Earnings mix to change at property developer
By KENT CHEN
CHINA Overseas Holdings plans to diversify its business, which will result in a new mix of profit breakdown, with 70 per cent coming from property and the remaining 30 per cent from construction, industrial investment and trading.
The group is part of China State Construction Engineering Corp, China's largest state-owned construction conglomerate under the control of the State Council.
The company has acquired the construction arm of its parent company for $550 million, making it a fully integrated, listed property group based on two core business, property development and construction.
Last year, China Overseas secured 28 construction projects with an aggregate value of $5.5 billion and invested $1.86 billion in 10 property development projects.
Total turnover was $4.07 billion in 1993 and the group believes net profit after tax would be higher than the year before.
China Overseas said it had been actively replenishing its land bank and increasing property development floor area at strategic locations in the past year.
It currently owns interests in 35 development projects and holds more than seven million sq ft of premises in Hong Kong and China.
The company also was involved in joint ventures with major property developers.
Six new projects had been acquired last year, three of them planned for residential developments.
The Mount Parker site, was acquired at $3.94 billion, a record-breaking land premium of a single land deal in the history of Government land auctions in Hong Kong.
The company anticipates that the property sales activities will bring significant growth in terms of company turnover and profit in 1994.
On the construction side, the company's value of contract works saw rapid increase last year. It has secured 28 new projects with an aggregate contract value of $5.5 billion.
These include the West Kowloon Reclamation Phase II, North Lantau Expressway Tung Chung section and Black Point Power Station.
The company issued US$125 million in 5.25 per cent, convertible guaranteed bonds due 2000. Some of the money would be used to pay for the group's property development and construction projects and related industrial developments.