Developer Agile misses target amid price curbs

Guangdong-based developer Agile Property Holdings said it generated 31.5 billion yuan (HK$38.68 billion) of contract sales last year, about 15 per cent below its target due to difficult market conditions.

The developer yesterday reported its underlying profit last year rose 28.4 per cent because of low land prices and higher sales as a result of the price discounts it offered to beat a sluggish market.

Stripping out revaluation gains on investment properties, the company's core earnings amounted to 5.16 billion yuan for the year, from 4.02 billion yuan a year ago. Turnover increased 11.8 per cent to 22.94 billion yuan.

The company declared a final dividend of 23.4 HK cents, up 1.7 per cent from a year earlier.

Alex Liu, vice-president of Agile Property, said prices for some property projects were cut by 10 to 20 per cent last year to offset the curbs imposed by the government to cool the red-hot market. 'We still have room for downward price adjustment if the overall property market turns sour because of low land costs,' he said.

Agile's net profit margin last year edged up 2.9 percentage points to 22.5 per cent even as the average selling price dropped 11.06 per cent to 10,144 yuan per square metre. Liu said the average land cost of its 31.44 million sq metre land bank amounted to 1,277 yuan per square metre last year, accounting for just 12.6 per cent of selling price.

The firm's land acquisition expenses dropped to a five-year low last year as it spent only 1.57 billion yuan to secure five sites, said Liu. That was 87 per cent lower than what it had spent in 2010.

According to chairman Chen Zhoulin, property prices were likely to drop this year as the central government is unlikely to relax the tightening measures.

'As we have implemented several cost control measures, our profits will not be severely hit even if we have to cut prices by another 10 per cent or so at some of our projects. Our lower land costs allows us more flexibility in our pricing strategy.'

To build up cash reserves, he said, Agile would adopt prudent strategies to slow down land acquisition, speed up project launches in cities less affected by the market downturn and allow buyers instalment payments for increasing sales.

Asked if the company had any plans to raise funds, deputy general manager Peggie Wai said it would 'keep exploring various options in accordance with market changes'.

Agile Property stocks dropped 2.46 per cent to HK$9.48 after the results announcement.