FUNDRAISING

Developer Cifi has no need for rights issue, says chairman Lin Zhong

PUBLISHED : Tuesday, 16 September, 2014, 11:54am
UPDATED : Wednesday, 17 September, 2014, 5:08am

Medium-sized developer Cifi Holdings (Group) has no plans to follow its rivals in launching a rights issue, given the company's financial health, chairman Lin Zhong said.

"We will not launch a rights issue," Lin said. Nor did Cifi plan any bond issues this year, he said.

Lin said Cifi, as a listed company, would consider all kinds of financial instruments in the capital market. But any fundraising decision would be based on three criteria: that the move helped the company's development, was good for shareholders and served its short-term and long-term strategies, he said.

Amid the downturn in the mainland's property market, Country Garden became the first Hong Kong-listed mainland developer to tap the equity market this year by announcing a HK$3.18 billion rights issue last month. Guangzhou-based Yuexiu Property followed that move early this month by saying it aimed to raise HK$3.84 billion in a rights issue.

Lin said the company's financial position was solid, with gearing at 70 per cent despite the expansion of its portfolio. That puts it at a comfortable level compared with many of its rivals.

Listed in 2012, Cifi focuses on developing residential and commercial properties in first and second-tier cities, mainly in the Yangtze River Delta region. It has also expanded to the pan-Bohai Rim, including Beijing and Tianjin, and the central western region. The developer owned more than 60 projects and had a land bank of 7.5 million sqmetres attributable to the group at the end of June.

Rating agency Moody's Investors Service said Cifi's liquidity position was sound, with cash on hand of 6.4 billion yuan (HK$8.06 billion) in June that covered its short-term debt by about 2.8 times.

Moody's expects the developer's credit profile will continue to improve, boosted by its strong sales growth and disciplined approach to financial management.

Cifi last month announced core net profit for the six months to June jumped 12 per cent year on year to 646 million yuan. Net profit dropped 12.4 per cent to 749 million yuan.

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