Developer ready for sales boom

Beijing Capital Land will accelerate project launches this year after drop in profits caused by delays to approvals

Beijing Capital Land, one of the biggest developers in the capital, expects sales to double to five billion yuan this year as it accelerates project launches to compensate for falling earnings last year.

The developer said 10 projects this year would have a total gross floor area of 695,000 square metres. Last year, 269,200 square metres were sold for 2.35 billion yuan.

The projects include residential developments North Ring Centre Phase 2 and A-Z Town Phase 2 as well as two office premises, Beijing World Center Block 1 and the Center.

'We expect the years 2006 and 2007 will be the peak of our sales,' Beijing Capital president Tang Jun said yesterday. 'Tight housing supply, coupled with strong demand, is expected to provide support to property prices.'

Analysts were less optimistic, however.

'This may not be an exciting year for Beijing Capital Land when it comes to its earnings,' said China Everbright Financial analyst Matthew Chow. 'Most of its project completions are scheduled for 2007.'

Beijing Capital Land expects to complete 262,800 square metres this year - down from 322,000 square metres last year - but that will surge to 1.51 million square metres next year.

The aftermath of the central government's austerity measures to cool the overheated property sector took a toll on Beijing Capital's earnings last year.

The developer blamed Beijing's delay in approving new construction for the 19 per cent drop in its net profit to 211.51 million yuan, or 12.39 fen a share.

Turnover declined 30 per cent to 1.13 billion yuan. Its return on equity dropped to 6.64 per cent, from 9.28 per cent a year earlier.

A final dividend of five fen was declared, down from seven fen in 2004.

Nonetheless, its gross profit margin was holding up well at 26.5 per cent against 25.5 per cent in 2004.

Average selling price per square metre grew 14 per cent to 9,684 yuan.

'We don't expect prices to have any big upswings but we do expect steady growth this year,' chairman Liu Xiaoguang said.

Mr Liu said land development would be a new income stream for the company in the near future.

The segment accounted for 19 per cent, or 212 million yuan, of its turnover last year.

Meanwhile, Mr Liu said the company had no detailed timetable on its plan to issue 312 million new H shares, or 20 per cent of its registered share capital.

Shares of Beijing Capital Land surged 9.15 per cent to close at $4.175 yesterday.