Shui On seeks to fill 2b yuan gap for projects

PUBLISHED : Friday, 17 April, 2009, 12:00am
UPDATED : Friday, 17 April, 2009, 12:00am

Shui On Land said its partner, Winnington Capital, was unlikely to raise stakes in two of its mainland projects, leaving the developer to seek other options to fill a 2 billion yuan (HK$2.27 billion) funding gap.

The private equity firm 'informed us that its first [round of] funding had been used up. The second round will not be completed until the second half of the year', said chairman Vincent Lo Hong-sui.

The agreement signed last year allowed Winnington to raise its stake in Shanghai Rui Hongxin Cheng and Chongqing Tiandi from 25 per cent to 50 per cent by this month. Winnington had paid a combined 2.14 billion yuan for a 25 per cent stake in both projects.

Winnington remained keen on increasing investment in the two projects but Shui On would not extend the deadline, Mr Lo said.

'We will finance the projects either by ourselves through bank borrowings or other partners,' he said.

Shui On booked a gain of 1.68 billion yuan from the sale of a 25 per cent stake in each of the two projects to Winnington, boosting last year's profit by 0.73 per cent to 2.48 billion yuan. Turnover dropped 22.19 per cent to 3.56 billion yuan because of lower property sales.

Excluding the decline in revaluation gain in investment properties and fair value adjustment on derivatives, underlying profit rose 7.48 per cent to 2.21 billion yuan.

Shui On proposed a final dividend of 1 HK cent per share and one bonus share for every 10 shares held.

Mr Lo said the company would speed up construction of residential projects to strengthen cash flow.

The developer planned to increase annual flat production to 1 million square metres in three years from 230,000 sqmetres this year, he said.

For the first three months of this year, Shui On sold 76,000 sq metres of properties, compared with 85,100 sqmetres for the whole of last year.

Shares in Shui On dropped 19 HK cents or 5.41 per cent to finish at HK$3.32 yesterday.