China Overseas Land and Investment has lifted its full-year property sales target by a quarter to HK$100 billion, despite believing that the industry's tough times are not yet behind it.
Kong Qingping (pictured), chairman of the mainland's largest developer by market value, said at a media conference yesterday on the company's interim results that China Overseas Land achieved a record high of HK$65.15 billion in property sales in the first half of this year, an increase of 24.7 per cent from the year-earlier half. The figure equates to more than 81 per cent of the company's original full-year forecast of HK$80 billion, which it has since revised upward to HK$100 billion.
Because the mainland needs to maintain growth amid an uncertain global economic outlook, Kong expects Beijing to implement measures, such as cutting interest rates, to boost market liquidity.
'But there won't be significant changes on the government's control over this [property] industry and the government has repeatedly said it will maintain its measures [to control prices],' the chairman said.
'The market still faces a lot of challenges ahead and the toughest period is not over yet.'
Kong said stable home prices of about 5,800 yuan (HL$7.100) to 5,900 yuan per square metre on average in the last seven months showed the effectiveness of the housing measures, and he expected prices to remain steady in the second half.
But he said some tightening measures might be replaced by certain long-term policies such wider application of a tax on second-home buyers introduced early last year in Shanghai and Chongqing.
China Overseas reported that its first-half net profit surged 17.7 per cent to HK$8.38 billion, while core profit rose 9.3 per cent to HK$6.36 billion. This is lower than an average of a 16.3 per cent rise in interim core profit from four analysts surveyed by Reuters. The gross profit margin of its mainland property projects was maintained at more than 40 per cent, it said.
The developer sold 3.95 million square metres of property during the period, up 28.6 per cent year on year, of which 3.9 million square metres, or HK$59.08 billion, were from properties on the mainland. The rest of the 50,000 square metres, or HK$6.07 billion, of property sales were from Hong Kong and Macau.
Kong said the company was confident it could achieve its full-year target of more than 20 per cent growth in net profit. That is because there would be about 5.2 million square metres of flats completed and booked in the second half, compared with only 1.7 million square metres in the first six months of this year.
He added that from now until the first half of next year would be a suitable time for the company to increase its land bank. It only spent HK$4.6 billion to acquire four sites in the first half, which is less than one-fifth of its full-year budget of HK$25 billion.
China Overseas declared an interim dividend of 15 HK cents a share, up 15.4 per cent from a year ago. A special dividend of 2 HK cents a share was also declared to celebrate the company's 20th listing anniversary.
The price of its shares closed unchanged at HK$18.08 each yesterday, in a weaker overall market.
China Overseas Land's full-year sales target, in Hong Kong dollars, for 2012
-It was revised up from HK$80 billion