Chinese developer KWG to seek projects through mergers and acquisitions
Core profit rises 0.7 per cent to 2.6 billion yuan
Hong Kong-listed mainland developer KWG Property says it will seek projects through mergers and acquisitions rather than bidding for land after seeing an increasing number of small developers face financial strain.
“Land is too expensive in big cities,” KWG executive director Hoffman Tsui said at the company’s annual results press briefing on Monday.
Guangzhou-based KWG posted 0.7 per cent annual growth in its core profit (excluding fair-value gains and non-recurring items) to 2.6 billion yuan (HK$ 3.1 billion) last year.
To save costs amid a slowing mainland housing market, Linda Wu, the company’s head of investor relations, said it would focus on M&A or share-purchase opportunities for expansion this year.
“We see more chances as smaller developers finding it getting very difficult to borrow money from financial institutions, and this would surely lower our land costs,” Wu said.
We see more chances as smaller developers finding it getting very difficult to borrow money from financial institutions
The intensified divergence in the mainland’s property markets, with housing sales in third- and fourth- tier cities are struggling while home prices skyrocket in top-tier cities and some leading second-tier ones, has seen developers swarm to bigger cities, pushing up land prices there.