In the era of great service, how does KWG extend its “life thickness”? - News

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In the era of great service, how does KWG extend its “life thickness”?

10/19 . 2021

In 2021, the scroll of history

Enter the year of unknown and stirring thought.

In new economic cycle, what does enterprise vitality depend on?

Maybe no longer chasing the clock,

Perhaps the steadiers ones, with both breadth and depth,

In the constant change of the market, will have more long-term competitiveness.

When I look back where I used to be,

Be myself, grow in quality.

This is the most honest answer about the present.

（The following excerpts are taken from Ehconsulting）

Introduction:

In 2021, the industry was in the three red lines, two concentrations of land and other big framework regulation, the "survival of the fittest" of real estate enterprises turn white-hot. From "big development" to "big service" era, steady and quality are the two key words of the industry. In this context, Ehconsulting believes that real estate enterprises engaged in urban comprehensive operation, such as KWG, have great development potential, which is mainly reflected in five aspects:

1、Stable operation

Adhere to the long-term principle, financial indicators optimization

In 2021, Mr. Kong Jianmin, chairman of the board of directors of KWG, said in the performance press conference, "We hope the company can achieve quality growth in the future".

01、Steady growth in scale and profit

From 2017 to 2020, the sales scale of KWG increased steadily, with a CAGR of 28% , exceeding the scale of 100 billion. In the first half of 2021, KWG’s pre-sales reached RMB 56.18 billion, up 53% year-on-year. Meanwhile, KWG's core profit was RMB 3.32 billion, increased 4.6% year-on-year, and its core profit margin was 15%, maintaining a high level in the industry.

This reflects that KWG has achieved "quality growth" by balancing profit growth with scale.

Source: Ehconsulting, corporate announcements

02、The "three red lines" indicators have been continuously optimized

In recent years, KWG has continued to optimize its financial structure. In the first half of 2021, the asset-liability ratio excluding pre-receipts decreased by 3.3 percentage points to 71.8%, and the net debt ratio decreased by 7.6 percentage points to 54.1%, as the leverage ratio continued to be repaired. The ratio of unrestricted cash to short debt rose from 1.6 times to 1.8 times, indicating abundant short-term funds. It is expected to return to green by the end of 2021.

Source: Ehconsulting, corporate announcements

ll、Business Deepening

Adhere to industrial synergy and build a diversified ecology

The real estate development model can simplify the process into AEO model, namely "Resource Acquisition (A) - Resource Exploitation (E) - Asset Operation (O)". Real estate enterprises need to strengthen resource acquisition, asset operation and resource exploitation to form an ecological closed-loop and achieve a win-win situation.

Hangzhou KWG | THE MOON MANSION An exemplary cozy residence

Over the years, KWG has been adhering to the synergistic development of diversified businesses such as real estate development, commercial operation, health, cultural tourism and education, and actively building an industrial ecosystem. At present, both heavy and light assets have been carried out to build a good AOE model.。

盐城月养云来，描绘自然人居乐趣

01.The commercial segment is forward looking and the whole business chain is constructed

The rapid development of KWG’s commercial business is inseparable from its early cultivation. In 2003, KWG formally entered the commercial market. In 2014, KWG prospectively laid out its national commercial territory and expanded its commercial real estate business to the first and second tier cities such as Shanghai, Beijing, Chengdu and Chongqing.

As of June 30, 2021, KWG's investment properties have penetrated into office buildings, hotels, shopping centers and other categories. Its investment properties have opened a total of 41 projects, including 10 shopping malls, 9 office buildings and 22 hotels. In the future, 25 new shopping malls and 11 new office buildings will open successively.

Beijing M·Cube Carrying a unique city character

In the first half of 2021, KWG achieved a rental income of RMB 901 million with a year-on-year growth of 55%, among which the hotel increased by 145%, shopping malls by 29% and office buildings by 16%. The overall occupancy rate of shopping centers operating for more than half a year reached 89%, passenger flow increased by 88%, and retail sales increased by 82%. The overall occupancy rate of office buildings operating for more than half a year reached 87%.

A Hotel: Accumulate experience and scale development

In the hotel business, KWG focused on cooperation in the early stage, and then learned from experience to hatch its own brand "The Mulian". At present, it has sophisticated hotel design, development and investment management ability, and hatching out of the four major product lines, including luxury five-star hotel "MORDIN", light luxury business hotel "The Mulian Hotel", high-end vacationing hotel "The Mulian Resort", and fashionable design hotel "MUSTEL". In the future, we will combine light and heavy asset with scale development.

Shanghai “The Mulian Hotel”Create a comfortable living experience

B Shopping Center: Work together for win-win, and achieve precise positioning of differentiation

In terms of space value of shopping center, it has realized fine operation. Through differentiated positioning, three commercial IP brands have been formed, including "Ufun" which focuses on creating a fashionable, healthy and exquisite lifestyle, "M·Cube" which accurately provides trendy and fashionable life experience for young hipsters, and "Ufun World", which provides better quality and comfortable life mode for community residents.

Chengdu, Suzhou KWG | Ufun Bursting with multicultural vitality

C Office Building: Superior location and innovative integrated business model

KWG has built a number of high-end office building projects and industrial headquarters in the core areas of Beijing, Guangzhou, Shanghai, Chengdu and other cities. At present, it has successfully created three high-end office building brands: IFP (KWG International Financial Plaza), IMP (KWG International Metropolitan Plaza) and ICP (KWG International Commerce Plaza).

Guangzhou, Shanghai IMP (KWG International Metropolitan Plaza) Highlight the front-end business configuration of the industry

02.Continue to develop diversified asset-light business and empower the enterprise

In 2016, Premier Li Keqiang put forward the concept of "Well-being Industry" for the first time. KWG studied the development trend of the industry deeply and responded to the policy guidance. In 2017, KWG put forward the development strategy of three well-being industries and gradually cultivated the light asset businesses such as education, health and cultural tourism.

In the field of education, KWG Education Group was established in 2017. With the mission of "Pursuing Education in its Purest Form", it has created an innovative education ecological system for comprehensive training in and out of school. It has made remarkable achievements in preschool education, international education, out-of-school education and other directions, providing certain guarantee for the improvement of various programs.

In the field of health, KWG Health Group has been established, with the mission of "Taking the lead with innovation and making healthiness accessible" to build a high-tech industry group providing health management for the whole life cycle of mankind. At present, KWG Medical Health Industrial Park is actively built in Guangzhou.

In the field of cultural tourism, Huacheng Culture and Tourism Group was established in 2019 with the core concept of "Best Service for High Quality Travel", and is committed to becoming the world’s first-class culture and tourism industry investment operator and the leader of the global cultural tourism industry ecological chain.

Through the continuous development of asset-light business, KWG has realized the coordinated development of diversified businesses, enabling enterprises to acquire resources and manage assets.

III.Precise Investment

Adhere to the "two-wheel drive", balance the long and short terms development

Under the downward trend of the industry, the markets of first-tier and key second-tier cities have shown strong resilience. KWG adheres to the investment strategy of layout of first-tier and key second-tier cities in line with the development trend of the industry and leads the high-quality development of enterprises.

01、"2+X" investment pattern, short-term flow and long-term volume of dual balance

Ehconsulting believes that KWG adheres to the "2+X" investment pattern and deeply invests in the Greater Bay Area and the Yangtze River Delta region, which is in line with the development trend of the industry. At present, KWG has more than 200 projects in 41 cities across China. By the end of the first half of 2021, KWG has land reserves of 11.77 million square meters in the Greater Bay Area and 4.07 million square meters in the Yangtze River Delta region, with a total land reserve of approximately 23.17 million square meters, 95% of which can be sold in the first and second-tier cities.

Source: Enterprise Announcements, Ehconsulting

The high value of goods in the Greater Bay Area superimposed the high flow in the Yangtze River Delta to build the “two-wheel drive” development model of KWG, which can predict the strong sustainable growth of enterprise performance.

When the industry entered the stock era, KWG laid out urban renewal business earlier and developed rapidly in recent years. In 2018, KWG established the urban renewal group, which is responsible for urban renewal business development and laid out the Guangdong-Hong Kong-Macao Greater Bay Area first. After years of operation, KWG has formed five advantages in the field of urban renewal: geographical advantage, product quality, complex operation experience, rich business format and senior team.

KWG project in Kai Tak, Hong Kong Build high-end quality

In the future, with the release of urban renewal project performance, the scale and profit of KWG will be further consolidated.

IV、Quality Refinement

Adhere to quality first and develop diversified products

In the era of "great service", the industry has returned to the core, and "products and services" become an important focus of enterprises. KWG has been focusing on product quality and innovative design for many years, and product strength and service strength have become one of the core competitiveness of the enterprise.

01、Actively optimize products and create diversified product lines

KWG attaches great importance to products, based on user needs to provide products in different business formats. For example, housing has formed four major product lines, namely JADE, COSMOS, MOON and SEASONS, and built a number of classic projects such as Guangzhou THE RIVIERA, Guangzhou THE COSMOS, Chengdu THE COSMOS and Chengdu THE JADEITE. According to the differentiation positioning, the company has successfully developed three shopping center product lines, namely "Ufun", "M·Cube" and "Ufun World". In terms of long-term rental apartments, three product lines of "PRIMCASA", "RISCASA" and "NOVUSCASA" are created according to the needs of different groups.

Chongqing KWG | THE COSMOS Deliver the concept of exquisite living

At the same time, we are actively innovating and optimizing our product capability. In September 2021, the "Next Future Life Definition - 2021 KWG Habitat Aesthetics Conference", KWG first released the concept of "KWG 5.0 Living Aesthetics" and proposed four major aesthetic concepts of natural aesthetics, humanistic aesthetics, luxury living aesthetics and originality aesthetics in residential design for the first time. It revealed for the first time that 152 living scenarios were integrated into the product development, and the interior space aesthetics was redeveloped from the perspective of indoor living scenarios, user experience and usage.

KWG hosts first habitat aesthetics conference

Behind the strong product capability of KWG is the continuous research and exploration of enterprise. Mr. Kong Jianmin, chairman of the board of directors, once said, "In the early stage, the design concept of KWG was simple, that is to build good architecture with good design and good decoration. Next, we will add more artistic elements, so that KWG's products have more vitality and more distinctive character."

V、Operation Enhancement

Adhere to digital transformation and improve operational capabilities

With the development of Internet technology, the industry has set off a wave of digital transformation. The digital transformation of KWG is in the forefront of the industry. As early as 2016, KWG put forward the "Future+" strategy, aiming to use Internet thinking to run through its residential, commercial, property and other fields to improve service efficiency.

01、Build internal digital platform, improve enterprise management efficiency

At present, KWG Group has completed the construction of SAP system. The SAP system mainly builds multi-level control system through the joint group, regional companies and project companies to realize the integration of operation, accounting, capital and business, so as to promote the data sharing and business connection among various departments. In the first half of 2021, the group achieved a comprehensive improvement of 12%, and achieved a 2% reduction in the cost of determined bidding documents and a 4% reduction in the standard cost through the improvement of operational efficiency and the superposition of information technology means.

In 2021, the Group officially launched the hr DHR digital platform project to optimize the all-round business process of organization planning, recruitment and personnel, attendance and salary, training and performance, and talent development.

02、02.Externally, we actively build the "Smart +" platform to facilitate the development of various businesses

Under the new normal of market digitization, KWG Group has developed the online marketing platform of "Yihe Good House", explored the online marketing mode, and improved the competitiveness of the group. KWG smart service platform has also been successfully put into use, and the smart customer service system has been connected to more than 30,000 owners. The service efficiency of owners has been improved by 50%, the half-year delivery effect has been significantly improved, and the re-purchase recommendation rate of old owners is 76%, which is significantly improved compared with the same period last year.

Conclusion

As the market shifts from incremental to stock, the industry has entered the era of "great service". Many real estate enterprises cannot resist the risk of market fluctuations and fall into business difficulties, including some of the top 100 real estate enterprises. In this industry trend, KWG is operating steadily and focusing on "quality growth" to overcome the cycle.

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