China Overseas Land to accelerate investment in Hong Kong after posting 25pc interim profit gain

PUBLISHED : Monday, 21 August, 2017, 7:34pm
UPDATED : Monday, 21 August, 2017, 10:44pm

State-owned developer China Overseas Land & Investment said it will accelerate investment in Hong Kong to take advantage of opportunities in the Greater Bay Area initiative after it reported first-half profit rose 25 per cent.

The blue-chip developer saw net profit for the first six months expand to HK$21.7 billion driven by higher selling prices and valuation gains during the period.

Revenue was up 3.5 per cent to HK$87.2 billion. Gross margins improved by 3 percentage points to 30.5 per cent.

“Hong Kong is an important part in the Guangdong-Hong Kong-Macau Bay Area, which is set to be one of the key drivers in China’s economic growth,” Yan Jianguo, chairman and chief executive of China Overseas Land & Investment, told reporters during the results briefing on Monday.

“We want to put more investments in Hong Kong and Macau,” he said.

Including its large scale Kai Tak project now in pre-sales, the developer achieved HK$16 billion in contracted sales in Hong Kong last year and HK$8 billion so far this year. It hopes to receive a sustainable sales contribution from Hong Kong market, Yan said.

In regard to China’s latest restrictions on overseas property investment by domestic firms, Yan stressed that it was different from other mainland developers in that China Overseas is registered and headquartered in Hong Kong.

The company bought a lot of land parcels in the first half at relatively low cost, which should pave the way for fast growth next year
Liu Feifan, Guotai Junan International

“We won’t have problems as we invest in Hong Kong as a local company,” he said.

Analysts said China Overseas’ first-half earnings were ahead of forecasts and looked positive for the company’s future growth.

“The company bought a lot of land parcels in the first half at relatively low cost, which should pave the way for fast growth next year,” said Liu Feifan, a property analyst at Guotai Junan International Holdings.

In the first half, China Overseas spent 41 billion yuan (US$6.1 billion) for 27 new sites totalling 6.3 million square metres, in 18 mainland cities as well as Hong Kong. It spent another 15 billion yuan in July for land acquisitions.

The developer earlier set an aggressive goal to spend 100 billion yuan to replenish its land bank this year.

In the first seven months, China Overseas achieved a total of 144.2 billion yuan in contracted sales, representing 33 per cent year on year growth.

With a bullish market outlook, the company raised its 2017 contracted sales target by 10 per cent to 231 billion yuan from the previous 210 billion yuan.

A interim dividend of 35 HK cents was declared, unchanged from the same period last year.

Shares of China Overseas closed 3 per cent higher at HK$25.5 in Hong Kong after the results were revealed.