Sino-Ocean Land to cut property prices

Company to 'speed up' slowing sales in the current half after prices drop by a quarter in first half of year

PUBLISHED : Saturday, 18 August, 2012, 12:00am
UPDATED : Saturday, 18 August, 2012, 3:10am

The average selling price of Sino-Ocean Land Holdings' properties dropped by a quarter in the first half-year compared with a year earlier, and chief executive Li Ming said the company will cut prices further to sell inventory in the current half.

The average price fell to 11,600 yuan (HK$14,178) per square metre from 15,400 yuan per square metre a year earlier, mainly because during the period there were more projects and contribution from second- and third-tier cities, where property prices were relatively lower than in first-tier cities, said Li.

Beijing, which used to be Sino-Ocean's largest contributor, fell to fourth by the end of June, accounting for only 11 per cent of the company's business.

However, the company remains confident it will reach its sales target of 27 billion yuan for this year because it achieved 63 per cent of its full-year target during the first seven months.

Li expects selling prices to remain flat for the rest of the year, but he said the company will continue to cut prices to "speed up sales and cash flow," though would not offer as much discount as it did in the first half.

Li said "the worst time for the property market had gone," and the government will focus on implementing existing measures instead of introducing more strict ones this year.

"Going forward, we will pursue the development strategy established early this year, exercising strict control on our costs and sales expenses," said Li.

By the end of June, the company had a total of 23 million square metres in its land bank.

Li said the company would be "prudent" in land acquisition amid the "fluctuating market", and "would rather miss opportunities than make wrong decisions."

"We will choose projects with ground floor area of less than 200,000 square metres to control the development cycle, and we will further strengthen our presence in the established markets," he added

The company yesterday posted a 10 per cent gain in first-half profit attributable to shareholders to about 1.21 billion yuan from a year earlier.

But gross profit dropped by 12 per cent to 2.06 billion yuan, while revenue fell by 14 per cent to 6.76 billion yuan during the period.

Gross profit margin remained at 30 per cent and basic earnings per share was 15 fen.

The company proposed an interim dividend of 6 Hong Kong cents per share.