Agile Property net profit plunges 68 per cent on higher land costs, forex losses
Guangdong developer plans to increase onshore financing, dispose low-margin projects
Guangdong developer Agile Property said on Wednesday that net profit fell 67.6 per cent to 1.39 billion yuan (HK$1.66 billion) on higher land costs and foreign exchange losses, despite an increase in revenue.
The company said it expects margins to improve this year on better sale prices after disposal of low-margin projects.
Core profit fell 39.8 per cent to 2.43 billion yuan during the period, while revenue rose 12.2 per cent to 43 billion yuan.
“Last year we spent a lot of efforts on clearing inventories,” said Chen Zhuolin, chairman. He said that the company’s strategy of cutting prices for fast turnover led to the lower profits in 2015.
Agile’s average selling price declined 7 per cent to 8,642 yuan per square meter in 2015. The developer said it bought only two land parcels last year to shore up its land bank.
Property prices in Guangdong province and cities like Nanjing where Agile has big inventories, have risen due to policy support from the government and better market sentiment. The company expects its average selling price to rebound to 10,000 yuan per square meter this year.
Chen said he remained confident about prospects in Zhongshan, a city in Guangdong province and the developer’s home town, which accounts for 12 per cent of its total land bank.
“The construction of the Shenzhen–Zhongshan Bridge has brought many Shenzhen buyers to Zhongshan,” he said adding that “prices have just started to rise.”
Home prices in Zhongshan surged 5.6 per cent month on month in February to 6,549 yuan per square meter, the best among all cities in China .
Sam Cheung, the chief financial officer of Agile said the company was taking necessary measures like increasing onshore financing to guard against future foreign exchange losses. It posted foreign exchange losses of about 1.3 billion yuan in 2015 due to the yuan depreciation.
In addition, Agile has also submitted an application to issue its first Panda Bond with an expected rate of 6 to 7 per cent, he said.
The board recommended a final dividend of 14.5 HK cents and a special dividend of 25 HK cents.
The company’s shares rose 3.6 per cent in Hong Kong to close at HK$4.34 on Wednesday.