Review on the operation of Taihe Group's semi-annual board of directors in 2020

The business review of the Board of Directors of Taihe Group (000732) in the first half of 2020 is as follows:

I. Overview

On the macro-economy, the sudden outbreak of COVID-19 in the first half of 2020 has brought a serious impact on the economic and social development of China. In the first half of 2020, China's GDP was 45661400 million yuan, down 1.6% year-on-year. At present, the domestic epidemic has been in the stage of stable prevention and control, and the overseas epidemic is still accelerating. The decline in external demand may have a certain drag on the domestic economic operation.

In the real estate industry, in the first half of 2020, the sales and resumption of work in the real estate industry were seriously affected by the epidemic, and both sales and prices showed a year-on-year downward trend. According to the data of the National Bureau of Statistics, in the first half of 2020, the national investment in fixed assets (excluding farmers) was 28160.3 billion yuan, down by 3. 1% year-on-year, and the investment in real estate development increased by 1.9%. The sales area of commercial housing nationwide decreased by 8.4% year-on-year, and the sales of commercial housing decreased by 5.4% year-on-year.

In terms of real estate policy, "no speculation in the house" and "policy for the city" are still the main theme of real estate policy. On February 2 1 day, the central bank held a conference on financial market work in 2020 to deploy six key tasks in 2020. As far as real estate is concerned, it will maintain the continuity, consistency and stability of real estate financial policies, continue to implement the long-term real estate management mechanism due to the city's policy, and promote the smooth operation of the market; /kloc-In May of 0/8, the Central Committee of the Communist Party of China and the State Council issued the Opinions on Accelerating the Improvement of the Socialist Market Economic System in the New Period, pointing out that the real estate tax legislation should be steadily promoted, the local tax system should be improved, the local tax system should be adjusted and improved, local tax sources should be cultivated and strengthened, and the local tax management authority should be steadily expanded; On May 22nd, at the National People's Congress in 2020, the "Government Work Report" reiterated that "houses are used for living, not for speculation, so as to promote the stable and healthy development of the real estate market"; On August 6th, the People's Bank of China released the Report on the Implementation of Monetary Policy in China in the Second Quarter of 2020. The report pointed out that it is necessary to firmly adhere to the position that houses are used for living, not for speculation, not to use real estate as a short-term means to stimulate the economy, to stabilize land prices, house prices and expectations, to maintain the continuity, consistency and stability of real estate financial policies, and to implement a prudent management system for real estate finance.

During the reporting period, the company continued to focus on the real estate business, adhered to the brand concept of "China is made by culture", adhered to the high-quality and high-value-added product line of "making works for the city and offering fine products for the times", and deeply cultivated the first-and second-tier core cities.

During the reporting period, the company continued to deepen the layout of the original projects in the city and did not carry out new land acquisition and regional expansion. At present, the company's real estate projects are mainly distributed in first-tier and core second-tier cities, including Beijing-Tianjin-Hebei region with Beijing as the center, Yangtze River Delta region with Shanghai as the center, Guangdong-Hong Kong-Macao Greater Bay Area region with Guangzhou and Shenzhen as the center, Fujian region with Fuxia as the center, and central region with Wuhan as the center.

The company has national first-class real estate development qualification and rich project development experience. Its product formats include high-end houses, high-end apartments, first-class office buildings and urban complexes, which have a certain brand awareness. In addition to high-end improved courtyard products, it also has many differentiated residential product lines such as university department, landscape department, luxury department, government department and bay department, as well as commercial real estate products with Taihe Plaza as the core brand.

During the reporting period, the company achieved an operating income of 2.463 billion yuan, down 83.02% year-on-year, which was mainly affected by the COVID-19 epidemic in the first half of 2020 and the settlement progress of the company's real estate development projects. There is no centralized delivery of real estate projects, only sporadic project delivery carry-over income, resulting in a sharp drop in income compared with the same period of last year. During the reporting period, the company realized a net profit attributable to shareholders of listed companies of-65,438+05.82 million yuan, down by 2,065,438+0.33% year-on-year, mainly due to the sharp drop in revenue, which led to a sharp decrease in operating profit. At the same time, the investment income in the first half of 2020 was mainly generated by the investment income of the joint venture confirmed by the equity method held by the company, with a small amount, which was greatly reduced compared with the same period of 2065,438+09. During the reporting period, the company accrued estimated liabilities for overdue loans and paid other liquidated damages of about 776 million yuan, resulting in losses during the reporting period.

From the perspective of income composition, real estate development business is still the most important source of company income, accounting for 86.90% of operating income; Services, retail and other businesses account for a relatively small proportion. In the same period, the gross profit margin of the company's real estate industry was 65,438+08.38%, down 9.765,438+0 percentage points year-on-year, mainly because the land acquisition cost of the real estate projects carried forward in this period was higher and the profit level dropped significantly. During the reporting period, the operating income of the company's real estate business was 65.438+0.953 billion yuan, with a carry-over area of 3,685,654.38+0.48 square meters, of which the sales income of residential real estate was 65.438+0.806 billion yuan, with a carry-over area of 2,893.060 square meters; The sales revenue of commercial real estate was 65.438+0.47 billion yuan, and the carry-over area was 7920.88 square meters.

In terms of residential projects, during the reporting period, Beijing Jin Fu Siheyuan, Foshan Siheyuan, Jinan Siheyuan, Jurong Jinzunfu and other projects sold well, covering villas, stacked apartments, large flat apartments and small and medium-sized units. The company always adheres to the strategic policy of high quality and differentiation, and constantly carries out product research and development and design with artistic ingenuity to meet the diversified and escalating housing needs of urban home buyers and maintain market competitiveness. At the same time, the company actively promotes the process of product standardization and is widely recognized by the market.

In the field of commercial real estate, Taihe Group has formed a unique "Taihe Model", covering development, design, investment promotion, operation, hotel management, smart payment and other fields.

At present, Taihe Group has a number of large-scale urban complexes in Beijing and Fujian, including Wu Si Beitaihe Square in Fuzhou, Taihe Square in Fuzhou East Second Ring Road, Taihe Square in Quanzhou Shishi, Taihe Square in Quanzhou Donghai, Taihe Central Square in Beijing, etc., and has laid out commercial real estate projects in different formats in core cities such as Beijing and Shanghai.

During the reporting period, high-end residential and commercial projects, which are difficult to be capitalized, accounted for a relatively high proportion of the company's real estate projects due to the overall downturn in the real estate environment and the COVID-19 epidemic. Due to the tight liquidity of the company, the continuous industrial control policies and the adverse effects of the epidemic, the pace of sales promotion has slowed down and it is facing greater pressure of capitalization. At the same time, the short-term liquidity of the company is difficult due to the huge scale and concentration of its own debts. As of June 30, 2020, the company's overdue loans amounted to 22.525 billion yuan. As of the disclosure date of this report, the overdue loan amount of the company was 34.9 billion yuan, and the unpaid interest was 4.332 billion yuan.

Accumulated land reserve

Development of major projects

Sales of major projects

Lease of major projects

Primary land development

□ Applicable √ Not applicable.

Financing method

Development strategy and business plan for the coming year

1, actively solve the debt problem and resolve the debt risk.

In the coming year, the company will actively pay attention to sales promotion and solve the debt problem. In order to actively and steadily resolve the company's debt risks, the company hired professional institutions to restructure its debts, assisted the company in organizing and coordinating the communication opinions and demands of creditors, and provided professional suggestions for alleviating the short-term debt repayment pressure and optimizing the capital structure. The company will form a comprehensive debt restructuring plan based on the opinions of all parties, so as to realize the long-term value of the company and ensure the interests of creditors to the greatest extent.

2. Introduce strategic investors and optimize the company's equity structure.

Taihe Investment Group Co., Ltd., the controlling shareholder of the company, signed the Share Transfer Framework Agreement with Hainan Wan Yi Management Service Co., Ltd. on July 30, 2020. The company believes that the signing of the Share Transfer Framework Agreement by the controlling shareholder of the company will help to promote the debt restructuring of the company, revitalize existing assets, maintain normal operation, optimize the company's shareholding structure, help the company to continuously improve corporate governance, and thus help to realize its long-term value and safeguard the interests of the company and shareholders.

3. Improve management level and attach importance to personnel training.

Provide guarantee for commercial housing buyers with bank mortgage loans.

√ Applicable □ Not applicable

The Company provides mortgage guarantee for commercial housing buyers in accordance with the practice of real estate management. This guarantee is a phased joint guarantee. The guarantee period starts from the effective date of the Mortgage Loan Contract signed by the company, the mortgage bank and the purchaser, and ends on the date when the company completes the real estate license for the purchaser, assists the mortgage bank in mortgage registration and submits other certificates of rights to the mortgage bank. By the end of the reporting period, the staged guarantee amount provided by the company for commercial housing buyers was RMB 2,665.438+RMB 300 million. Since the winning bidder has not breached the contract so far, and the current market price of these properties is higher than the selling price, the company believes that the risks related to providing such guarantees are relatively small.

Co-investment between Dong and listed companies (applicable to listed companies where Dong is the main investor)

□ Applicable √ Not applicable.

Three. Analysis of core competitiveness 1. Strategic success: Be far-sighted, carefully adhere to the unique strategic vision and professional judgment of Taihe Group, assess the situation, and go deep into high-potential areas such as Beijing-Tianjin-Hebei integration, the core area of the Belt and Road, Guangdong-Hong Kong-Macao Greater Bay Area and Fuxia, which are in line with the national regional development strategy and enjoy the regional development dividend. Taihe Group has both strategic foresight and strategic determination, and always adheres to strategic planning: regional layout: deeply cultivate core first-tier cities, comprehensively lay out second-tier cities, selectively enter core cities and urban agglomerations, and lay out economically developed areas; Product positioning: always adhere to the quality and brand line, uphold the mission of "creating works for the city and dedicating quality products to the times", and gain market recognition with the concept and practice of "making quality products and building good houses"; Customer orientation: Focus the main target customers on the middle class with huge consumption potential, and provide them with home ownership and supporting full-cycle services; "Taihe+"strategy: combining its own advantages, we will aggregate the resources of controlling shareholders, provide owners and customers with "quality products+supporting services+value-added services" throughout the life cycle, and vigorously build a "Taihe+"strategic system around education, medical care, culture and life services. 2. Brand Winning: Unique Brand, Ingenious Quality In 2002, Taihe Group took the first step to explore the living culture in China. With the success of China Siheyuan, Taihe Group has gradually established a characteristic product system, such as the new Chinese Siheyuan represented by Siheyuan, which has formed a recognized high-end residential product in the industry. In the process of continuous iteration and self-improvement, Taihe Group has created and adhered to the "cultural residence" in real estate development and operation by extracting and activating China traditional culture and traditional architecture. At present, the company has gradually established a "Chinese-style good life" product system. In addition to yard products, Taihe Group has successively launched a number of differentiated product lines, such as University Department, Landscape Department, Luxury House Department and Bay Department. , and formed a relatively complete product system with high-end residential buildings, high-end apartments, Grade A office buildings and urban complexes as the core. 3. Talent wins: relying on the team and attaching importance to talents. Taihe Group always adheres to the concept that "investment in people is the most important investment of an enterprise" and always firmly believes that the core of enterprise development lies in talents. Taihe Group attaches great importance to the construction of management team and human resources, and relies on teams, systems and systems to manage enterprises. With an open and inclusive corporate culture, Taihe Group has built a platform for talents to freely display their talents. According to the company's strategy, corporate culture and values, it has established a people-oriented training system and a relatively perfect incentive mechanism to build an excellent professional manager team in an all-round way and form a high-level and high-quality backbone team.