023.
In 2021, the Group succeeded in the bid for the land use right of a parcel of land at the Baiyun New Town, Baiyun District, Guangzhou City at the reserve price through the public Listing-for-Sale process, with an aggregate site area of approximately 116,471 sq. m. and a total GFA of approximately 506,000 sq. m. With the significant advantage of this parcel of land in terms of its location, environment, accessibility to transport network and the development of industries nearby, it has promising market prospects and is conducive to realising the Group's regional development strategies in the Greater Bay Area. Through a scientific and effective diversified collaborative expansion model, the Group continued to expand its quality land bank and control land costs in an effective manner, thereby satisfying the Grou's future development needs.
In 2021, the Group established a project co-investment mechanism that focuses on both compliance and incentives, the project development cycle of which is in line with that of leading companies. In 2021, the Zhongshan GDH City Project, Foshan Laurel House Project, and Guangzhou Yungang City Project have implemented project co-investment to the employees; the completion rate of the first and second phases of the three projects has reached 100%. The Group, via cost optimisation, can effectively control the costs, the investment and operational risks, thereby effectively incentivising the project teams and accelerating the projects' development.


In 2022, the global economy will face myriads of downside risks, including the resurgence of the pandemic caused by the rapid spread of the mutated COVID strain, Omicron, soaring inflation expectations, financial pressure from high debt levels, etc. Meanwhile, China's economic development is facing shrinking demand, supply shock, and weakening expectations. Under the global COVID-19 pandemic and the downward economic pressure, the PRC government executed comprehensive pandemic control measures and adhered to the principle of focusing on stability while seeking progress. The macro policies need to be stable and effective; the micro policies need to continue to stimulate the market; the structural policies need to focus on smoothing the national circular economy and keep the economy going in a reasonable manner. The World Bank predicts that China's economy will grow by 5% in 2022. In the face of a complex and trying economic environment, China's long-run fundamentals remain positive. The favourable conditions for building a new development landscape remain unchanged, with new economic growth points continuing to emerge.
At the Central Economic Work Conference of the PRC government held in December 2021, the position that “housing is for living in, not for speculation” was reiterated. The PRC government will strengthen the guidance of expectations, explore new development models, facilitate both property rental and purchase, and accelerate the development of the long-term rental market. Moreover, it will promote the construction of affordable housing, support the commodity housing market to better meet the reasonable housing demands, and implement city-specific policies to foster a virtuous circle and healthy development of the real estate industry. The real estate industry will still play a stabilising role in China's economic development. Going forward, it is expected that the PRC government will continue to maintain the consistency and stability of its overall policies on the real estate market. Generally, the sound fundamentals of China's economy in the long run coupled with steady property development and investment will continue to facilitate the steady and healthy development of China's residential and commercial property sectors. The real estate industry will no longer rely on the quantity-driven development that focuses on "high leverage and high turnover"; instead, it will continue to innovate business models and put more emphasis on product quality, so as to better meet the buyers' reasonable demands.
With the full implementation of the development strategies in the Greater Bay Area, it has maintained a good momentum in economic growth and becomes the most attractive city cluster in China. The 14th Five-Year Plan strengthens the linkage between Guangzhou and Shenzhen and facilitates the integrated development of industries and transportation on the east and west sides of the Pearl River Estuary, with the aim of building the Greater Bay Area into a world-class bay area, which will offer a solid foundation for the development of the real estate industry. The development of the land market in 2022 is expected to remain stable, with the overall market popularity continuing to be at a low level. The land auction rules ay continue to be optimised, and the city differentiations will be further highlighted. With the loosening of credit and the policies of maintaining stability, the demand in the Greater Bay Area remains resilient. The market is expected to recover in 2022, with the transaction volume rising slightly, which is conducive to the healthy development of the real estate industry in the Greater Bay Area.
The Group's projects such as the Shenzhen GDH City, Guangzhou Yungang City, Guangzhou Laurel House, Zhuhai Jinwan, Jiangmen Chenyuan Road, Jiangmen Ganhua, Huizhou Dayawan, Foshan Laurel House and Zhongshan GDH City are all located in the core cities of the Greater Bay Area and will benefit from the strong development momentum of the area.
The Group will continue to seek progress while maintaining stability, make every effort to complete the construction, sales and operation of the existing projects, and leverage its status as a provincial state-owned enterprise and the resource advantages of its shareholders to seize business opportunities and innovate project development models. Through high-quality project mergers and acquisitions, cultivation of redevelopment projects, and strategic cooperation projects, the Group will continue to seek exceptional development opportunities in the Greater Bay Area. It will also continue to promote lean management, position itself strategically as "the influential, comprehensive development expert in the Greater Bay Area", adhere to the spirit of ingenuity, and continuously create mid-to-high-end products that meet the needs of the markets and customers, so as to further strengthen the Company's management in real estate development and operation, boost the brand awareness and reputation, and enhance the Company's competitiveness in the industry under the management-driven era.
Last but not least, on behalf of the Board, I would like to acknowledge the contribution by management and staff over the previous year. Under the leadership of the Board, the Group is confident in the prospect of its business development and will actively promote the development of its property business in order to create greater returns for its shareholders as we did in the past.


LAN Runing

Hong Kong, 30 March 2022