China Merchants Land arm sells project stake to Ping An subsidiary
Sale of 49pc stake in residential-commercial land will boost firm's financial flexibility
China Merchants Land will bring in Ping An Real Estate Investment as a partner in its recently acquired 1.18 billion yuan (HK$1.49 billion) residential-commercial development site in Nanjing.
In a filing with the stock exchange, China Merchants Land, said wholly owned Runray Holdings would sell a 49 per cent stake in Cyber Light Investments to Fujin Investment Management, which is controlled by Ping An Real Estate.
China Merchants Land bought the 57,945 sqmetre site in May through Cyber Light, which is wholly owned by Runray. The site could yield 244,527 square metres in gross floor area.
The disposal will reduce China Merchants Land's stake in the site to 51 per cent.
According to the company statement, the group's investment in the site would be reduced by 582 million yuan.
It said the decrease in investment and capital commitment following the disposal and the cash inflow to be generated by the project would increase the financial flexibility of the group and boost its capability to seize future development and investment opportunities.
China Merchants Land, controlled by state-owned and Shenzhen-listed China Merchants Property Development, reported a 68 per cent plunge in core profit to 333 million yuan in the first half. Earnings per share fell to 1.24 fen from 7.58 fen a year earlier.
Contracted sales dropped 18 per cent to 2.7 billion yuan but average selling price rose 42 per cent, largely because of a high-end project in Nanjing.
China Merchants Land said it would continue to increase its presence in six cities, including Xian in Shaanxi province and Jurong in Jiangsu province.
It has a land bank of 6.92 million sqmetres at the end of June.
In August, the company announced it would buy a 49 per cent stake in a Guangzhou-based developer in a deal that could be worth 1.2 billion yuan.
The target firm, Merchants Property Development (Guangzhou), is developing a high-end residential and commercial complex in Panyu district, with unsold properties totalling 676,252 sqmetres.
It also has an interest in eight projects - six in Foshan, Guangdong province, and one each in Chongqing and Guangzhou.
Of the nine projects, three are making sales and generating profit. The others are expected to be launched for sale this year.
Merchants Property Development (Guangzhou) made a net profit of 1.2 billion yuan on revenue of 3.6 billion yuan last year.