Franshion Properties sees profit jump 63pc on strong high-end sales

PUBLISHED : Wednesday, 20 August, 2014, 1:34am
UPDATED : Wednesday, 20 August, 2014, 1:34am

Mainland developer Franshion Properties China said yesterday it would speed up launches of projects in the second half while keeping prices flexible to hit its full-year sales target after it reported a 63 per cent year-on-year jump in first-half net profit to HK$3.65 billion.

Stripping out property revaluation gains, core profit rose 14 per cent to HK$2.08 billion.

In the second half, Franshion would launch 20 projects, including one office project in Shanghai, that would push up both sales and profit margins, chief executive Li Congrui said.

"Our sales performance was very good in a weak market in the first half," Li said. "The sell-through rate was over 80 per cent."

He added that policy relaxation, especially the lifting of price controls for high-end housing projects in cities such as Beijing and Shanghai, would help boost the company's sales for the rest of the year.

Franshion's shares rose 1.9 per cent to close at HK$2.15 yesterday.

Revenue from property development rose 29 per cent year on year to HK$11.8 billion, rental revenue grew 11 per cent to HK$696.1 million and hotel revenue picked up 2 per cent to HK$1.06 billion.

Franshion has a pipeline worth 47 billion yuan (HK$59.2 billion) for this year, but only released 8.2 billion yuan worth for sale in the first half. As a result, its contracted sales in the first seven months reached 6.86 billion yuan, only 34 per cent of its full-year target of 20 billion yuan.

Li said the company would price its products in line with market changes in the next few months, although the average selling price rose in the first half.

It would replenish land reserves in the rest of this year based on sales performance, although it had a budget of about 10 billion yuan for the second half.

Franshion spun off its hotel business, Jinmao (China) Investments, for a separate listing on the Hong Kong stock exchange last month, receiving a pre-initial public offering dividend of about HK$6 billion. It now holds 66.5 per cent of Jinmao.

The hotel business would grow fast in the second half as the company expected a pickup in the room rate after occupancy ratio, which improved in the first half across all hotels it operated, chief financial officer Jiang Nan said.

Langi Chiang