Company Profile

GREE REAL ESTATE CO., LTD is a China-based company, principally engaged in the development and operation of real estate. The Company mainly provides high-end residential buildings. The Company mainly operates its businesses in Zhuhai, Guangdong Province, China. The Company also conducts its businesses in Shanghai and Chongqing, China. (Source: MarketScreener)

Event

1) Gree Real Estate (“the company”) intends to issue shares, at a price of CNY5.38 per share, to Zhuhai State-owned Assets Supervision and Administration Commission and Urban Construction Group, who are shareholders of Zhuhai Dutyfree, and pay cash to purchase 100% shares of Zhuhai Dutyfree.

2) The company plans to issue a private placement to 35 non-public investors at a price of CNY5.38 per share to raise over CNY800 million. The issued shares are expected to be no more than 566 million shares and no more than 30% of the total shares outstanding before the transaction.

3) The Zhuhai Dutyfree Group reported a revenue of CNY1.270 billion and CNY1.906 billion for 2020 and 2021, respectively, up 50.07% year-on-year. The net profit attributable to shareholders stood at CNY132 million and CNY528 million for 2020 and 2021, up 301.12% year-on-year. The net profit margin attributable to shareholders reached 10.36% and 27.68% for 2020 and 2021, respectively, showing strong profitability.

Comments

The company restructured and raised capital to optimize its asset-liability ratio and took part in the duty-free business to improve its profitability.

(1) After this major asset restructuring, Gree Real Estate will be engaged in the duty-free business, which has strong profitability and broad prospects.

(2) At the same time, through the private placement, the company will raise funds to continue project construction, pay debts and replenish liquidity for its previous real estate business. The effort will also optimize the company’s asset and liability structure and accelerate the resource integration and business coordination with Zhuhai Dutyfree Group.

In the future, the duty-free business is likely to drive up the company’s profitability and enhance its market competitiveness.

Zhuhai Dutyfree has been engaged in the duty-free business for many years and has been improving its layout in Hainan and the Greater Bay Area.

As a veteran in the duty-free industry, Zhuhai Dutyfree has formed a dual layout of “city + port” for its duty-free business. In addition, Zhuhai Dutyfree won the bid for the Outbound Duty-free Shop Project in Hengqin Port Outbound Hall in June 2022.

Again on December 2 and December 6, 2022, Zhuhai Dutyfree won the bids for the Outbound Duty-free Shop in Zhongshan Port and the Outbound Duty-free Shop Franchise Right in Zhuhai Waizai Port, respectively.

Zhuhai Dutyfree is also promoting the Helian Central Business District Project in Sanya and the Novotown Project in Hengqin, in a bid to improve its layout in Hainan, the Greater Bay Area and other strategic locations.

Potential risks

Pandemic-related risks; acquisition falling short of expectations; intensified market competiti