Sunac reports 21pc rise in first-half core net profit to 1b yuan

PUBLISHED : Tuesday, 26 August, 2014, 10:15am
UPDATED : Tuesday, 26 August, 2014, 10:15am

Sunac China, a mainland luxury-home builder, reported a 21 per cent year-on-year rise in core net profit to 1 billion yuan (HK$1.26 billion) in the first half, with its net gearing ratio down 3 percentage points from the end of last year at 66.7 per cent.

Its revenue rose 5.9 per cent to 9.1 billion yuan, and net profit grew 8 per cent to 813 million yuan. The company had 23 billion yuan of cash on hand by the end of June, it said in a statement to the Hong Kong stock exchange late on Monday.

“Overall Sunac delivered a steady first-half result with growing margin and lower gearing,” said Edison Bian, research head for China property at UOB Kay Hian in Hong Kong.

He said investors would need to watch how Sunac closes and funds its acquisition of 24.3 per cent stake in peer Greentown China as well as its gearing level after the deal and gross margin in the second half.

The company will continue to closely monitor the public land market while also look to seize any suitable opportunities

The Greentown deal is still navigating regulatory procedures.

Sunac shares opened up 3.4 per cent on Tuesday morning at HK$6.38.

The company delivered total gross floor area of 520 million square metres in the first half, up 72 per cent from a year earlier, but average selling prices fell 39 per cent to 17,169 yuan per square metre.

Its gross profit margin improved to 22.4 per cent from 20.8 per cent a year earlier. Excluding fair value changes, gross margin was 30.9 per cent in the first six months.

“The group continues to pay attention to and manage its financial structure and potential risks during its course of development,” Sunac said.

It acquired eight parcels in prime locations in the first half, adding 1.48 million square metres to its land bank. It is focused mainly on five cities: Beijing, Shanghai, Tianjin, Chongqing and Hangzhou.

“In the second half, the company will, prudently and cautiously, continue to closely monitor the public land market while also look to seize any suitable opportunities that may arise as a result of the industry’s adjustment,” Sunac said. “In the absence of opportunities that meet the company’s criteria, the company would rather stockpile cash than buy a questionable parcel of land.”

The company said it would launch eight new projects in the second half and was confident of achieving its full-year sales target of 65 billion yuan.

Its contracted sales rose 33.5 per cent on year to 31.2 billion yuan in the first seven months of the year.