China Overseas Land raises sales target as profit jumps
After reporting a 31.6 per cent rise in interim profit, developer says it does not expect Beijing to relax property market tightening measures
China Overseas Land & Investment, the Hong Kong-listed mainland developer, raised its annual sales target by a fifth yesterday as it announced the possible injection of its parent company's real estate businesses into the firm.
The company said it achieved sales of HK$80.07 billion in the first six months of the year, prompting it to revise its annual sales target to HK$120 billion, from HK$100 billion.
The company said Beijing's tightening measures would not be relaxed and that the mainland property market would be confronted with "huge challenges".
It added that it expected the market to consolidate, which would be beneficial for large developers such as itself.
The developer said its net profit in the first half rose 31.6 per cent year on year to HK$11.03 billion. Core profit jumped 26.7 per cent to HK$8.06 billion.
Property sales amounted to HK$30.24 billion in the period, up 27.3 per cent, with some HK$650 million of them coming from Hong Kong and Macau.
The company said it would pay an interim dividend of 18 HK cents, up 20 per cent from a year ago.
During the six-month period, the company acquired 11 land parcels on the mainland, adding about 4.62 million square metres of gross floor area to its land bank.
The group also acquired two sites in Kai Tak, in Hong Kong. Its total land reserve grew to 36.49 million sq metres.
China Overseas said its controlling shareholder, China State Construction Engineering Corp, planned to inject its real estate development business, as well as those operated by two other companies - China State Construction Land and China State Construction International - into China Overseas.
The company said in a stock exchange filing it was studying the feasibility of the injection but that there was no definitive proposal and that no agreement had been entered into yet.
"The injection aims at restructuring our business. We have a few listed companies and some are in the real estate development business, and they compete with each other.
"We can consolidate our resources and do a better job in the long term," Kong Qingping, who steps down as China Overseas chairman and executive director today, said at a press conference yesterday.
He said he would continue in his position as vice-president of China State Construction Engineering. Hao Jianmin, a former China Overseas vice-chairman and chief executive, takes over from Kong as the developer's new chairman today.
Shares in China Overseas fell 0.64 per cent to close at HK$23.35 per share yesterday. The benchmark Hang Seng Index rose 0.14 per cent.