Soho China core profit dives 60pc as sales plunge
Mainland commercial property developer Soho China yesterday posted a 60 per cent drop in core earnings last year because of a lack of completed projects.
Turnover plunged 69 per cent to 5.68 billion yuan (HK$6.96 billion) from 18.22 billion yuan in 2010.
Core earnings fell to 1.42 billion yuan from 3.51 billion yuan as only 100,315 square metres of floor area were sold during the year, 75 per cent less than the previous year. The drop was cushioned by a 27 per cent increase in average selling price.
Attributable profit rose 7 per cent to 3.89 billion yuan from 3.64 billion yuan.
'It is the first time our company has failed to meet our sales target since we listed [in Hong Kong] five years ago,' chairman Pan Shiyi said.
The company had a sales target of about 20 billion yuan for last year.
'We did not have new project releases when the property market was active in the first half of last year,' said Sharon Tong Ching-mau, the company's chief financial officer. 'We only started launching our projects in July.'
However, the company remains confident of achieving its sales target of 23 billion yuan for this year as it has projects worth 24 billion yuan available for sale. It expects to obtain sale permits for two more projects in the second half of the year.
Pan said the sales market was improving as liquidity controls had started to loosen.
'Our sales reached 380 million yuan last month from about 70 million yuan in January,' he said. 'We have also raised the selling price of our projects by 2 per cent this month.
'If sales remain strong this month, we will raise the price by a further 2 per cent next month.'
Last year, the company recorded contract sales of 10.91 billion yuan at an average of 58,649 yuan per square metre. It also spent 15.38 billion yuan on land acquisitions.
During the year, Soho bought assets from companies which began selling in the face of tighter lending policies. It believes there will be more acquisition opportunities this year and plans to spend 10 billion yuan acquiring development projects.
Net profit margin climbed to 25 per cent from 19 per cent in the previous year.
The company has proposed a final dividend of 11 fen per share, against 14 fen a year earlier.
Soho shares fell 2.94 per cent to close at HK$5.29 yesterday.