Earnings at Beijing Capital Land jump 18pc

Hong Kong-listed developer Beijing Capital Land said yesterday that it could hit a full-year sales target of 28 billion yuan (HK$35 billion) without cutting prices despite slow sales in the first half, but gross profit margin would suffer.

The company reported an 18 per cent year-on-year jump in first-half net profit attributable to shareholders to 661.13 million yuan. But gross margin fell 3 percentage points from six months earlier to 23 per cent at the end of June. Revenue dropped 8 per cent to 4.52 billion yuan.

Shares in Beijing Capital Land gained 1.04 per cent to HK$2.91 yesterday, recovering from an early dip to finish near the highs of the session.

"China is easing its [housing] policy, with more cities expected to scrap home purchase restrictions and [mortgage] loans becoming cheaper," said chairman Liu Xiaoguang.

Executives told reporters that there was no need to cut prices for the rest of this year to boost sales as the market was recovering, although the company only achieved contracted sales of 6.77 billion yuan in the first six months. It has 35 billion yuan worth of homes available for sale in the second half, while the gap to hit target is less than 22 billion yuan.

Chief executive Tang Jun said 60 per cent of the pipeline was in Beijing and Tianjin and 75 per cent was for end-users.

The average selling price rose 1.6 per cent in the first half. Beijing and Tianjin combined generated 56 per cent of its contracted sales during the period.