Shimao to buy more land after net soars 317.7pc

Shimao Property Holdings, controlled by the mainland's second-richest man Hui Wing-mau, will spend about one billion yuan on buying land this year after recording a 317.68 per cent jump in its first annual earnings report since listing in July last year.

Net income, excluding non-cash items such as gains from property revaluation and goodwill impairment charges, surged to 2.19 billion yuan last year from 526 million yuan in 2005, beating the 2.05 billion yuan forecast in a Thomson Financial survey. Turnover rose 176.52 per cent to 6.91 billion yuan from 2.5 billion yuan.

Shimao's property sales jumped 173.57 per cent to 6.73 billion yuan last year from 2.46 billion yuan.

Adjusted net margins improved to 32 per cent from 21 per cent with average land costs accounting for about 20 per cent of its average selling prices of 11,700 yuan per square metre, compared with the industry practice of 40 per cent.

Mr Hui said the firm planned to buy as much as four million square metres of land this year. It has a land bank that can be developed into 20.16 million sqmetres of gross floor area.

Together with 3.52 million sqmetres of land it has bought since January, the firm aims to add 7.52 million square metres, up 19 per cent from 6.31 million sqmetres added last year, to its land bank.

Jason Hui Sai-tan, Shimao's executive director and Mr Hui's son, said the capital outlay for this year would be about 10 billion yuan. The company had cash and bank balances of 6.02 billion yuan last year.

Mr Jason Hui expects 30 per cent growth in sales revenue for this year as the area available for sale grew to 1.64 million sqmetres from 1.4 million sqmetres. It would be raised to 2.8 million sqmetres next year, he said.

To speed up property sales, he said Shimao had shifted its strategy to building projects with bare units, which only took about one year to complete, from residential blocks with interior fittings and decorations that took between two and three years to finish.

Shares of Shimao fell 2.84 per cent to close at HK$15.04 yesterday.