CR Land to buy assets worth HK$7.3b from main shareholder China Resources
Core profit surges 25pc to HK$6.3b, on a 20pc rise in revenue to HK$44.5b
State-run China Resources Land, one of the country’s top ten property developers, has agreed to buy a mixed-use integrated project in Shenzhen, and the ownership and management rights of 23 car park projects spread across eight cities, from its controlling shareholder, China Resources (Holdings) for HK$7.29 billion in cash.
The acquisitions come as the firm posted a 25 per cent surge in interim core profit, excluding revaluation gains, to HK$6.3 billion, which was at the top end of analysts estimates polled by SCMP of HK$5.5 billion to HK$6.3 billion.
The assets to be acquired include a residential-hotel-retail complex currently under construction in Shenzhen’s Nanshan district, valued HK$16.4 billion, according to the company filing to the Hong Kong stock exchange on Friday.
It said the residential development had recorded contract sales by June 30 of more than HK$4.9 billion, with further revenues expected until 2020. The project is due to be delivered in 2018, while the serviced apartments are expected to be ready for sale in 2020.
The shopping mall and the hotel are expected to open in 2018 and 2019, respectively.
Of the 23 car park projects in cities including Nanjing and Tianjin, 13 are owned outright, with the rest management only.
Within its interim figures, the company said revenue increased 20 per cent to HK$44.5 billion, while its gross margin ratio improved to 33.9 per cent from 32.2 per cent during the same period last year.
The company “benefited from its strategic focus on tier 1 and tier 2 cities and its brand recognition by customers”, said Tang Yong, its vice-chairman, in a statement on Friday.
Rental income from its 21 shopping malls – including the well-known Mixc brand – buildings and hotels increased 13.6 per cent to 3.53 billion during the period, despite a weak retail market in mainland China.
The company has announced an interim dividend of 9.2 HK cents, rising from 8.7 HK cents a year ago.
“Despite soaring land costs, CR Land managed to replenish its land bank with 16 billion yuan worth of new land purchases, in major cities at reasonable costs. This paved the way for long-term contracted sales and earnings growth,” John So, a property analyst at China Merchants Securities wrote in a note prior to the earnings announcement.
The investment bank expects CR Land to post 17 per cent core profit growth for the full year of 2016.
CR Land shares climbed 3.87 per cent and closed at HK$21.45 on Friday. Its shares have jumped 24 per cent in Hong Kong in the past 12 months.