New World China Land sees mainland China profit double

New World China Land (NWCL), the mainland property unit of New World Development, said an estimated 6.27 billion yuan (HK$7.94 billion) worth of property sales will be booked in the second-half result for the financial year ending in June. That compares to 5.39 billion yuan of sales in the year-earlier period.

The statement came after it reported an underlying profit - excluding revaluation, exchange difference, impairment and amortisation of intangible assets - up 103 per cent to HK$1.43 billion for the first-half to December 31.

It said 405,586 square metres in floor area with gross sales proceeds of about 6.27 billion yuan could be booked in the second half as these projects are scheduled to be completed within six months.

"In order to grasp market opportunities while diversifying policy risks at the same time, the group will maintain a healthy balance of business coverage in first, second and third-tier cities, and it is expected that future gross profit margin will be maintained at a healthy level," said chairman and managing director Henry Cheng Kar-shun.

"With an increasing proportion of property projects to be completed in the next two years being located at second and third-tier cities, the group expects that the achievable overall gross profit margin from property sales will be maintained at a level of more than 35 per cent," Cheng said.

In the period under review, attributable operating profit from sales saw year-on-year growth of 94.33 per cent to HK$3.09 billion, while rental income registered a 4.81 per cent increase year on year to HK$292.19 million. Revenues increased 82 per cent to HK$11.88 billion.

Overall gross profit margin dropped to 50.9 per cent in the first half, down from 51.2 per cent in the same period in 2012. Executive director and company secretary Lynda Ngan Man-ying said the decline in gross profit margin was due to the 27.5 per cent fall in the average selling price. The firm said average selling prices were at 13,073 yuan per square metre, down from the previous 18,035 yuan per square metre.

Ngan expects 80 per cent of the projects for sale would come from second and third-tier cities with an average selling price of 14,000 yuan to 15,000 yuan per square metre. Ngan said NWCL has no immediate plan to offer projects at discounted prices.

As at the end of last year, she said the firm had secured 10 billion yuan in property sales, accounting for 57 per cent of the 17 billion yuan target sale for this financial year to June. From now to June, the group plans to complete 10 property projects for sale with a total gross floor area of 753,131 square metres.