Soho China

Soho China banks big increase in net profit

Mainland property giant reports higher sales and revaluation gains in some investments

PUBLISHED : Thursday, 07 March, 2013, 12:00am
UPDATED : Thursday, 07 March, 2013, 6:12am

Shares of mainland commercial property developer Soho China jumped nearly 7 per cent yesterday after it reported a 172 per cent rise in net profit, thanks to a big increase in floor area sold during the period.

The stock closed up 6.7 per cent at HK$6.22, while the benchmark Hang Seng Index edged up by 0.96 per cent.

The Beijing-based property developer said turnover for the year to December soared 169 per cent to 15.3 billion yuan (HK$19 billion) while net profit surged to 10.6 billion yuan, compared with 3.9 billion yuan in 2011.

The company attributed the improved performance to more bookings for space in its developments, including Galaxy Soho, a prime office building in Beijing; and Soho Zhongshan Plaza, a retail and office complex in Shanghai.

Also contributing to the strong set of results were revaluation gains from some property projects it had invested in.

Area booked during the reporting period was more than 236,000 square metres, compared with only 100,315 sqmetres of floor area sold a year earlier. The average selling price also climbed 18 per cent to 66,639 yuan per square metre, the company said.

The mainland's biggest property developer, Soho China has shifted its focus in recent years from residential projects to office development and investment in Beijing and Shanghai.

Soho China chief executive Zhang Xin was quoted as saying that residential development in the country had "really come to an end".

A report last month from property services firm Cushman & Wakefield said office rental growth on the mainland was expected to slow this year following three years of rapid growth, but the upward trend would continue during the next few years.

One risk facing Soho China is the impact of the fast-growing e-commerce sector on traditional bricks-and-mortar retailing businesses.

"The group is reducing the retail exposure in its portfolio, and those retail facilities included in its projects will mainly be concept stores," it said.

As of December last year, Soho China had 22.2 billion yuan of cash and bank deposits, and its core net profit margin for last year was 22 per cent.

It proposed a final dividend of 13 fen per share for the year.