Shui On Land has proposed spinning off 14.11 billion yuan (HK$16.73 billion) of investment properties after reporting a 55 per cent fall in underlying full-year profit.
'We are actively in discussion with investment banks to study the possibility of seeking a listing for our investment properties,' said chairman Vincent Lo Hong-sui, who added that he would relinquish his role as chief executive immediately.
Freddy Lee Chun-kong, an executive director and managing director, will take over.
Asked if Shui On would spin off its commercial properties in a yuan- denominated real estate investment trust, Lo said: 'We are open to all options as long as they maximise the interests of shareholders.'
Last year, Shui On's investment properties portfolio grew to a gross floor area of 438,000 square metres from 310,000 sqmetres in 2009.
Core earnings dropped to 756 million yuan from 1.68 billion yuan because of lower property sales.
Net profit, including revaluation gain from investment properties, rose 5 per cent to 2.8 billion yuan.
Rental income increased 10 per cent to 706 million yuan, of which 74 per cent was contributed by Shanghai Xintiandi and Shanghai Corporate Avenue.
Turnover dropped 28 per cent to 4.87 billion yuan.
A final dividend of five HK cents per share was declared.
Lo said the decline in property sales was largely because of the postponement of sales for its Casa Lakeville Towers in Shanghai, which it planned to upgrade into high-end luxury flats.
He said he did not plan to retire despite stepping down as chief executive.
'I will continue leading strategic direction, corporate development and policies. Previously, senior management used to seek my opinion before making decisions. Now, efficiency will be enhanced if I don't focus on day-to-day management,' Lo said.
The firm aims to double contracted sales target to 10 billion yuan this year, from 5 billion yuan in 2009, from the pre-sale of 506,000 sqmetres of residential gross floor area and 250,000 sqmetres of commercial area.
To accomplish the three-year plan started in 2009, Shui On plans to increase construction.
Chief financial officer Daniel Wan expected capital outlay for this year to increase more than 77 per cent to 16 billion yuan - 7.5 billion yuan for construction costs and the remainder for land costs.
Wan said the spending would be financed by an expected 10 billion yuan in contract property sales and 6.79 billion yuan cash on hand.
Lee said the firm would consider selling non-core commercial assets to enhance its cash flow.
'We are in talks with various institutional funds on the potential sale of these properties,' he said.
Shares of Shui On Land rose 2 per cent to HK$3.56.
Chief executive Vincent Lo quits with immediate effect after the results
The value of Shui On's investment properties that may be sold after a drop in underlying profits, in yuan: 14.1b yuan