China Overseas Land & Investment

China Overseas Land’s 2016 profit rises amid record property prices

Property giant China Overseas Land net profit climbs 6.9 per cent as it targets 210 billion yuan in sales in 2017, unchanged from previous year

PUBLISHED : Wednesday, 22 March, 2017, 1:01pm
UPDATED : Wednesday, 22 March, 2017, 8:17pm

State-owned developer China Overseas Land & Investment, said its full-year net profit for 2015 climbed 6.9 per cent, amid record property prices in the country over the past two years.

Net profit for the year to December 31, 2016 rose to HK$37 billion (US$4.76 billion), or HK$3.64 per share. Core earnings, excluding fair value gains, rose to HK$31.4 billion, in line with the expectations of analysts polled by Bloomberg.

The developer has set a target for contracted sales in 2017 of 210 billion yuan (US$30.4 billion), unchanged from its sales in 2016.

“The policy regulation by the central Chinese government will continue,” China Overseas chairman Xiao Xiao said in a statement announcing the results. “China’s property sales are expected to experience some resistance in the first half of 2017 as market consolidation accelerates, with the sector overall presenting both challenges and opportunities.”

The key concern of the company is if the new CEO will pursue a growth pace that can catch up with the industry average
Toni Ho, analyst, RHB-OSK Securities

Excluding losses generated by property assets acquired from Citic Group, the profit attributable to shareholders increased to HK$38.4 billion.

Revenue decreased 3.2 per cent to HK$164 billion.

China Overseas’ property business spans from Hong Kong to Macau and London.

Xiao told reporters on Wednesday the builder will continue to actively bid for land in Hong Kong despite the increasingly hotter competition and the company expects the housing markets of Hong Kong and Macau to see stable growth.

The developer appointed Xiao to chair its board, together with new chief executive Yan Jianguo in late 2016, after the sudden departure of former chairman and chief executive Hao Jianmin.

China Overseas also acquired the entire property assets of state-owned conglomerate Citic Group for 31 billion yuan last year.

Contracted home sales in 2016 rose 17 per cent to 210.6 billion yuan, lagging behind its competitors.

“The key concern of the company is if the new CEO will pursue a growth pace that can catch up with the industry average,” said Toni Ho, a property analyst at RHB-OSK Securities.

During the results briefing, Xiao said the company was sticking to its goal of reaching 400 billion yuan in sales by 2020, and would speed up land acquisitions to achieve it.

A final dividend of 42 HK cents was declared, making its 2016 total distribution at 77 HK cents, a 26 per cent increase from 2015.

Shares of China Overseas closed 1.8 per cent lower at HK$24.35 in Hong Kong on Wednesday after the results were revealed.