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2023 Post Sprint Competition
On December 22, the official website of the Shanghai Stock Exchange disclosedHuaxia's first outlet REITIt has been declared to the Shanghai Stock Exchange, and the promoter and the original owner areBeijing's first business management***, managed artificiallyHuaxia**, the manager of the special plan is artificialCITIC**
It isThe first single outlet REIT in China, which is also declared domesticallyThe fifth single consumer infrastructure public offering REIT
In view of the fact that the Shanghai Stock Exchange has not yet disclosed the specific documents of Capital Outlets REIT, this time we will focus on the specific operation of the sponsor's outlet business.
1.Introduction to the first outlet
of this declarationHuaxia's first outlet REITThe initiator isBeijing's first business management***, which isBeijing Capital Venture GroupBeijing Capital Group is a wholly-owned subsidiary of Beijing State-owned Assets Supervision and Administration Commission.
Beijing Capital Venture GroupHolding (actual shareholding of 75%)The first of its kind（1329.HK) is a listed company in Hong Kong. The first of its kindAt present, it is one of the largest integrated outlets operators in China, the company isIt is the only listed company in China with outlets as its core business.
By the end of 2022, it is the first to create a large outletsIt has 15 projects in operation across the country, with a construction area of more than 1.6 million square meters。In the camp outletsThe total annual sales volume exceeds 10 billion yuan, and the annual customer reception is nearly 60 million。The project covers the two municipalities directly under the central government of Beijing and Chongqing, the provincial capitals of Hangzhou, Nanchang, Wuhan, Hefei, Jinan, Zhengzhou, Xi'an, Kunming and Nanning, as well as potential consumption cities such as Huzhou, Kunshan, Qingdao and Xiamen.
The company's outlets in operation are shown in the following table:
The outlets in the company's reserve are shown in the following table:
According to the official website of Capital Juda, in the process of rapid development, the company has won the favor of international heavyweight capital. In 2016, KKR, an internationally renowned capital, and Sino-Ocean Group were introduced as strategic shareholders。The joining of Sino-Ocean Group and KKR has rapidly enhanced the company's reputation in the global capital market and business field, enhanced the company's ability to connect with international leading business resources, and provided a more solid foundation for the company to achieve leapfrog development.
As of the end of June 2023, Capital Juda (1329HK) major shareholders include:Capital Capital Group holds 75% of the shares, and KKR holds 99%
2.The recent operation of Capital Juda
In the first half of 2023, the first big realization will be realizedSales of RMB 53$1.8 billion, an increase of 42% over the same period last year；ImplementationThe total passenger flow was 26.95 million, with an average daily average of about 10,000 passengers per project, an increase of 34% over the same period last year
In the first half of 23 years, the first great realization was madeOperating income is about 62.5 billion yuan, an increase of 36 percent over the same period last year33%；among othersThe rental income of the outlet is 46.4 billion yuan, a year-on-year increase of 38%. The increase in revenue was mainly due to the rapid recovery of the domestic retail industry in the first half of 2023 and the improvement in the sales performance of outlets.
According to the business classification, the company's business is mainly divided into:Investment property development and operation, property development, and commodity inventory sales, comprising three business segments
among othersIncome from the Investment Property Development and Operations segmentMainly from:Rental incomeRevenue from the Property Development segmentMainly from:**Completed propertyRevenue from the Sales of Commodity Inventory segmentMainly from:Inventory of goods sold (i.e., self-employed).
In the first half of 2023, Capital Juda's gross profit margin was approximately 33%, a decrease of 9 percentage points from 42% restated for the same period in 2022. among othersThe gross profit margins of investment property development and operation, property development and commodity inventory sales were % respectively, an increase of 3 percentage points, a decrease of 131 percentage points, and an increase of 14 percentage points respectively over the same period last year. can be found,The investment property development and operation business has a high gross profit margin.
In the first half of '23, the company's operating profit was approximately RMB13.6 billion yuan, compared with the same period last year after the restatement of RMB44,9770,000 yuan, an increase of 202%. The increase was mainly due to the increase in the level of rental income from the development and operation of the Company's investment properties, and the fair value income of investment properties increased significantly compared with the same period last year. The operating profit loss of the property development business was $100 million.
In the first half of '23, the company's net profit was about RMB 900790,000 yuan, compared with a net loss of RMB1 in the same period last year$1.7 billion represents a significant increase. The main reasons for the turnaround in the period are: (a).The contribution of property appraisal appreciation to net profit increased by approximately RMB2 over the same period last year$6.7 billion, which mainly adds value to the property appraisal of the Wuhan and Jinan projects held for sale;and (b).As a result of the increase in sales of the outlets business in the period, the gross profit of the outlets increased by approximately RMB90 million compared with the same period last year。The impact of these factors was partially offset by an increase in foreign exchange losses and interest expense in the period compared to the same period last year.
In the first half of '23, the net profit attributable to the parent company was approximately RMB87 million, a loss of 1 in the same period last year$1.6 billion. 
3.The main operational strategy of the first Juda
The company mentioned in the 2023 semi-annual report that in the second half of 2023, the group will rely on:The core competitive advantages of famous products, discounts, and leisure create a full-store, one-stop shopping experienceto further optimize and improve the consumer service experience, and take digital construction as the starting point to comprehensively improve the core capabilities of investment, operation and marketing
Investment promotion: Will go furtherMake up for the shortcomings of international brand investment, open up the data connection between investment promotion and operation, and build a more scientific and efficient intelligent investment promotion system.
Operational aspectsWe will continue to promote cost optimization and standardization, strengthen the quality and upgrading of customer service centers, accelerate the deployment of commercial service systems, and provide better and timely services for brand owners to achieve a win-win situation.
Marketing: Will be positiveTry the outlet theme market and create your own market IP；Innovate the best marketing model,Explore new formats of live streaming and upgrade the membership system, build points to redeem**, and continuously improve member loyalty and repurchase rate.
Digitalization: Optimize data governanceAccelerate the construction of a data cockpit that can assist in business decision-making。The company believes that the improvement of digital capabilities will fundamentally enhance the company's brand influence and core competitivenessCommitted to becoming a benchmark for digital-driven retail enterprises
In terms of self-operated businessIn the first half of 23, the company adjusted its business ideas, clarified the profit-centered assessment orientation of its own business, increased destocking efforts, and effectively improved its inventory structureAt the same time,Expand consignment channels and enrich the categories of self-operated storesto save the cost of goods procurement;andOpen up the whole link of live broadcast and increase salesIn the first half of '23, the self-operated business achieved sales of 12.5 billion yuan, and profitability has also been greatly improved
4.The main assets of Capital Juda
At the end of June 2023, the total assets of Capital Juda reached 213100 million yuan, mainly including:
(1) Investment property 131500 million yuan:
It is mainly the fair value of the company's operating outlet properties, which are roughly shown in the following table
(2) Inventory 273.4 billion yuan:
It mainly includes properties under development180.5 billion yuan, 7 completed properties for sale2.8 billion yuan, commodity inventory 33.9 billion yuan (self-operated business). It can be seen,Some of the company's development properties are sold to the outside world, and not all of them are self-sustaining. However, the impairment in the first half of the year was 13.8 billion yuan, reflecting the less optimistic situation of property sales. 
) is classified as an asset held for sale211.1 billion yuan:
The Company plans to place its wholly owned subsidiaryJinan's first giant real estate***andWuhan's first giant outlet business management***All the equity ** givesA subsidiary of Capital Group, the company's directors have approved the ** matter. As a result, the relevant assets and liabilities were presented as held for sale, and the two companies were reported as discontinuing operations during the period. This item brings profit to the company31.5 billion yuan.
5.Capital Juda's main liabilities
At the end of June 2023, the company's total liabilities were 168100 million yuan, with an asset-liability ratio of 789%。Key liabilities include:
(1) Bank borrowing61400 million yuan:
Including long-term borrowings of 4.9 billion yuan and short-term borrowings of 12400 million yuan, the weighted average effective interest rate of the company's borrowings from banks is 512%。
(2) Other payables and accrued expenses697 billion yuan:
These include: Priority Asset Support Program 52900 million yuan, outlets plan 13500 million yuan, which is the priority of the company's issuance of asset-backed plans. In recent years, the company has issued a number of asset-backed ** issues for the company's continuous expansion of outlet projects.
At the end of June 2023, the Company's interest-bearing debt principal amounted to approximately 127$9.5 billion, of which about 70% is non-current liabilities of the CompanyNet gearing ratio was 235%., the scale of interest-bearing liabilities is large. This has also led to a relatively large interest expense for the company, with the company's interest expense of about 30.7 billion yuan.
6.The first huge issuance of REITs
Since 2019, Capital Juda has issued multiple asset-backed REITs** and has accumulated rich experience in issuing REITs, which has also laid a solid foundation for the company to issue public consumer infrastructure REITs. The asset-backed assets issued by the Company in recent years are as follows:
(1) The first phase of the asset-backed special plan of "Zoomlion - the first giant outlets No. 1".
On December 9, 2019, the company issued the first phase of the asset-backed special plan of "Zoomlion First Creation - First Giant Outlets No. 1". The company will be heldThe first outlet in Beijing and the first outlet in Kunshanof the two properties **.
The program has a five-year issuance period and a total issuance amount of 357.9 billion yuan. Includes: (i) $2.7 billion principal amount of senior asset-backed** with a fixed coupon rate of $5. per annum2%, all of which are subscribed by third-party qualified investors and listed and traded on the comprehensive agreement trading platform of the Shenzhen ** Exchange;and (ii) the principal amount is RMB87.9 billion yuan of subordinated asset-backed**, no fixed coupon rate, all subscribed by the company's wholly-owned subsidiary, Zhuhai Hengqin Hengsheng Huachuang Commercial Management *** Hengsheng Huachuang), subordinated asset-backed ** not listed.
(2) The first phase of the asset-backed special plan of "Zoomlion's first - the first giant outlets".
On May 28, 2021, the company issued the second phase of the asset-backed special plan of "Zoomlion's first and first giant outlets". The four properties held by the Company (i.eThe first outlets in Hefei, the first outlets in Hangzhou, the first outlets in Jinan, and the first outlets in Jiangxi**.
The plan has a three-year issuance period and an aggregate issuance amount of RMB32$6.8 billion, comprising: (i) principal amount of $26Backed by 100 million yuan of senior assets**, with a fixed coupon rate of 505%, all of which are subscribed by third-party qualified investors and listed and traded on the comprehensive agreement trading platform of Shenzhen ** Exchange;and (ii) the principal amount is RMB66.8 billion yuan of subordinated asset-backed**, no fixed coupon rate, all subscribed by Hengsheng Huachuang, subordinated asset-backed** not listed. On 26 July 2023, the asset-backed special plan was fully prepaid.
（3）"China Life Investment - the first giant outlets"Phase 1 Asset-Backed Plan
On April 27, 2022, the company issued asset-backed ** products:"China Life Investment - the first giant outlets"The first phase of the asset-backed plan, the total principal amount of the plan does not exceed 13Under the 500 million yuan beneficiary certificate, Hengsheng Huachuang (the original owner) will provide loans to Chongqing Capital Outlets (an indirect wholly-owned subsidiary of the Company) and Kunming Capital Outlets (an indirect non-wholly-owned subsidiary of the Company).
The creditor's rights and interests enjoyed by Hengsheng Huachuang will be used as the underlying assets to be realized through the plan to raise funds for the company's business development. As of the end of June 2023, the company has issued a principal amount of RMB 13$500 million in assets** with a fixed coupon rate of 485% with a three-year issuance period.
(4) The second phase of the asset-backed plan of "China Life Investment - the first giant outlet".
On July 6, 2023, the company issued an asset-backed product: "China Life Investment - The First Giant Outlet" Phase II asset-backed plan, which will issue beneficiary certificates with a total principal amount of no more than RMB 1.8 billion.
Under the plan, Hengsheng Huachuang (the original owner) will provide loans to Xi'an Capital Outlet, Nanning Capital Outlet and Huzhou Capital Outlet, and the creditor's rights and interests enjoyed by Hengsheng Huachuang will be used as the underlying assets to realize the realization of the plan and raise funds for the company's operation and development.
7.Summary
To sum up, as one of the largest integrated outlets operators in China, Capital Juda has mainly adoptedAsset-heavy model of self-owned properties, which is destined to require large-scale funding to support the company's ongoing development projects.
It can also be seen from the balance sheet for the first half of '23,The company's total assets are 23.1 billion yuan, and investment real estate is 131500 million yuan, but the scale of interest-bearing liabilities reached 12.8 billion yuan, and the net debt ratio reached 235%.。The company borrowed 6.1 billion yuan from banks and raised 6.6 billion yuan through the issuance of asset-backed **, with a total financing of 12.8 billion yuan.
It can be said thatThe company's debt leverage has reached its upper limit. If you want to refinance to support your company's expansion, it is almost impossible to finance it with debt
In this context, in March 2023, the National Development and Reform Commission (NDRC) issued the Notice on Standardizing and Efficiently Recommending the Application and Recommendation of Real Estate Investment Trusts** (REITs) Projects in the Infrastructure Sector, officially including consumer infrastructure in the scope of REITS issuance. This provides policy conditions for Capital Juda to open up financing channels and carry out asset-light business transformation.
Capital Juda said that it will seize the policy window periodWe are committed to opening up the cycle of asset investment and financing management, accelerating the improvement of business management capabilities, and gradually realizing the transformation of assets from heavy to light and from light to refined
The declaration of the first domestic outlet REIT is also an important step for the company to accelerate the transformation of its business into an asset-light business. It is expected that the first outlet REIT is expected to land in the domestic capital market next year. We will follow the latest progress of Capital Outlet REIT in a timely manner.
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