Mainland developer Powerlong Real Estate Holdings said net interim profit margin, excluding property valuation gains, declined nearly by 12 percentage points due to increased income tax and a change in company strategy. Powerlong's net profit margin for the first six months of this year dropped to 13.9 per cent from 25.6 per cent a year ago. Chief executive Hoi Wa-fong said gross profit margin dropped slightly to 43.3 per cent since the company abandoned plans to sell its shopping centres. 'While selling properties can give us a higher profit margin of about 70 per cent to 80 per cent, we are not cutting the selling price,' Hoi said. Powerlong expected rental income to double every year. The commercial and residential developer said rental income in the first half grew 60 per cent to 101.8 million yuan (HK$124.2 million). This accounted for 5.2 per cent of the group's total revenue. Hoi said full-year gross profit margin should be able to climb back to 50 per cent, as a few projects would be completed in the second half of the year. These included two new malls in Suqian and Yancheng in Jiangsu province, which were scheduled to open next month with at least 97 per cent of the floor area taken. The company's income tax expenses surged 313 per cent to 1.04 billion yuan from 252,206 yuan for the period mainly because of fair-value gains for properties. Net profit including property revaluation gains increased 210 per cent to around 2.52 billion yuan. Contracted sales for the six months to June 30 came to more than 2.33 billion yuan, representing an increase of 87 per cent over the corresponding period last year. The total contracted sales area reached nearly 345,687 square metres, up from 158,828 sq m in the corresponding period last year. The average price was 7,640 yuan per sq m for commercial property and 6,793 yuan per sq m for residential property. From January to June, the group acquired four sites - two in Tianjin, one in Shanghai and one in Quanzhou - which boosted its land bank by about 1.7 million sq m to about 9 million sq m. Another developer Poly (Hong Kong) Investments, the locally listed vehicle of state-owned conglomerate China Poly Group, recorded a 21 per cent rise in net interim profit totalling 892.87 million yuan in the first half of this year. Its pre-sale and sold area came to 1.1 million sq m, a gain of 69 per cent over a year ago. Contracted sales reached about 8 billion yuan, about 45 per cent of its full-year contract sales target of 18 billion yuan. Both Powerlong and Poly pay no interim dividend to shareholders.