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Cooling market hits KWG Property sales

Guangzhou-based KWG Property Holdings has achieved less than 30 per cent of its sales revenue target of 11 billion yuan (HK$12.37 billion) in the first five months of the year.

The slow property sales were attributable to the cooling down of the housing sector in the city and lack of new property projects offered for sale during the period.

Speaking after the company's annual general meeting, chairman Kong Jianmin said the company had reaped property sales of 1.6 billion yuan since the beginning of the year.

Together with the 1.2 billion yuan of revenue generated from the pre-sale of properties last year, the company has had about 2.8 billion yuan in property sales to be booked this year.

However, the company is still more than 8 billion yuan behind its sales target of 11 billion yuan.

Prudential Brokerage associate director Kingston Lin King-kam said the sales result was a bit disappointing, reflecting the pressure mainland developers had been facing.

However, Mr Kong remained confident in the company's business outlook.

'We have not yet launched our new projects,' he said. 'There are a number of new projects to be sold between this month and September. Property sales will see a substantial increase.'

Mr Kong said buying interest was coming back, as reflected in the 20 per cent year-on-year increase in sales revenue last month. Gross profit margins could be sustained at about 55 per cent, he said.

KWG has a land bank of 6 million square metres and Mr Kong said the company hoped to increase it to 8 million square metres by the end of the year.

'The company will replenish the land bank carefully, ensuring that any purchase will not affect [our] operation,' he said.

The company had net gearing of 13 per cent and its financial health was still strong if it raised the level to 50 to 60 per cent, said executive director and chief financial officer Hoffman Tsui Kam-tim.

It has cash on hand of 2 billion yuan.

In its office building International Finance Place in Guangzhou's Zhujiang New Town, occupancy had reached 80 to 85 per cent and rents were as high as 280 yuan per square metre, Mr Kong said.

Sluggish season

Cooling housing sector and lack of projects blamed for sales drop

Sales target of Guangzhou-based KWG Property Holdings for this year, in yuan: 11b yuan

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