Good afternoon, everyone. My name is Wu Yi. Allow me to welcome you to the 2023 interim results of China Overseas Land & Investment Limited. We have with us today our Chairman, Mr. Yan Jianguo, Vice Chairman and Chief Architect, Mr. Luo Liang, our CEO, Mr. Zhang Zhichao, Vice President, Mr. Guo Guanghui, our CFO, Mr. Eddie Lui. The presentation comes in three parts. First, we will review our interim results highlights, and then we'll move on to the business and management review. We will talk through our outlook and strategy and have a session to exchange ideas. You can raise questions later on. Mr. Guo, please present our interim results.
Good afternoon, dear analysts and investors. I would like to report to you the interim results. I am going to divide my presentation into three parts.
We will first look at our interim results highlights, and then business and management situation. Finally, we'll go through our outlook and strategy. First of all, our 2023 interim results highlights. In the first half, China's economy faced new difficulties and challenge. The domestic demand is insufficient, along with a complex and severe external environment. The real estate market has been on a downward trend after a brief recovery. Despite the market downturn, the group responded proactively to the various challenges, executed lean management, and made steady progress to achieve high quality development and long-term success. The result highlights include the following aspects: First, the sales market share continued to increase, further enhancing our industry position.
In the first half, contracted sales of the group series companies increased by 30.1% to CNY 180.2 billion, ranking 3 and 1 in the industry in terms of gross sales and attributable sales, respectively. Market share increased 0.76 percentage points to 2.86%. Second, the group maintained a leading position in land premium amount to drive sustainable development. The group strategically acquired quality land bank. In the first half, group series of companies' total land premium reached CNY 41.4 billion, among which the land premium of the group reached CNY 37.9 billion. The group further focused on high-tier cities, with new sellable resources in first-tier cities, accounting for 44.7%.
Third, we exhibited financial stability with 58.32% of liability-to-asset ratio, 37.74% of net gearing attributable to shareholders, 3.54% of average borrowing cost, and CNY 114.2 billion of cash on hand. Among the volatile fluctuations in the real estate industry, the advantage and stability of our financial resources are more outstanding. Fourth, we maintain a leading position in value creation. While industry's profit margin is under pressure, we bolstered and improved the cost and advantages and refined management. SG&A, as percentage of revenue, was 3.8%, remaining low in the industry. We realized core net profit margin attributable to shareholders of 15.5%, ranging highest in the industry. Core net profit attributable to shareholders, CNY 13.8 billion, maintaining an industry-leading amount.
Second part reviews the business and operations of the first half. In terms of contracted sales, facing a weak demand and declining market, the group looked shrewdly at the market and operated prudently and steadily. The group realized a growth in market share, and its industry position was strengthened against the market headwinds. In the first half, contracted sales of the group series of companies achieved steady growth, rising 30.1% to CNY 180.2 billion, with market share up 0.76 percentage points to 2.86%. Gross sales ranking and attributable sales ranking of the group series of companies were number three and number one in the industry. In terms of cash collection, we focused on cash flow management to strengthen cash collection.
Overall cash collection rate increased 5.7 percentage points to 93.7%, of which cash collection rate in domestic market increased 14.8 basis points to 109.9%, maintaining a leading position in the sales quality. The group had competitive advantage in sales, focusing on key cities. During the period, we continued to focus on key cities and prime locations, with stable sales contributions from first-tier cities, including Hong Kong, and major second-tier cities totaling CNY 107.8 billion, accounting for 60%. Among them, Beijing's contracted sales amounted to CNY 35.9 billion, continuously ranking first in terms of market share.... The group series of company furthered our market penetration, with 33 cities ranking top three in terms of market share, an increase of three compared to 2022.
In terms of land investment, in the first half, the supply and transaction of land market were at a low level, and there was a significant divergent trend between cities and sectors. The competition in the land market for residential purpose in major cities was fierce. The group continued to invest, and its land premium amount was at a leading industry level, with a reasonable strategic positioning of quality land bank. During the year, total new land premium of the group reached CNY 41.4 billion, corresponding sellable resources, CNY 71.7 billion. Our group, excluding COGO, newly acquired 13 land parcels with a land premium of CNY 37.9 billion, corresponding sellable resources, CNY 64.2 billion. 10 were acquired in the first- tier and major second- tier cities, accounting for 70% in terms of land premium and 79% in terms of sellable resources.
More than half of the newly acquired land was obtained at zero or low premium with reasonable returns. We remained active in the non-public market and acquired several quality land parcels through multiple channels. We will continue to actively seek opportunities for urban redevelopment and M&A projects in the second half. We maintained a sizable and quality land bank. At the end of June of 2023, total land bank was 60.96 million sq m , corresponding sellable resources of CNY 1.09 trillion, of which the group series of companies' total land bank, excluding COGO, was 39.17 million sq m , with attributable land bank of 32.95 million sq m . We had a quality land bank with focus on major cities.
The group had land bank, excluding COGO, in first-tier cities, including Hong Kong, and major second-tier cities at 27.6 million sq m , accounting for 81% of the total sellable resources. The group adhered to customer orientation, continued to create excellent products, and provide quality services. In terms of products, we continue to strengthen our product competitiveness and create excellent products. We tailored product design to each city to meet the differentiated requirements of customers to strengthen our competitiveness. In the meantime, we increased efforts in decarbonization to create low-carbon products. We have obtained a cumulative 296 patents in innovative green building technology to create excellent products. In terms of services, we continue to be customer-oriented and provide quality services. We delivered 26,000 residential units with a 100% on-time delivery rate, demonstrating our strength in delivery.
We adhere to customer orientation and customer caring, and timely responded to their needs. With the property market in a downturn and the industry's profit margin under pressure, we succeeded in refining professional management, as well as continuously reduced cost and increased efficiency, strengthening the cost and advantage. In the first half, net profit margin attributable to shareholders was 15.5%, gross margin 22.6%, maintaining leading value creation capability. We announced interim dividend of HK$0.35. Dividend accounted to 24.3% of core net profit attributable to shareholders. 27.8% of core net profit, including net foreign exchange gains and losses, creating continued returns for the shareholders. During the period, our SG&A as percentage of revenue was 3.8%, with average borrowing of 3.54%, maintaining at low level in the industry.
In terms of financial position, the group upheld its robust financial position, maintained low liability asset level and optimal debt structure. By the end of June, excluding pre-sales proceeds, the liability to asset ratio was 51.21%, net gearing 35.78%. After subtracting the pre-sales proceeds of properties, the cash to short-term debt 1.67 times, remaining inside green category, and all metrics stayed in excellent levels. Residential properties had no off-balance-sheet financing and perpetual bonds, so as to maintain optimal debt structure. Cash on hand, CNY 114.2 billion, accounting for 12.4% of total asset. We are well capitalized to capture market opportunities and support our momentum. Offshore financing interest rate remain high. We continue to optimize our financing structure.
By the end of the period, our renminbi debt as percentage of total increased one percentage point to 63.6%. Fixed rate debt as percentage of the total increased to 50.3% compared to the end of 2022, demonstrating financing advantages. Under the circumstances of frequent occurrence of credit risk in the industry, we had the highest credit ratings and smooth onshore and offshore financing channels. We continue to exert our financial advantages, and the ratings of the group by Fitch, Moody's, S&P Global, and Lianhe remained unchanged, with stable outlook. In terms of unbooked pre-sales, at the end of June 2023, group series of companies unbooked pre-sales was CNY 294.2 billion, up 19.9% compared to the end of 2022.
The Group's series of companies, excluding COGO, attributable unbooked pre-sales was CNY 226.4 billion, up 31% compared to the end of 2022. Unbooked pre-sales remained stable and will be booked gradually, bringing positive impact to secure the revenue and profit of the Group. We hold steadfast to the development of commercial property. Revenue from commercial properties increased 11.3% year-on-year to CNY 2.95 billion, up 18.7% year-on-year, excluding the rental relief. Revenue from commercial properties, including JVs, increased 12.1% year-on-year to CNY 3.25 billion. In the first half, 10 new projects of the Group's series of companies were launched with GFA of 730,000 sq m, among which four were shopping malls, accounting for 56% of the total area of new projects.
As at the end of June 2023, GFA owned by the group series of companies was 7.32 million sq m . The group also expanded asset-light business to demonstrate a competitive advantage of asset management capability. By the end of the period, asset-light business reached 1.15 million sq m , accounting for 13.6% of total managed area. We focused on asset returns to ensure high operating efficiency, refined our asset management capabilities, and strengthened our competitiveness of its dual-focused business. Office building business remained steady, with operating efficiency at a leading position. Accumulative GFA of office building reached 540,000 sq m , up 11% year-on-year. Cornerstone tenants accounted for 42% of the total area. Mature projects exhibited stable performance, with occupancy rate of 89.5% and gross profit margin at 72.5%.
Shopping mall business enjoyed strong growth momentum, with an occupancy rate of mature projects of 97.8%. During the period, four new projects were launched as expected. Operational management enhancement and the opening of new projects jointly stimulated a growth of customer traffic and significant increase of sales. In the first half, overall sales of shopping malls increased by 59%, and sales of same store increased by 31%. The group accelerates the launch of new projects. Ten were launched in the first half, and another 10 will be launched in the second half, corresponding GFA of 1.42 million sq m to be in operation in 2023, sustaining growth of commercial revenue. Meanwhile, the group continued to expand the value of asset management business.
Tiexiang Temple Waterfront , Chengdu, has become a new landmark for the city, and the brand influence is further enhanced with newly signed external asset-light projects of 220,000 sq m in the first half, and cooperation intention of 520,000 sq m , injecting new momentum into the revenue growth. The group firmly adhered to sustainability strategy of four excellences, with high recognition from international authoritative institutions and the capital markets on the group's ESG achievements. We've been a constituent member of the Hang Seng Corporate Sustainability Index and the FTSE4Good Index for 13 and 7 consecutive years, respectively, and scored 90 in Refinitiv, ranking world's number one among 499 developers. The group maintained a leading position in the ESG rating of Sustainalytics and Wind.
In terms of environment, we proactively responded to the 30/60 decarbonization targets set by China and set COLI's decarbonization targets of reducing at least 30% Scope 1 and 2 carbon emissions intensity per unit area by 2030, and striving to achieve carbon neutrality by 2060. All newly built, fully fitted projects met at least 1-star green building standard in the first half. There were 584 green certified projects in total, with more than 100 million sq m certified GFA. We continue to strengthen climate risk management and complete climate scenario analysis in accordance with TCFD framework. In terms of social responsibility, we value stakeholders, including employees, customers, partners, and society, and kept corporate social responsibility in mind. In the first half, employee satisfaction was 87 points.
We attached great importance to the occupational health and safety of our employees and obtained ISO 45001:2018 Occupational Health and Safety Management System. In terms of corporate governance, we established ESG working leadership and decarbonization working leadership to facilitate decarbonization and sustainable development of the group. The third part is outlook and strategy.... China's economy has enormous development, resilience, and potential, and the fundamental trend of long-term improvement has not changed, which will provide strong support for the long-term prosperity of the real estate industry. Central government has recognized the significant changes in the supply-demand relationship of the real estate market, and has explicitly stated that it will adjust and optimize real estate policies to better meet the housing needs of residents for both essential improved housing, promoting stable and healthy development of the real estate market.
The group remains confident that the market will stabilize and firm up, with more than adequate financial capacity to handle market volatility risk and solid resources to seize opportunities arising from market adjustments. The group practices an integrated strategy that seeks to overcome every challenge and capitalize on every opportunity in balanced pursuit of overall goals. In the first half, the market fluctuated and declined. Uncertainties increased. We actively responded to various challenges with industry-leading sales and profitability, continuing to create value for our shareholders. In the shorter term, the property market is bottoming up, facing both challenges and opportunities. In the second half of the year, the group will strive to make steady progress, and the targets for 2023 remain unchanged. So that's all for my presentation. Thank you very much.
Thank you, Mr. Guo. Now, Mr. Yan will have a brief exchange with you.
Good afternoon, dear analysts. Welcome to China Overseas 2023 interim financial results. In the first half, our contracted sales increased by 30%. Against the negative trend, we further expanded our market share. Core net profit attributable to shareholders, CNY 13.82 billion, leading the industry. Core net profit margin attributable to shareholders, 15.5%, up from the whole of last year. Core net profit margin continued to remain in the highest range in the industry. At the same time of achieving this operating performance in the first half, excluding COGO, the company invested and purchased land of CNY 37.9 billion. New value of goods, CNY 64.2 billion. Investment and purchase amount of land ranked among the top three in the industry.
We also achieved positive operating cash flow of CNY 33.7 billion, repaid more than CNY 40 billion in advance for our debt. We continue to maintain most stable financial situation with abundant cash. Cash on hand by the end of June, CNY 114.2 billion. Ratio of cash to total assets, more than 10%. Asset-liability ratio, 58.3%. Net gearing ratio, 37.7%, remaining inside the green category. Real estate market is still in the downward process, good and bad factors intertwined. The situation is complicated, but we want to remain unchanged in a number of things. First, relationship between supply and demand in real estate market has undergone significant changes. What is unchanged is that real estate is still a large and pillar industry.
First half of the year, we saw rapid growth coming to an end, and the scale of the second half, it has been shrinking. But it's still a big market and big industry of more than CNY 10 trillion, and it is a pillar industry of our national economy. So we need to continue to adapt to the new situation and major changes, and central government clearly needs to adjust and optimize real estate policy in a timely manner, make good use of policy to better meet the rigid and improved housing needs of residents, and promote steady and healthy development of real estate market. We are confident about this and are long-term. Secondly, in the turning period of this, real estate market, uncertainty is increasing. The market is changing, but what remains unchanged in our high-quality development strategy of seeking progress
We were founded in 1979, with the longest development history of domestic real estate enterprises. We are the only experienced going through three big economic crisis and industry cycle transformation, including the 1997 financial crisis, 2008 subprime crisis, and also the current transitional period. Under the impact of such economic crisis, we continue to grow. In the current round of industry reshuffling, we continue to be steady. Our market share and industry status continuously improved. As you may know, over the past 20 years, our asset liability ratio has been controlled at about 60%. Net lending ratio, about 40%. Debt ratio has been maintained the lowest among leading players. Cash on hand to total assets been maintained at more than 10%. High-quality development of seeking progress while maintaining stability, has become the key label that differentiates our group from our competitors.
We will continue to believe in long-term development. We are not radical when things are going well, not too conservative when things are hitting its bottom, and we will continue to pursue quality growth, pay more attention to creation of value for our customers, shareholders, and our society... We will maintain a steady and prudent financial level, actively seek development, actively prevent risks, focusing both on the offensive and defensive, constantly improving our market share to continue to lead the industry. We're confident that we can have improved dividends in the second half. Third, the second half is still changing, and our full year goal of stable sales and profit growth remains unchanged. Our confidence to win over the market comes from the sufficiency of our goods, as well as the main quantity of our products distributed in a core city of the different capital advantages.
We have good financing cost. In the second half, we'll increase investment in core cities, actively seize M&A opportunities, and ensure sustainable development of the company while seeking progress. Thank you very much.
Thank you, Mr. Yan. Now, we are going to proceed to the Q&A session. You can leave your questions online or over the telephone call. Please do not ask more than two questions. Let's bring in the first question. Please press star one if you would like to ask a question. First question from Mr. Zhang Yu.
Thank you. Good afternoon, I'm Eric. I'm quite touched by the results. I remember Mr. Yan has been talking about your development strategies, and you focused on steady growth and progress. When it comes to the market situation, perhaps we don't have very in-depth understanding. We've seen a lot of restructuring and reshuffling in recent years.
So I'm given the opportunity to raise the first question. I want to first congratulate for your very solid performance in the first half. I think that it's because of the high level of execution capability of your team. I have two questions. First of all, it is about policies and market. Recently, the policies have gone through some major changes in terms of supervision of the market or for longer term development. So I would like to ask you, based on such policies, do you have any judgment for the future? How would such policies affect the market? What are your expectations? And your sales target, the growth for this year was set at 20%, which represents the highest in the market, and you have sustained very good growth in the first half.
So looking at the current trends, in terms of your sales target, how much of it can be completed? Do you have any new sharing? Second question, land acquisition and the speed. I believe you have certain expectation in terms of growth and demand. We need to continue to replenish the land bank with quality land parcels. I have seen some very, highly competitive auctions for second-tier cities. You mentioned in the second half, you will focus on M&A opportunities. So I would like to ask you, in terms of land replenishment and also open auction and also M&A opportunities, can you share some more specific targets or strategies? Thank you.
Thank you, Eric. Concerning the first question about policies on the market, I will take that, and then I will ask Mr. Zhang to take the second question.
So policies on the market. Recently, as we all know, the central authority, on the 24th of July, they issued some new thinking. We are all observing what's happening in various cities. People are doing a lot of research on the policies. And Mr. Guo, in his report, already talked about projections and our relevant strategies. Basically, we feel that the market, we have confidence that it will stabilize, and there are two factors involved. Mr. Guo already mentioned them. First of all, it depends on the macro situation and also industry policies. On the macro level, when it comes to the Chinese economy, we understand it's highly resilient. We're very confident about that. The Chinese economy will stabilize, and it will proceed to a better path of development. Secondly, about policies. Everyone is researching into that. We all want the real estate market to stabilize.
So we believe the overall market in the second half, things will stabilize further, so things will look brighter. Land acquisition, I will ask Mr. Zhang to respond.
I should say, the first half of the year, which is disclosed, we have obtained 13 land parcels, representing 44% of total for whole year figure. We have been following up on land supply plans covering 18 cities. We are talking about 36% of the full-year supply, which means there are more investment opportunities in the second half. And in the first half, we have looked at our major competitors' investment strategies. They may become homogenized. So in such situation, in terms of our competitors, what land they are acquiring, the quality of such land parcels, and also when things recover further in the market, people have high level of confidence.
In the second half, the popular cities and popular locations, I think competition will become even more fierce. People will become even more aggressive. If you look at our competitors' performance in the recent months, people are becoming more and more rational. We believe there are better investment opportunities in the second half. In terms of our policy and strategies, we'll continue to focus on three major points: high-tier cities, premium locations, and quality land parcels. In the first half, land we acquired enjoy very high quality level. About 80% of our acquired land parcels were located in first- and second-tier cities, and our return rate has been very strong. In the second half, we will continuously participate in investing in the open market, because when it comes to M&A and also large-scale land acquisition and urban renewal, we will focus our efforts there.
In Beijing, Shanghai, for renewal projects, we have continuous investment, including Jianguo East Road in Shanghai, and other players have also announced that we have acquired certain important shareholding rights. So in terms of M&A activities, we will make further announcements. In the second half, we believe there will be some new developments, and we are confident that we can complete our investment target for the full year.
Thank you, Eric. Can we bring up the second question? JP Morgan. Mr. Karl?
Good afternoon. I'm Karl from JP Morgan. I have two questions. First, about sales. I can see that you are maintaining full-year growth of 20% for sales. Beginning from June and July, overall sales situation has declined slightly, which is in line with the overall development of the market. So why do you have the confidence to achieve your annual target?
In the following months, you will need year-on-year growth of at least 13% to reach the full-year target. So I would like to ask you, how are you going to achieve your target? Secondly, I want to ask about unbooked sales, about CNY 200 billion odd. How much of that will be delivered in the second half? Do you have any guidance about the delivery momentum? Is it going to represent year-on-year growth compared to last year?
Thank you, Karl. About sales, Mr. Zhang will take that. Second question, unbooked revenue, we'll ask Mr. Guo to answer.
Thank you very much for your question. I should say, for the full year, we have sufficient products. The structure was very optimal. In the first half, we have taken opportunities in the market to obtain very good sales results.
Looking into the second half, in July, yes, there were some seasonal impacts because of supply-demand mechanism. Certain guidance came from the central authority. Beginning from last month, some new policies have been launched at the central level and also local level. They helped to further stabilize our market and supply and demand mechanism. So on the market level, we have achieved a positive changes. So looking in the future, if you look at August, we've seen an increase by 15%-20% compared to July. In various cities and different locations, of course, there are differential trends. So overall speaking, in the second half, on the policy level, we will be able to provide greater support to the market. In the second half, inventory is continuously sufficient. We have CNY 610 billion in stock.
For the full year, it is very sufficient, and 80% are located in first-tier and second-tier cities, among which Shanghai, Beijing, Shenzhen, Guangzhou, Chengdu, Hangzhou... have new projects to be launched. So from the supply end, we are very certain that there are many large-scale projects, including Jianguo East Road in Shanghai. In the second half, it will make contribution of CNY 400 billion. In Beijing, new projects, we expect in the second half, the contribution will be CNY 30 billion. So for these first-tier cities and premium locations, in the second half, the fundamentals are very strong. We expect in the second half, in terms of sales momentum, we will obtain very good results. If you look at the August situation, you can see year-on-year, we are seeing very good growth already. So in terms of completing our annual target of 20% growth, we are still fully confident.
All right. When I reported the highlights, I already mentioned. Overall guidance for 2023 is the same; our profit, stable growth. So in terms of your question, I need to report two points. First of all, unbooked revenue. If you look at the company, series of companies, we are talking about CNY 294 billion renminbi, which is an increase of almost 20%. So the group excluding COGO... We are looking at a growth of 31% at CNY 226.4 billion. So all these unbooked revenue will continue to push upward our overall performance. We have also done some rationalization of unbooked amount. 60%-70% at the moment will be delivered and booked towards the end of the year, so that revenue and profit will enjoy good support and contribution.
Thank you, Mr. Zhang and Mr. Guo. Can we bring in the next question, please?
Thank you. Next question is from [Karl Choi].
I have two questions. First of all, I want to follow up on the policy front. About some new reform measures, how much new demand can be created? In some cities, things are not totally monetized, so is it going to affect your cash flow back? What is your attitude in general? Second question: You are confident in terms of long-term development, and you think it's a large industry, but in recent years, the economic downturn has created a lot of pressure, and right now, a lot of demand. The nature of the demand is different with such economic downturn, improvement led demand. Is it going to be much less compared to two, three years ago?
All right. For the two questions, Mr. Zhang will answer. Mr. Zhang, perhaps you can take the improvement-led demand first.
According to what we have seen from the market and our performance, basically, we focus on first- and second-tier cities, so improvement-led demand is still very strong. Yangpu project in Shanghai was launched over the weekend. Sales situation, very strong. Sell-through ratio more than 90% and major clients, customers, wanted to seek improvement for the first round or second-round improvement. So our judgment from such observation is that we are focusing on optimal locations and projects in high-tier cities. In the future, such demand may become even stronger. This will be the main driver for our sales. That is our judgment. As for our village inside the city policy in Guangzhou, people are looking into new policies to be launched. We have participated in a lot of renewal projects and also certain village inside city projects.
We have large-scale projects already running. So to develop its overall capability and our asset level, the demand is higher for the village inside city projects. I think it will release further demand in major cities. For Guangzhou situation, there are about 200 such villages inside cities. Many of them are actually quite close to the city centers, so affecting more than 1 million population. So once the demand is released for such core cities, in terms of improvement of demand... It's going to create a good drive. In various cities around the nation, there are different policies. Taizhou in Zhejiang is one example. And there are certain concessionary arrangements offered by the government so that certain housing vouchers can be obtained by the people affected. So it is a kind of subsidy from the government. So after you get the vouchers, they will purchase new houses.
So such vouchers themselves to developers is actually a, an advantageous policy. After we receive the vouchers, we can directly get paid by the government, so it does not affect our cash flow back plan.
Thank you, Mr. Zhang. Can we bring on the next question?
Thank you. Next question, Ken from Citibank.
I'm Ken. Good afternoon. I have two questions. First, gross margin. Compared to last year, full year, I see a slight increase. So I want to ask, can we confirm? Gross margin and net margin, in the first half, has grown from the full year level last year. So full year, this year, can we expect further growth? Secondly, about land bank. Compared to December, the land reserve has been reduced by about 4 million square meters. I've looked at the land premium figure.
If you can do contracted sales this year of up to CNY 360 billion, does that mean next year, we have to maintain at least contracted sales of CNY 360 billion or even more, to be able to support such growth? I want to know what you think about the situation. After 2023, what will be the momentum of growth?
Thank you for your questions. First, about gross margin, Mr. Guo will answer that. Second question about land reserve and future sales, I'll ask Mr. Zhang to respond.
All right. Thank you for your questions. You mentioned just now, this year, first half performance gross margin, 22.6%, net profit, 15.5. For such levels of gross margin and net profit in the industry, we can tell you we are definitely the market leader.
If you look at overall development of the group and what we think about gross margin, well, first of all, it is one important reflection of the industry. You can see how it relates to the development of the overall market. When we look at gross margin, we focus more on core profit margin, because that better reflects our management level and efficiency level, especially in the current time, has been restricted within a certain range. So how do we enhance gross margin? That is a big issue that every company is facing. If you look at the overall market situation, how do we realize management premium? We have to enhance our efficiency level from investment, operations, cost, expenses, every portion, every department, every series. They must do well their management work, so as to enhance our core net profit margin. For example, SG&A, 3.8%, very low.
Financing cost, 3.54%, very low. Together with other strength, when we are going through such transformational period, our net profit margin will continue to take the lead. We will create further value for the company. Thank you.
I will talk about land reserve. The group's land reserve is sufficient. 0688, current level, CNY 800 billion. So our structure is also optimal. 80% of land reserve is in first and second tier cities. So you can see that on the sales end, in the first half, we have achieved very good results. We have not offered any major discounts, so it shows good quality and reasonableness of our land reserve structure, and we have sufficient financial capability.
In the first half, we have CNY 33.7 billion operating cash flow, ensuring the second half in terms of investment, when there are good opportunities, we can ensure we can grasp such investment opportunities in the market. Recently, when it comes to land acquisition or M&A activities from year end last year, from core cities, premium locations, good land parcels, stronger players will enjoy obvious advantages. So in the second half, we will also rely on such market opportunities and create even greater growth.
Thank you, gentlemen. Because of time constraints, we are going to reply to the last question.
Thank you. From Huatai Securities, Mr. Chen Shen .
Thank you. I just have one question. We have seen very, fierce competition in the market. How do you compare the land acquisition cost and last week? Some new policies were launched. I want to ask you what you're thinking may be about the new policies. Interest rate and policy on protection-type housing.
Yes. Thank you for the questions. Last year, interest rate for land acquisition, because we focus on mainstream cities and investment is very important to us. So for the land parcels obtained, have followed the usual parameters. Excluding COGO, we continue to focus on premium locations in mainstream cities, 44.7% in first-tier cities. So our profit margin continues to be at high level. I trust that such land parcels in the future, during sales, will contribute greatly to our profit level. In the second half, if you look at the current situation of the land market and also resources on hand, we will actively participate in open market or non-open market M&A collaboration opportunities. We trust that China Overseas, in terms of investment, will continue to focus on our principles, providing safeguard to future investments.
Second question. Allow me to answer. There are three types of demand to be released. For example, villages and cities, some renewal of facilities and also security housing. They are all to drive forward society-wide demand, sustain healthy and stable growth of the real estate sector. Because the government will continue to provide great support if it is government-led in implementing security housing projects, then in relation to whole society, economic growth and investment, it is good news. For commercial housing sales and also long-term apartment rental, there is no direct competition because the client base is very different. That is the situation. Thank you.
Thank you, gentlemen. Thank you very much for participating in China Overseas Land and Investment Limited interim results announcement. Thank you, analysts and investors, for your long-term concern and support. We will have further roadshow sessions to have more in-depth exchanges with you. That's the end of today's session. Thank you for your time.