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China Property

Chinese developer Times Property says policy tightening having limited impact on sales

Core profit, excluding one-off items, rose 17.6pc to 635.7 to US$94.46 million, thanks to strong sales increase, but net profit was down 9 per cent, blamed on early redemption of 132 million senior notes

PUBLISHED : Friday, 04 August, 2017, 5:41pm
UPDATED : Friday, 04 August, 2017, 10:44pm

Times Property, the major Guangdong developer, remains positive about home sales in the second half of the year, even as the Chinese government shows no signs of relaxing its tightening measures on the housing market anytime soon.

“The government starts a tightening cycle every two or three years, and every time the market seems very pessimistic, as if real estate companies will die as a result– but that hasn’t happened,” said Times Property chairman Michael Shum Chiu-hung.

Shum said the company’s business wasn’t that affected by the local governments’ control on selling prices as most of their land banks were bought at lower cost, back in 2015 and 2016.

Although mainland regulators shut down a number of funding channels for developers such as domestic bond issuance, Shum said he believed Beijing, long term, will still encourage real estate companies to seek financing through the public markets.

The government starts a tightening cycle every two or three years, and every time the market seems very pessimistic, as if real estate companies will die as a result– but that hasn’t happened
Times Property, chairman, Michael Shum Chiu-hung

The company forecasts house purchase demand in big, regulated cities will continue to be suppressed, while transactions in third- and fourth- tier cities will remain active, especially in satellite towns close to the core metropolitan areas.

The company’s core profit, excluding one-off items, rose 17.6 per cent to 635.7 million yuan (US$94.46 million) in the first half, thanks to the sales increase, but net profit was down 9 per cent to 497.8 million yuan, blamed on the early redemption of 132 million senior notes within the period.

Shares in Times Property slumped 7 per cent to HK$5.99 on Friday following the results announcement.

Shum admitted that being offered cash receipts from banks had seen “some delays” recently as lenders enforced stricter checks on mortgage lending, but he stressed he was confident of achieving its 2017 contracted sales target of 32.5 billion yuan, and that its bottom line would improve by the end the year.

The company has set the ambitious goal of annual sales of over 100 billion yuan by 2020.

With most of its projects in Guangzhou, Foshan and other cities in Guangdong province, the homebuilder recorded 20.1 billion yuan contracted sales in the first seven months, a 50 per cent year-on-year growth.

As of June 30, the company had secured land reserves in eight cities covering a total area of 14.5 million square meters, which it believes is sufficient to support company developement over the next three to five years.

Shum said Times would focus on its investment in the “Big Bay Area”, which covers Guangdong, Hong Kong and Macau, as he was sure it will benefit most from the country’s industrial upgrading, luring young professionals in the process, which in turn will support the property market.

Rather than through government land auction, however, he said the company would acquire its land primarily through mergers and acquisitions to keep costs under control.

“Land are very expensive at this moment,” he added.

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