Hong Kong company reporting season

Beijing Capital Land posts 2pc drop in 2016 net profit, says it will continue Australia home building drive

PUBLISHED : Tuesday, 21 February, 2017, 6:28pm
UPDATED : Tuesday, 21 February, 2017, 10:13pm

State-owned developer Beijing Capital Land said it will continue to expand its footprint in Australia despite tightened controls on capital outflows.

“We will continue to strengthen our presence in Australia, and this year we’re considering entering Melbourne,” Tang Jun, president of Beijing Capital Land said at the annual result briefing in Hong Kong on Tuesday.

Beijing Capital Land currently has several residential projects in Sydney and Brisbane, reflecting its lead as one of the first Chinese property developers to expand in Australia,

“For the long term, we are very positive on Australia, given its receptive stance towards Chinese immigrants and buoyant economic activities,” said Bryan Feng, head of investor relations at Beijing Capital Land.

Feng added that fresh capital control on Chinese individuals buying overseas real estate will not have a big impact on its sales because about 80 per cent of its buyers are Australian residents.

The developer expects Australian property projects to contribute 10 to 15 per cent of its annual contracted sales in 2018 and 2019, as a result of portfolio diversification. The company said it is seeking local bank loans to finance its developments in Australia besides tapping offshore US dollar bonds.

Meanwhile, Beijing Capital Land said its mainland share listing application was officially accepted by the China Securities Regulatory Commission, which means its listing process is accelerated.

It expects to be successfully listed on a mainland stock exchange in the first half of 2018.

The company will keep its Hong Kong listing, officially becoming a dual-listed entity once it begins trading in Shanghai or Shenzhen.

Chief financial officer Fan Shubin said getting listed in the mainland will help the developer reduce its debt ratio to about 70 per cent from more than 130 per cent currently.

The developer said its 2016 profit totalled 2.03 billion yuan (US$29.5 billion), a 2 per cent decrease from a year earlier. Revenue rose 27 per cent to 20.3 billion yuan, yet margins were under pressure from sales in low-margin, lower-tier cities.

Beijing Capital Land’s shares in Hong Kong slumped 6.7 per cent to HK$3.33 on Tuesday following the results announcement.

With the company’s development focus shifting to top tier cities including Beijing, Shanghai and Tianjin, Fan said its gross margin is on the way to recovery and would improve to 20 per cent by the end of 2017, compared to 13 per cent at the end of 2016.

The company has also set a contracted sales target of 50 billion yuan this year, 10 per cent more than 2016’s actual sales.

The board recommended a final dividend of 0.2 yuan per share, unchanged from last year.