Boom time for developer

Tianjin-based property developer Sunac China Holdings announced a sharp rise in its revenue for the financial year ended December 31, 2011. Revenue for the reporting period rose by 59.4 per cent year-on-year to 10.6 billion yuan (HK$13.1 billion), while operating profit rose 41.2 per cent to 3.72 billion yuan.

Net profit attributable to shareholders increased by 52.8 per cent from 2010 to 2.36 billion yuan last year.

Last year, the group focused on developing properties in six mainland cities: Beijing, Tianjin, Chongqing, Wuxi, Suzhou and Yixing.

The group continued to deliver a solid performance, achieving satisfactory growth in its core businesses.

Revenue was substantially generated from sales of residential and commercial properties. Only a minor portion of the group's revenue was derived from the rental of investment properties located in Tianjin and from the income from property management services.

The company says in a statement that it achieved its sales target last year, despite a tough environment where stringent property market adjustment measures continued to be implemented. Sales reached 19.21 billion yuan, representing an increase of 130.5 per cent from 2010.

Sunac says the increase in sales of properties is primarily due to a 52.3 per cent increase in the average selling price (ASP) per square metre from 9,267 yuan to 14,112 yuan. This was mainly attributable to the mix of properties in different cities. The proportion of the sale and delivery of properties with higher ASP for the year was 60 per cent, representing a substantial increase of 17 percentage points from 43 per cent in 2010.

Meanwhile, the launch of high-end projects, such as West Chateau in Beijing, has significantly enhanced the company's market image as a developer of luxury properties and increased its brand influence.

Sunac says the excellent sales performance is attributable to the company's strategy of focusing on regional business and high-end properties alongside strong efforts by the sales team.

Abundant cash flow enabled the company to grasp opportunities to acquire land. It successfully acquired five new projects in existing cities at suitable prices and expanded its land bank by about 2,116,276 square metres.

Sunac also introduced high-quality joint-venture partners, such as Poly China and Franshion Properties (China), when the new projects were acquired.

Last year represented a tremendous leap forward for the development of the company. It achieved significant progress in the scale and enhancement of its brand image, thus laying a solid foundation for continuous sustainable growth in the future.

Sunac says property market adjustment measures introduced last year by the central government have been an initial success. It expects similar measures will persist this year, creating a similar sales and financing environment for the whole industry. It will accelerate the pace of industry integration and bring about an opportunity for excellent enterprises to expand. Sunac's strategy this year will be to respond to market changes and capture opportunities based on the security of cash flow. It will focus on its existing cities and acquire high-quality land in premium locations.

At the same time, the company is considering making a prudent move into the Shanghai market to seek optimisation of resources allocation, while striving to strengthen its position and lay a solid foundation for its sustainable and steady development.

Continuing Sunac's pledge to acquire more land, an associate company acquired the use rights of a parcel of land in Tianjin for 2.99 billion yuan in an auction held in the city.

Sun Hongbin, chairman and CEO of the group, says the land has high development potential.

'The acquisition will increase the group's land reserves in Tianjin and benefit our property development business there.'