Half Year 2019 Central China Real Estate Ltd Earnings Call
ZHENGZHOU Aug 26, 2019 (Thomson StreetEvents) -- Edited Transcript of Central China Real Estate Ltd earnings conference call or presentation Wednesday, August 21, 2019 at 7:30:00am GMT
TEXT version of Transcript
* Po Sum Wu
Central China Real Estate Limited - Founder & Chairman
* Vinh Mai
Central China Real Estate Limited - Head of IR & CIO
Unidentified Company Representative, 
Good afternoon, ladies and gentlemen. On behalf of Central China Real Estate Limited, I would like to welcome you to the investor presentation of interim result announcement 2019. First, I would like to introduce the management team of Central China Real Estate who are here today: Mr. Wu Po Sum, Chairman; Mr. Felix Wang, Executive Director; Mr. Yuan Xujun, Chief Executive Officer; Mr. Hu Ping, Chief Financial Officer; Mr. Vinh Mai, Head of Investor Relations and Chief Investment Officer.
Here is the agenda today. First of all, Chairman Wu will give you a welcome speech. After that, Vinh will walk you through the PowerPoint presentation, and then we will have the Q&A section. May I now invite Chairman Wu, please?
Po Sum Wu, Central China Real Estate Limited - Founder & Chairman 
[Interpreted] Good afternoon, ladies and gentlemen. Thank you very much, old and new friends, for coming to our 2019 interim results announcement.
First of all, I would like to report to you that this year, our overall development is like this. As you know, China's macro economy in these 2 years encountered many challenges. There is a lot of uncertainty, an increasing uncertainty in the economic development. As a result, in the real estate industry, the uncertainty of investment also increases. The central government attaches most important to stability in the overall policy. And it also covers the guiding principle of the development of the real estate industry, so it is based on stability. Given this background, the overall scene is rather stable. Property price is stable. Construction volume, sales volume are stable, so overall speaking, stable.
So given these circumstances, you will realize that in the first half of the year, China's economic growth was still at 6.3%, and this 6.3% is within the range of expectation. And if you look at Henan province, that is our main battlefield, its GDP growth is higher than the national average. It is at 7.7%. So given this background, while Henan's economy is stable and rising, so it maintains a pace of stable development.
So if you look at our market, if you look at the overall growth in the real estate industry and also the overall economy, while the growth rate is higher than the national average, and if you look at our company's development, last year, the year before last year, for 2 consecutive years, we achieved high growth. And in the first half of this year, we also achieved stable growth. In the first half, sales for the first time exceeded CNY 30 billion. So this is a new record of us.
So in only half a year, we achieved sales of CNY 30.8 billion. And all along, we have been focusing on the Henan market. Many old friends know that in Henan, there are 18 prefecture cities. In China, in terms of its administration, well, prefecture cities are very important. Besides, well, you may say that there are 103, but then last week, the [Jiyuan] county is also established. So now in Henan, prefecture and county cities together, number 120 odd. As of the end of June, we have entered 90-odd cities. So at the end of this year, we hope to be in 120 prefecture cities, so full coverage.
Now I would like to remind you that since 2002, we went out of our provincial capital, Zhengzhou, and we started to move into other cities, for example, Luoyang, Kaifeng, Xuchang. These are Prefecture cities. In 2002, we started to move into these cities and now it has been 18 years, and we're able to cover all 120 prefecture cities.
Well, I see an old friend here. All along, he has been in Henan. I believe he is very familiar with Henan. So in 18 years' time, we have covered all 120 prefecture cities. And today, well, when you listen to me, it is just one line. In fact, if you look at our property management and all our other business segments, we have altogether 20,000 employees. So that is the result of our concerted effort. We have achieved this goal.
If you look at this goal in the real estate industry, it isn't a big thing because we haven't exceeded CNY 100 billion yet. So if you only look at the numbers, it is actually true. But if you look at the macro background of urbanization, well, we are a small company, so we move from a province, a city, a village and so on. So altogether, there are 5 tiers of market. We have 5 generations from the 50s all the way to millennials.
So I just said that there are 120 prefecture cities, and we are in a few towns and villages as well. So now we have achieved full coverage of the market, and in the future, we will explore the town-level cities or markets.
In the first half of the year, the population of Henan is 109 million, almost 110 million. So in no more than 10 years' time, population will be more or less the same as that of Japan. So in 10 to 15 years perhaps, population will be of the size of that of Japan. That is our market, and we have been focusing on it for 27 years. And since we started -- since we extended out of Zhengzhou, it has been 18 years. And I think we are a very unique case in the real estate industry in China. So if you look at this year, our sales and other results, we have achieved improvements. Later on, my colleague will present to you the specific data.
Since 2015, that is 4 years ago, we announced our strategic transformation or we called it our strategic upgrading internally. So it is, in fact, service upgrading. In the past 20-odd years, we were a property developer. We bought land and we sold land. We recovered cash and then we bought land again. Now our strategy is different from others. Other companies work in the whole country, so they are like a mobile operator. But we are focused on 1 market, so we have 120 cities with 100 million of population. Now the way of fighting a fixed venue battle and a mobile battle is very different. Now in the past, we were -- we focused on 1 town, and if I gave you some quantifiable figures on the 6th of June, we had an app, Jianye+. That is Central China Real Estate+. Two months after it was launched, now there are more than 1.6 million users who had downloaded our app. So at the end of this year, we hope to have 2 million.
So if you are interested in strategies, you will know that 2 million customer base has implications on an enterprise. Now our customer base of 2 million people have their own characteristics. There are 3 highs. First, high net worth because our main customers are property owners. Of course, there are 300,000 soccer fans. In China, we are the only club focusing on professional soccer teams. On the 28th, we will celebrate the 25th anniversary of our club. So in the reform history of China, we are the only soccer club of this kind, so we have 300,000 registered fans.
At the end of the year, we hope to have 2 million users, including our soccer fans. And we have also an education segment with a few 10,000 students and 100,000 parents. So now we have 1.6 million, including students, parents, soccer fans and our business customers. And in our group, there are almost 20,000 employees.
When it comes to real estate business, I have to also mention our other business segments because we are working on real estate plus. So we are now moving into culture, tourism, agriculture, hotel and commercial and education, technology. So now there are altogether almost 10 business segments. All these segments are related to people's lifestyle.
China has experienced 40 years of open reform, and now people have a medium level of income. People's demand is getting more and more diversified, and there is an increase in demand and also upgrading in consumption. So all needs related to people's lifestyle are covered. So people do not only need properties. There are, for example, household services, shopping services, tourism services and so on that will be needed. So we add new business segments according to new needs in people's lives.
In the past few years, when we transformed and upgraded our strategies, we had seen some achievements. Now I'm making these points today because these segments inject new driving force into CCRE's development.
Now we acquired land in the past 3 years. And in the past 3 years, altogether, there was more than 26 million or 27 million square meters of newly added land reserve. A lot was acquired through strategic transformation. So when you look at the new business segments, they, together with real estate, form a virtuous cycle.
So I would like to remind you at this point, so when we talk about CCRE, well, of course, today, we are announcing interim results for CCRE. Perhaps I have said too much, but I would like to remind you that when we think of CCRE, I hope that you can come to Henan and take a look. In fact, we are no longer a simple development model. So we are oriented around customers' needs in upgrading our strategy. So in fact, internally, we say that we are enhancing our mission. So this is a change that I would like to let you know.
In March -- well, since the results announcement in March, it has been 5 months already. In the past 5 months, I, as the majority shareholder of the company, have done 2 things, which I would like to report to you. First -- well, after some friendly and voluntary deliberation at the end of June, together with Kaida, that is our original second largest shareholder, reached a deal. My private company, [Joy Bright], acquired Kaida's shareholding, around 24% shareholding of 832. Now of course, both parties are voluntary in this deal, and both parties are happy. So Kaida and I are happy with this deal.
So in the past, well, we started cooperation with Kaida in 2006. It has been 13 years, so I would like to take this opportunity to express my thanks and pay tribute to Kaida. It is a very professionally run company. And before and after our IPO, Kaida, as the second largest shareholder, has given very good testimony to our IPO. So in 2008, our IPO process was very smooth as a result.
Those who have worked in investment banks for a long time will know what happened in 2008. That was the financial crisis and Lehman Brothers incident. So they happened in August 2008, and there was disruption in the market before that. And still, CCRE was successfully listed. We really have to thank Kaida's support and testimony. So I must thank Kaida for their help, support and guidance to the company and myself.
So I would like to report to you about this -- report to you this point because that is a move made by my private company and it has affected the shareholding structure of CCRE. Besides, my private company, in early July, acquired a reputable investment company in China, which wholly owns China Minsheng Drawin Technology Group Limited and it also owns 00726. It's a company, which specializes in prefabrication and construction. And in the industry, in fact, it owns 1,500 patents of technology, and there are 400-odd patents now being operated in the market.
So in the prefabrication and construction industry, this company, in terms of the number of patents owned, is leading. My private company acquires the company, and the intention is to offer more support and help to 832. As you know, in advanced countries like Japan, Europe and U.S., prefabricated construction accounts for over 70% of the total construction volume, in Japan, even 80%, 85%, a very high percentage.
Now prefabrication can solve 2 problems: first, quality. In China, you may know about the drawback of the real estate industry. 80% to 90% of the criticisms or negative comments are related to quality. That is because the prefabricated components still only account for a very small percentage, 20% or below on average. So we are in the initial stage only. Because of this, there are many defects and quality issues in the products.
Well, I realized this point long time ago. 15 or even 16 years ago, I went to Japan and Europe many times to take reference from their approach. Japan is the best in this regard.
In 2008, we formulated our residential property development plan, and so I have examined and made plans about this for more than 10 years. After identifying this opportunity, I finalized the deal within a short period of time. I used my private company to do the M&A for 00726. It has its own development strategy. It has been established for 5 years. It has a national layout. It is in more than 20 provinces and 40 cities. They have reached agreements with many local governments in China. So this is also a point I'd like to report to you.
In the past results announcement and all the way to today, it has been 5 months. So these 2 events happened. So I would like to take this opportunity to let you know, overall speaking, in the first half of the year, our company has grown amidst stability. At the last meeting, we said that we have a subsidiary, which attempted to move out of Henan, and it has been developing quite well. The name is Zhongyuan Jianye, and this year, its light assets business is mainly in county cities in Henan and some other cities.
This year, the plan is to exceed CNY 20 billion -- or CNY 23 billion. Last year, it did CNY 18 billion. So it is complementary in nature with the investment model of CCRE. So in other words, we have both light asset and heavy asset business models. So it is one part of our strategy upgrading.
The overall China real estate market is stable. Henan's urbanization is getting faster. If you refer to data of 2018, in Henan, the population is 109 million. We had already built our brand advantage, customer resources advantage. We'll continue to work hard to build our confidence in product and services. And in the past, of course, we have confidence in our culture, brand and strategy together with our confidence in our products and services. Then, in this way, I believe that we will continue to develop in a stable manner, and we can create more return for shareholders and investors. Thank you very much.
Unidentified Company Representative, 
Now may I invite Vinh to walk you through the PowerPoint presentation? Vinh, please.
Vinh Mai, Central China Real Estate Limited - Head of IR & CIO 
Good afternoon, ladies and gentlemen. Thank you for coming to our presentation. We'll just go to the first page due to the excellent speech by Chairman today, giving you an overview of where Central China is at.
Now if you look at the first half interim results, Page 5, you can see from there -- you've seen that transformation that Chairman's been talking about the last 3 years. Now you're seeing the fruit of that transformation in this interim result beginning.
You can see the revenue has increased by 90% in the first half of 2019, and you can see this booking revenue about CNY 9 billion. And that's up 90%, while attributable revenue from JCE is up 123% at CNY 1.9 billion. You can see from the result there, this is mainly driven by the increase in GFA delivery, increased by almost 103% to 1.37 million square meters. Recognized ASP, excluding carpark, increased by, you can see from that, 5.6% (sic) [5.9%] to RMB 5,747 per square meter. Gross profit increased also on -- increased on higher booking. You can see that's up almost 44% to CNY 2.47 billion, with a margin of about 27%.
EBITDA, as you can see from there, was up 70.4% to almost RMB 2.5 billion, and we achieved a net profit of RMB 768 million, up 33.8%. Net profit attributable to equity shareholders was up 19.6% to RMB 658 million. Very happy on behalf of the Board to declare an interim dividend of HKD 0.156 per share. Okay?
Next page, looking at operational overview, Page 6. You can see from there, first half contract sales from heavy asset increased by 9.2% to RMB 27.7 billion, achieved 43.6% of the full year target of CNY 63.5 billion. You can look at that, if you include the light asset, as you see from there, light asset project, where we also amounted to about CNY 11.9 billion and achieving a total contract sales under the Jianye brand of RMB 39.6 billion. And that's up 24.1%.
So moving on, you can see from that, in terms of GFA sold, heavy asset increased by 11% to 3.8 million square meters. And then contract sales from light asset, GFA sold from light asset was about 2.2 million -- 2.12 million in total. So in total, we achieved about 5.95 million square meters, which ranks Jianye -- or CCRE Central China ranked #13 in terms of GFA sold in China.
Now our market share, including light asset contract sales, has increased by 0.5 percentage point to 10.7% of market share. In terms of ASP, you can see from there, first half ASP in terms of heavy asset, we increased that -- sorry, slight decrease of 1.6% due to lower Zhengzhou contribution because of city mix. And then that was at RMB 7,233 per square meter.
Unrecognized contract sales for future booking has increased. You can see from that up 82% year-on-year to CNY 50.6 billion. And also, if you look -- also look -- when you look at the -- excluding the CNY 17.7 billion (sic) [CNY 19.7 billion] at the JCE -- attributable at JCE, and that's also up 110% year-on-year. So you can see that the earnings visibility from the next 2 to 3 years is very strong with the unbooking revenue there. Okay?
And as 30 of June, we successfully secured, signed up management contract in the light asset, 131 third-party projects of approximately 19.91 million square meters of GFA, with an estimated base fee revenue to be booked later on of RMB 4.08 billion.
Moving on. Again, financial highlights, you can see there. I won't repeat myself, but you can have a look. You can see there that the EBITDA has increased by 70.4% to almost RMB 2.5 billion. You can see from there, again, I said, basic EPS has also increased by 8.1% to RMB 0.24 on higher profit. I'll just leave that to you there to have a look.
Next page, Page 9, as I said, you can look on that profitability of recovering. We can see that from the low base of -- the low end of 2016, you can see full year '17, '18 and now '19, you can see that transformation now is coming to fruit, and you'll see a recovery there in terms of profitability. Okay?
Page 10, operating results. Again, you can see from that first half revenue and recognized property sales increased substantially as a result of the increase in recognized GFA and higher recognized ASP. In terms of the sales and GFA sold breakdown, you can see by that city there. Again, Zhengzhou projects amounted to about RMB 1 billion, contributing 12.8% out of the total revenue, lower than the first half of last year, 2018, with an average GP margin of 33.4%. While Tier 3, Tier 4 cities accounted for 79.8% (sic) [79.5%] of the total recognized sales with an average GP margin of 22.4%. County-level cities accounted for 7.7% of total recognized sales with an average GP margin of 18.4%.
Looking at the next -- at the hotel operation. You can see from there, hotel operation revenue increased by 12.9% year-on-year to RMB 149 million, with gross profit margin of 32%. Room revenue grew by 10.3% year-on-year to RMB 69.2 million, while F&B increasing, you can see there, for 14.9% year-on-year to RMB 80.3 million.
Average occupancy rate declined, slightly declined, you can see there, to 55% in the first half compared to 61% in the first half of 2018. This is mainly because we -- increase of the number of rooms availability as we launched 2 new hotel and -- 1 new hotel and 1 service apartment in Zhengzhou.
RevPAR decreased by 10.9% year-on-year to RMB 246 per room in the first half 2019 from RMB 276 per room in the first half 2018.
Net operating loss for the hotel was -- this year was a loss, was about a small loss, RMB 3.5 million in the first half with 4 of the 7 hotels achieving a positive operating profit. CapEx for hotel development first half was up 10.3% year-on-year to RMB 160 million. And again, first half net loss -- hotel net loss overall, net loss operation, hotel operation amounted to RMB 96 million -- sorry, RMB 98 million (sic) [RMB 95 million]. This is mainly due to depreciation of hotel assets. Okay?
Next page, Page 13 is a summary of the hotel metrics there, you can see from that, for your own perusal. Okay?
Next, light asset, quick summary of light asset project, Page 14. You can see from that, as I mentioned before, as at the end of June 2019, we've signed up 131 third-party projects. You can see there with a total GFA of 19.91 million square meters, which is up almost 20% of the -- from December of 2018.
As I mentioned before, with the fee -- as we say, this estimate fee is about CNY 4 billion that can be recognized over the next 3 to 4 years, so that's secure, very much recuring income from there. And then in the first half, you can see from the revenue, in terms of revenue from the light asset project model, we actually can -- we booked about RMB 404 million, which is up 62.2% from the previous year with a GP margin of 97%, so very highly profitable business, scalable and sustainable going forward. And we still have a target of this year of potentially reaching 150 projects by the end of 2019. Okay?
Moving on to next page with the cost analysis or the operating cost structure. You can see from that, in the first half, cost of sales as a percent of revenue increased by 8.7 percentage points to 72.7%. This is mainly due to different product mix. Land costs -- land acquisition cost as a percentage of revenue has increased to -- increased by 2.3 percentage points to 17.3% in the first half 2019. And then overall, you can see in the first half, SG&A -- total SG&A was up, increased to 5.5% from the previous year of around 4%, and that's because of the increased expansion in operation and projects. Okay?
Next page, Page 16, balance sheet. You can see from the balance sheet, achieved a very strong cash balance, you can see from that, at CNY 23.8 billion and it can cover 3.4x of short-term debt. Total debt increased by 30%. That's mainly because we issued a net issuance of USD 400 million in the first half of this year. Short-term debt increased by 31% to CNY 7 billion, and total shareholders' equity has increased by 5.6% to RMB 10.8 billion. And then we increased -- you can see from there, book value increased by 5.5% there, book value, to RMB 3.97 per share.
Okay. Moving on, key financial ratio. You can see from that, very strong -- asset turnover increased to 8.1% from 6.8% in the first half of 2018. Return on equity also increased to 7.3%, up from last year of 6.2% in the first half of 2018. And you see the gearing level. Our gearing level with -- very much improved. The gearing level with net debt-to-equity ratio, including restricted cash, sits at about 18.3%, while the net debt equity without the restricted cash sits at 60.5%, so it's decreased from last year as well. EBITDA or interest cover maintained about 2.8x in the first half, which is a healthy level, okay, and recovering.
Looking at the debt profile very quickly. You can see from that very diversified balance sheet again with 45% of debt is onshore and 55% of offshore; stable funding cost still around -- roughly around at 7.5%. And also in the first half, as I mentioned, we also redeemed USD 200 million of bonds of -- USD 200 million of the 8% senior note that was due in May 2019. And we still have an undrawn banking facility amounting to about RMB 24 billion.
Moving on with cash flow analysis. A very strong cash flow, you can see from that, very disciplined. We achieved a net positive net cash outflow -- sorry, net -- positive net cash inflow of CNY 5 billion in the first half, achieved based on a high cash collection ratio of 90.8% with total contract sales receipts, which is up about 14% year-on-year at CNY 25.1 billion. Maintained a very high cash balance, as I mentioned before; without [restricted cash] is about CNY 19.2 billion, and that's up 35.5%. Okay?
Moving on next, business operation quickly, contract sales, Page 21. You can see from that, as I mentioned before, the sales, we have achieved very strong contract sales in the first half, up -- you can see there up 9.2% to CNY 27.7 billion, achieving about 43.6% of the full year, achieved a sell-through rate of approximately 50%, slightly lower than the previous year in the first half, where were like 70%. And that's due to the second quarter market condition that was slightly softer due to all the geopolitical and trade war issues. Okay?
Now you can see from that, in the first half, we had CNY 54.7 billion of saleable resources to reach -- to achieve that CNY 27.7 billion of sales. ASP, first half, slightly decreased like I mentioned, and that's mainly due to the product mix.
Moving on, contract sale drivers, again, highly diversified across the -- in our province. You can see from there across 64 cities and 154 projects. You can see from that contract sales from Zhengzhou was about CNY 5 billion, accounting for 18% of the total first half. We're hopeful -- we expect that to increase in the second half. Tier 3, Tier 4 accounted for 50% of sales, while county level accounted for about 32% of sales. Okay?
I'll just move on from that. Inventory analysis, again, very, very healthy inventory when you look at that. Completed [held for sales] decreased by 2% year-on-year to only CNY 3.5 billion. Total saleable inventory GFA increased slightly to -- increased to 3.4 million square meters, amounting to about CNY 27.7 billion of saleable inventory there.
Saleable inventory in Zhengzhou accounted for about -- decreased by 12% to about CNY 7.7 billion, you can see from that, while 79% of saleable inventories are residential property and 4% is carparks, very healthy inventory. 41% of the inventory is aged within 1 year. And then overall, 69% of inventory is aged within 3 years. Okay?
Customer distribution, next page, Page 24. Who were the buyers again? Very consistent over years. Again, mostly all our buyers are mainly end user demand and with about 87%, and with -- 96% is at local buyers. So I'll leave it as it is due to time constraint.
Page 26, in terms of land acquisition strategy in the first half, in the first half, you can say we acquired about 4.6 million square meters of new land banking at an average cost of about RMB 2,176 per square meter. And you can see the total land bank for new development is approximately 46 million -- 47.6 million square meters with an average land cost of about RMB 1,180 per square meter. Okay?
Overall, you can see from that, our land act acquisition expenditure was about CNY 9.8 billion, which has accounted for about 35% of the first year -- for 35% of the first year contract sales of CNY 27.7 billion, so very prudent in terms of our land acquisition strategy, okay. And overall, in the first half, 38% of the new land was acquired for equity cooperation and 62% through land auction. Okay?
Page 27 shows you overall the summary of the land reserve. I'll leave that for you. You can see from there, as Chairman said, we are strategically located in 95 cities, 95 cities across 18 prefecture cities and 77 county-level cities; and we aim to move beyond the 100 cities there in Henan this coming year, okay?
Moving on, contract sales for the second half and the target for the rest of the year. You can see from there our target still remains the same at CNY 63.5 billion for 2019. Up to 7 months now, you can see we've already hit 49% of the sales target at CNY 30.8 billion contract sales in terms of heavy asset. Overall, second half, we estimate the total saleable resource for second half is approximately about CNY 73.3 billion for second half, including CNY 27.7 billion of inventory and CNY 45.6 billion for new launches in the second half. To achieve the target, we need to do a sell-through rate of 51%.
Page 30 is the sales plan. You can see from there, very diversified in terms of cities and projects for the next -- for the second half. And we expect contribution from Zhengzhou will be about 30%, so as I mentioned before, first half was about 70%. Second half, we're expecting more contribution from Zhengzhou. Okay?
Development plan, Page 31, you can see from there commencement. You can see from that, GFA, we expect commencement in the second half of about 68 projects with GFA of approximately 6.78 million square meters and plan to launch about 97 (sic)  projects with GFA of about 5.96 million square meters and aim to deliver 41 projects with GFA of about 3.74 million square meters. So we expect this development plan to support the sales and our full year result.
Next page, 32, shows you the main projects. I leave that for you to -- for your own viewing. And Page 33 shows the major project launches in the coming half there. Okay.
Quickly onto cash flow, Page 34. Second half cash flow, you can see from there, continue on to adopt a very prudent cash flow management there. We estimate net profit cash inflow for the full year by end of the year of about RMB 4.98 billion end of the year. Second half cash flow inflow should be balanced. You can see from there, second half land acquisition expenditure is expected at about CNY 5.8 billion with total unpaid land premium of approximately about, I think, CNY 480 million or so. Okay.
Construction expenditure for the second half is about CNY 12.12 billion (sic) [CNY 12.07 billion], which is due to higher commencement; estimate cash balance of about CNY 19.8 billion by year-end. That's without restricted cash. Okay.
That's all. Macro overview, you can see from there, in the first half, you can see from that, Henan property GDP was very -- still very moderate growth, growing at real GDP growth of about 7.7%, relative 1.8% higher than the national rate. In terms of the market itself, Henan market reached 57% -- 57 million square meters sold, up 7.7% compared to national growth rate of GFA growth that was only minus 1.8%. So you can see there strong contract sales across all major cities of Henan, I'll leave there for you to look.
In terms of sales value, Page 37, you see from there Henan grew by 20% year-on-year to CNY 368 billion in terms of contract sales, represent about 5.2% of the overall China market versus the growth rate of about 5.6% nationally. So Henan's still very -- growing, very strong versus nationally.
In terms of ASP, you can see there, Henan ASP grew by 11.5% to RMB 6,409 per square meter versus the national rate ASP of about RMB 9,329 per square meter, anyway, you can see from that.
Overall, Zhengzhou again grew by 22.8% year-on-year in terms of contract sales value and representing about 40% of the Henan market. So again, Zhengzhou is still very important market overall.
Page 38, again, this page, I always show this page. Again, signify the strong market growth potential for Henan you can see from that. As Chairman mentioned before, we have a population of 109 million people with very rising disposable income per capita. You can see from the first half, it reached -- was up 8.6% year-on-year reaching RMB 11,145 per person. So you can see from there also rising urbanization rate only at around 52% at the end of 2018. So it's due, a lot of urbanization to continue. And really important one is it has a -- fifth largest economy in China with approximately about USD 350 billion and account for about 5.4% of China's total GDP. And also surprisingly is that the property market in Henan is the second largest by GFA, representing about 7.9% of China's total property GFA sold. So you can see from that, it's a high-volume market, which we will aim to capitalize on in the coming years.
Okay. Overall, I'll leave that to that because of time constraint. Please feel free to ask your questions, and we will answer it. Thank you.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]