Shui On Land expects a tough year for developers

Shui On Land expects the business environment for mid- and small-sized developers to be challenging this year as cooling measures in the mainland property market continue to have an impact.

'The business environment may be more difficult than that in 2011,' chairman Vincent Lo Hong-sui said yesterday.

Despite the People's Bank of China lowering banks' reserve ratio requirements twice, he believes the measures to loosen lending will not help the market unless there is a turnaround in the global economy.

'Mid- and small-sized developers will face pressure as the property market isn't active and they are finding it difficult to finance. But we have prepared sufficient funds for expenditure this year and are also planning to spin off our investment properties. If they are listed, it can shore up our capital,' he said.

The developer said its underlying profit, excluding property revaluation gains, surged 108 per cent to 1.57 billion yuan (HK$1.93 billion) in 2011.

Its turnover jumped 74 per cent to 8.48 billion yuan, while net profit rose 22 per cent to 3.43 billion yuan.

The growth in profit and turnover was driven by strong property sales, higher selling prices and increased sales volumes, said CEO Freddy Lee.

Shui On generated 7.58 billion yuan from property sales last year, 83 per cent more than achieved in 2010, while the average selling price increased to 24,600 yuan per square metre.

'Our projects in Chongqing, Wuhan and Foshan also began to make a contribution last year,' Lee added.

Its contracted sales in 2011 increased by 114 per cent to 10.67 billion yuan, covering a total gross floor area of 527,500 square metres.

Lee said the company had properties worth about 15 billion yuan available for sale this year. 'We hope our contracted sales can reach 12 billion yuan this year,' he added.

The company proposed a final dividend of 10 HK cents a share.

Shui On Land shares dropped 0.33 per cent to close at HK$3.02 yesterday.

25%

The percentage Shui On Land's average property selling price increased by in 2011