Aoyuan Healthys Revenue and Net Profit Increased by Approximately 46% and 108% Respectively in 2019

• Continue to pursue asset-light operations and focus on general health & wellness industry
• Steady development on the three core businesses

Financial Performance:

Operational & Development Highlights:

Rapid growth in scale expansion in property management segment

• Revenue from property management service segment amounted to RMB646.4 million with a growth rate of 42.6%, accounting for approximately 71.8% of the total revenue. Gross profit margin was 34.6%.
• As at 31 December 2019, the Group had a total gross floor area (GFA) under management of approximately 15.1 million sq.m., of which the Group achieved an increase in the GFA under management of 4.7 million sq.m. under the property management service segment, representing a year-on-year (y-o-y) increase of 45.2%.
• Revenue from Southern China region accounted for 62.2% of the total revenue; the Group will continue to benefit from policy for Guangdong-Hong Kong-Macao Greater Bay Area.

Significant growth in commercial operational segment

• Segment Revenue from commercial operational services amounted to RMB254.4 million with an annual growth rate of 53.6%, accounting for approximately 28.2% of the total revenue. Gross profit margin was 44.5%.
• As of 31 December 2019, the Group was contracted to provide commercial operational services to 37 shopping malls, which together has a contracted GFA of approximately 1.8 million square metre (sq.m.). In which, contracts provided for post-opening commercial operation and management services to 28 shopping malls represented a contracted GFA of approximately 1.5 million sq.m..
• The Group achieved an increase in aggregate contracted GFA of 493,000 sq.m. under the commercial operational service segment, representing a y-o-y growth of 38.8%. During the Year, the Group had a total of 10 newly opened shopping malls.

Broad application of the general health and wellness business in the two ecosystems of “lives in properties and commercial complex”

• Healthcare business was officially launched as a strategic business. The Group set up a dedicated team composed of well-known healthcare experts in the industry and formulated the development strategy of healthcare business for the next three years. The Group also officially launched two community healthcare pilot projects in Guangzhou Panyu Jinye Villa Garden and Guangzhou Luogang Aoyuan Plaza.
• In respect of traditional Chinese medicine (TCM) business, the Group set up two TCM centres in Guangzhou Panyu Aoyuan Healthcare Plaza and Guangzhou Luogang Aoyuan, and has a team of well-known TCM practitioners.
• In respect of medical beauty, the Group introduced international medical team, modern medical system and service concepts for medical beauty business. The Group also established medical beauty brand MS ARORA and cosmetics brand ARORA LAB.

CHINA – Media OutReach – 25 March 2020 – Aoyuan Healthy Life Group Company Limited (“Aoyuan Healthy” or the “Group”; SEHK stock code: 3662), is pleased to announce its annual results for the year ended 31 December 2019 (the “Year”).

For the year ended 31 December 2019, the Group’s total revenue was RMB900.8 million, representing an increase of 45.6% as compared to that in 2018. The increase was mainly due to the rapid growth in GFA under management and commercial operational services. Revenue generated from property management services and commercial operational services contributed to 71.8% and 28.2% of total revenue, respectively.

During the Year, the Group’s gross profit was approximately RMB337.1 million, representing an increase of approximately 61.4% as compared to that in 2018. The gross profit margin was 37.4% which remained higher than average. The net profit was approximately RMB163.1 million in 2019, representing an increase of approximately 108.3%. Return on equity was approximately 33.5%. Basic earnings per share was RMB23.78 cents. The Board recommends the payment of final dividend of 9.0 RMB cents per share for 2019.

Property Management Services
The Group provided property management services to 94 properties in 38 cities across 13 provinces, municipalities, and autonomous regions in the PRC with a total GFA under management of approximately 15.1 million sq.m.. The Group achieved an increase in the GFA under management of 4.7 million sq.m. under the property management service segment, representing a y-o-y growth of 45.2%.

The revenue generated from property management services segment increased for about 42.6%, of which the increase in the revenue generated from property management services was approximately 27.5%, and the increase in revenue generated from sales assistance services was approximately 74.8%.

Commercial Operational Services
The Group was contracted to provide commercial operational services to 37 shopping malls with a contracted GFA of approximately 1.8 million sq.m.. Among them, contracts provided for post-opening commercial operation and management services to 28 shopping malls represented a contracted GFA of approximately 1.5 million sq.m.. During the Year, the Group achieved an increase in aggregate contracted GFA of 493,000 sq.m. under commercial operational service segment, representing a y-o-y growth of 38.8%.

As of 31 December 2019, the Group provided commercial operational services to 17 shopping malls in operation in 11 cities in the PRC, with a total GFA under management of approximately 775,000 sq.m.. During the Year, the Group had a total of 10 newly opened shopping malls.

The increase of revenue generated from commercial operational services segment was approximately 53.6%, mainly due to the increase in revenue generated from commercial operation and management services of approximately 56.9% and the increase in revenue generated from market positioning and business tenant sourcing services of approximately 48.4%.

General Health and Wellness Business
In respect of healthcare business, as a strategic business officially launched at the end of the Year, the Group set up a dedicated team composed of well-known healthcare experts in the industry and formulated the development strategy of healthcare business for the next three years which proposed the “1+3” model and “1+1+N” healthcare system strategy, namely: to generate synergy with elder care at home, at institution, and during sojourn with community elder care as the foundation.

At the end of the Year, the Group also officially launched two community healthcare pilot projects in Guangzhou Panyu Jinye Villa Garden and Guangzhou Luogang Aoyuan Plaza, fully explore the quality resources of the cultural tourism industry under China Aoyuan Group Limited (“China Aoyuan”, SEHK stock code: 3883″) , so as to open up a new life of living, healthcare and vacation experience for the elderly.

In respect of TCM business, the Group set up two TCM centres in Guangzhou Panyu Aoyuan Healthcare Plaza and Guangzhou Luogang Aoyuan Plaza under its management. The Group had a team of well-known TCM practitioners, providing professional, convenient and distinctive TCM services and sincerely serving the community and surrounding population.

In respect of medical beauty, the Group introduced international medical team, modern medical system and service concepts. With rich experience of our established management team, the Group created a “light medical beauty” concept of “professional medical beauty is all around you” for medical beauty business, and established the medical beauty brand MS ARORA and cosmetics brand ARORA LAB. The Group set up three medical beauty clinics during the Year, which provide skincare treatments, micro cosmetics, and plastic surgeries services, and formed a medical system with Chinese and Korean features by integrating Korean medical elements and domestic medical beauty market features, to provide better medical beauty services for domestic consumers. Meanwhile, the Group jointly developed five new cosmetics products with the well-known Korean cosmetics research and development company “Cosmax Group” during the Year.

Outlook
In mid-late January 2020, COVID-2019 broke out in the PRC. The Group responded quickly to this nationwide battle, and established the “Coronavirus Emergency Management Office” for guiding epidemic prevention. Always putting the lives and health of the owners, merchants, customers, and employees as the top priority, the Group actively and comprehensively took all-round measures from resource supply, disinfection and protection, publicity, to closed management. Communities is the main battle field and property management is the main force for epidemic prevention and control.

The Group implemented joint prevention and control measures, built a tight line of defense for group prevention and controlled, strictly controlled community entry and exit, and executed access control and epidemic prevention. Besides, the Group provided owners with two types of personalised value-added service models: “Yue Service” and “Healthy Life Service”, and launched group purchase service of scarce protective materials such as alcohol and organic agricultural by-products to ease owners’ worries.

As a listed company, the Group also takes up corporate social responsibility. In addition to cooperating with China Aoyuan Group in the donation of protective materials, the Group also overcomes difficulties together with tenants through various preferential policies such as rent reduction and exemption. Meanwhile, the Group has jointly launched a free online consultation service for COVID-2019 with chunyuyisheng.com. During the epidemic, the two personalised value-added service models provided by property management have been effectively examined and affirmed by the owners.

In the future, the Group will continue to implement and improve the models. As the epidemic still prevails, the Group will continue to adhere to the “customer-oriented service” principle and mobilise various resources for prevention. In a complex and volatile market with diverse and competitive situation, the Group has always followed a sound financial management strategy, maintained low-cost and multi-channel financing advantages, as well as reasonable and safe debt levels.

Property Management
In respect of property management, the continued trend of urban development and consumption upgrade will support the long-term steady growth of the property management industry in 2020. In light of increasing competition in the industry, the Group provides property management services for most of the property projects developed by China Aoyuan Group, while achieving stable income contribution, expansion is the only way for property management to increase market competitiveness.

The Group will leverage on the edge of the listing platform to deepen its strategic layout and focus on the coordinated development with other businesses and will also further expand the scale of property management through its own expansion, investment, mergers and acquisitions, and joint investment and cooperation. Besides, multiple business formats will be operated to complete strategy of the entire industry chain of the property management industry. Through asset management, it is developing a commercial and office property market with great potential. The Group will further strengthen its property diversification operations.

Commercial Operation
With the consumption upgrade and rapid expansion of the consumer service industry, consumers are having higher expectation on shopping experience and service quality, thus the demand for professional business operation services is increasing. The Group provides commercial operation services for two major brands of China Aoyuan Group, i.e. “Aoyuan Plaza” and “Aoyuan City Plaza”, and also extended the service to third parties. The Group’s extensive experience in the property management industry, helps provide quality commercial operation and management services after the project operation starts, and generates synergy of multiple businesses. The Group’s past contracted projects will be successively launched in Guangdong-Hong Kong-Macao Greater Bay Area, Anhui, Jiangxi, and other areas.

In response to the business development, changes in the market as well as the impact brought by the epidemic, the Group will focus on enhancing its operation quality, and the shopping malls under operation, and continuously improve its operation capability to increase the revenue on projects. The Group will also expand quality projects in a prudent manner. Leveraging on the advantages in the general health and wellness business and industrial integration, the Group has explored a new asset-light business model. The Group provides asset-light services (medical beauty as well as healthcare services and products) to the industrial zone owned by its service targets through the ways of business and management consultation and business development and operation service, and property management service.

General Health and Wellness Business
As customers’ needs are constantly evolving, the Group will continue to provide general health and wellness service to meet customers’ needs and enhance their experience, thereby achieving future growth. As such, the Group will continue to expand the TCM healthcare business and medical beauty business to cater to eldercare policies, build online platform for community healthcare management and improve community service quality and customer satisfaction. In addition, the Group is actively exploring strategic alliance, investment, and acquisition opportunities, which can provide services complementary to the property management and commercial operational services of the Group.

Project in Fengxian District, Shanghai
Aoyuan Healthy actively extended its services to the healthcare and medical beauty industries to enhance the service capacity and quality. It is expected that the Group’s existing businesses will be upgraded and integrated, providing a comprehensive healthcare services platform for customers. In December 2019, the Group won a bid for a land plot in Fengxian District, Shanghai.

The Group will continue to pursue its asset-light business model while jointly developing the project with China Aoyuan and extending the scope of its services to the medical beauty industry. Fengxian District is located in the industrial zone in Shanghai, dubbed as the “Oriental Beauty Valley”. The industrial zone targets to stimulate the development of healthcare and beauty industry, gathering many well-known medical beauty and healthcare enterprises, attracting talents in the industry and encourage the integration of industry resources.

The Group will conduct cooperation with China Aoyuan on the project. China Aoyuan shall be responsible for the overall development, construction, operation and management of the project and will be entitled to 70% of the economic benefit arising from the project. Meanwhile, Aoyuan Healthy can continue to pursue its asset-light business model and be entitled to 30% of the economic benefit arising from the project, broadening Aoyuan Healthy’s income source.

Mr. Guo Zining, Chairman of the Board and Non- Executive Director said, “In the future, adhering to the core values of “efficiency, integrity, responsibility, and win-win”, we will not only pay close attention to the perspective and rules of the capital market with an open mind, but also polish the increasingly clear multi-dimensional business structure with the brand concept of “creating the joy of life” while striking a balance between vision and practice.

The Group will continue to consolidate its position in the property management service and commercial operation service industries, and expand cooperation with quality independent third parties, actively adjust and enrich its management portfolio, to enhance competitiveness, and leverage on the unique general health and wellness industry model to build an all-round industry chain strategy with property management and commercial operational service, and seize market opportunities to reach a higher level.

Meanwhile, leveraging on the innovative development model of “health + technology, health + ecosystem”, the Group will actively develop the general health and wellness industry, explore new business opportunities in the industries of community elderly care and health management. The Group will continue to expand its business scope and strive to become a leading healthy life service group in the PRC.”

About Aoyuan Healthy Life Group Company Limited
Aoyuan Healthy Life Group Company Limited is a reputable property management service and commercial property operation service provider in the PRC offering diverse property management services for residential and non-residential properties and a full range of commercial property operation services for shopping malls, with a focus on mid-range and high-end properties and mixed-use properties. The Group is also actively expanding its value-added services to enhance customer satisfaction.