Shimao to hit 2013 sales target ahead of schedule

PUBLISHED : Wednesday, 21 August, 2013, 12:00am
UPDATED : Wednesday, 21 August, 2013, 4:45am

Shimao Property Holdings said it would achieve its full-year sales target of 55 billion yuan (HK$69.16 billion) by October, amid a positive outlook for the mainland's housing market.

The upbeat sales view came as the developer announced a 11.4 per cent year-on-year growth in net profit to 3.47 billion yuan for the first six months of the year.

Core profit, excluding fair value gains of investment properties, jumped 60.7 per cent to three billion yuan from the same period last year.

Shimao, which has about 70 projects in 34 cities, said its contracted sales grew about 45 per cent to 32.5 billion yuan in the first half.

"As of July 31, contracted sales amounted to 36.5 billion yuan, representing about 66.5 per cent of our annual sales target," said Jason Hui Saitan, executive vice-chairman of the Shanghai-based company. "We are confident of achieving our full-year sales target by October," said Hui.

Chairman Hui Wing-mau said the mainland's property market took a positive signal from a July 30 Politburo meeting presided over by President Xi Jinping. The meeting, where the tone was set for the economic policies for the second half of this year, did not mention curbs on the real estate market.

New home prices on the mainland rose the most last month since January 2012.

"The main strategies for regulating the real estate market are expected to be optimisation and adjustment, making tightened regulation unlikely," said Hui Wing-mau in the statement.

Bucking the trend of developers' declining profit margins, Shimao said its gross profit margin rose 1.1 percentage point to 35.5 per cent from last year's first half.

"The increased profit margin was helped by effective cost control and rising asking prices," said Jason Hui, adding that he believed margin growth would be maintained as the projects pre-sold in the first half went for 13,033 yuan per square metre, compared with about 12,000 yuan per square metre for the projects sold last year. The projects pre-sold in the first six months of this year will be booked into the profit-and-loss account in the next two years.

Turnover rose 21.8 per cent to 16.68 billion yuan. No interim dividend was declared.

Shimao said the firm had sufficient cash. As of June 30, it had about 18.9 billion yuan of cash on hand and unused credit facilities of about 20 billion yuan.

In May, Standard & Poor's Ratings Services raised its long-term corporate credit rating on Shimao Property to BB from BB-minus.