Hong Kong company reporting season

Longfor Properties raises 2016 sales target after strong first half

Interim core net earnings jump 7.7pc to 2.4 billion yuan

PUBLISHED : Wednesday, 17 August, 2016, 8:53pm
UPDATED : Wednesday, 17 August, 2016, 10:56pm

Longfor Properties, one of the top 10 private developers in China, has raised its 2016 sales target by 21 per cent to 75 billion yuan after posted a 7.7 per cent rise in first-half core earnings.

The company saw its core net profit, excluding minority interest and revaluation gains, climb to 2.4 billion yuan in the first six months, thanks to improved sales price.

Net profit, however, dropped down 3 per cent to 3.73 billion yuan.

Gross margins recovered to 28 per cent from 27 per cent over the same period last year, driven by a higher proportion of income generated from shopping mall rental. The gross margin on rental was as high as 74 per cent.

We believe the government is positive in general on the property sector
Shao Mingxiao, chief executive officer, Longfor Properties

Shao Mingxiao, chief executive officer of the Chongqin-based developer – which has a large exposure in second tier cities such as Nanjing and Suzhou — said it remains bullish about the central government’s future home policies, despite recent tightening measures in Nanjing to cool the market.

“We believe the government is positive in general on the property sector,” said Shao on Wednesday in Hong Kong, adding the company has accelerated its construction activities to seize the window.

The developer recorded strong contracted sales in the January-July period, particularly, which reached 47.3 billion yuan, a 81 per cent year-on-year rise.

That represents 76 per cent of its original 2016 full-year sales target of 62 billion yuan. The developer has now raised the target to 75 billion yuan.

Shanghai developer CIFI holdings increased its core net profit 52 per cent in the first half to 948 million yuan. Gross margin also improved to 27 per cent from previous 25 per cent.

Chairman Lin Zhong said the company is confident the housing market will remain strong over the next 18 months, helped by an improved monetary environment.

He added, however, that as land competition in the larger cities is likely to remain fierce, the company will not increase its debt leverage to buy land as it will always consider profit as the priority when bidding.

CIFI plans to pay an interim dividend of 3.42 cents per share, a 33 per cent rise on last year.