Jingrui pays dividend almost twice its profit ahead of Hong Kong IPO

Payout made by the Shanghai-based developer during the first half was almost double its net profit for the period, prospectus reveals

PUBLISHED : Monday, 21 October, 2013, 3:56am
UPDATED : Monday, 21 October, 2013, 3:56am

Shanghai-based developer Jingrui Holdings, which plans to list in Hong Kong, paid its co-chairmen and other shareholders a 372.6 million yuan (HK$473.6 million) interim dividend for the six months to June, about eight times more than last year's whole-year dividend, according to its listing prospectus.

The interim dividend was almost double the developer's 197.7 million yuan net profit it made in the six-month period.

The company distributed 41.4 million yuan in dividends last year, about 12 per cent of its 341.5 million yuan full-year net profit.

The dividend was made public yesterday, a day before the launch of the company's initial public offering (IPO).

The share offer involves the sale of 25 per cent of the company's shares. The firm plans to raise up to HK$1.71 billion from the sale.

Speaking at a press conference concerning the IPO yesterday, co-chairman Yan Hao said he and co-chairman Chen Xinge received most of the dividend.

He did not elaborate on the higher dividend payment, saying it was "because existing shareholders bought shares from others".

Yan holds a 48.5 per cent stake in the firm while Chen has 47.44 per cent. The remainder is held by seven individuals and two senior executives of the company.

After the IPO, Yan's stake in Jingrui will be reduced to 35.28 per cent and Chen's will fall to 34.51 per cent.

The company focuses on residential projects catering to first-time homebuyers. The proceeds of the IPO will be used for working capital and to fund land acquisitions.

Gross profit margin at Jingrui dropped to 21.4 per cent for the six months to June from 28 per cent last year.

"The declining profit margin is because of lower average selling prices," chief financial officer Tan Mingheng said.

Average selling prices fell 12.58 per cent to 8,389 yuan per square metre for the six months to June from last year.

At the end of June, the company's total outstanding borrowing amounted to 4.66 billion yuan, up from 3.9 billion yuan at the end of last year.

Jingrui, which has 1.8 million sqmetres of property projects in 11 cities under development, will sell 313.43 million shares at an indicative range of HK$4.20 to HK$5.48 each.

The public offering will open for subscription from today and close at noon on Thursday. Trading of the shares will begin on October 31.

The company said it intended to use about 90 per cent of the net proceeds for acquisitions of new projects or land for development in Nanjing, Suzhou, Hangzhou, Ningbo and Shaoxing.

So far, the firm has not identified or committed to any acquisition targets, according to the listing prospectus.

Hao expressed confidence in the market outlook.

"In general, overall property sales registered a big jump in the first three quarters. We are confident we will achieve or even exceed our sales target this year," he said, without saying what the sales target for this year was.

Housing prices in 100 mainland cities rose an average 9.5 per cent last month, according to China Real Estate Index System.