Vincent Lo gets hands-on again
The chairman of Shui On Land said yesterday he would be 'resuming the leadership' at the developer in order to set up new business strategies
Vincent Lo Hong-sui, the chairman of Shui On Land, is back in the spotlight as he moves to improve the firm's performance.
Lo said he had withdrawn from the "front line" over the past two years but had decided to take a more active role.
"The market sentiment is poor and the government has released different policies. It is not easy for a new person to manage the company," he said yesterday.
"I worked as a consultant in the company over the past two years.
"Now I will resume the leadership in setting up development and business strategies.
"My involvement in the company will be more than that over the past two years.
"We tried to speed up residential sales over the past few years but the difficulties in the resettlement [of our Shanghai projects] led to a poor result for our company last year.
"Our interest expenditure is high and now it's time to adjust [the development strategy]."
Shui On's net profit fell 41 per cent to 2.03 billion yuan (HK$2.57 billion) last year.
To improve the liquidity of the company, Lo said, it would no longer invest in projects which involved the costly resettlement of people.
"We will invest in more small-scale residential projects to improve our earning ability. Mainland developers take only one year to pre-sell the residential project after they have bought the site. We are able to speed up the development as we are also a constructor," he said.
About 60 per cent of the company's current land bank is for commercial use, but Lo said Shui On would buy residential sites in first-tier cities in the future.
The company is already in talks to acquire a residential site in Shanghai. It will also in future provide tailor-made designs for the buyers in every project, and a one-stop service to buyers.
Last year, Shui On revealed a plan to spin off its premier commercial property division, China Xintiandi.
Lo said: "We may spin off China Xintiandi next year. It depends on the market sentiment and whether we are ready.
"I hope the company has a clear business model when it lists. It shouldn't be a property company reliant on rental income. It should have the ability to make money."
Shui On has assigned some of its staff to China Xintiandi. "The company began to operate independently on March 1," Lo said.
As many mainland developers rushed to develop commercial projects over the past few years, Lo said he expected there would be more unfinished projects released for sale. These would be among the company's acquisition targets.
Shui On is also aiming to lower its gearing ratio from 70 per cent to 50 per cent by 2015.