Poly Property to step up sales drive to meet annual target

Poly Property Group said yesterday it would speed up sales in the second half to hit its full-year target of 28 billion yuan (HK$35.3 billion) and maintain a gross profit margin of 25 per cent.

Chairman and managing director Xue Ming reaffirmed the company's mainland parent Poly Group's plan to merge it with Poly Real Estate, which is listed in Shenzhen. He gave no timetable or details.

Poly Property shares fell 1.4 per cent to end at HK$3.53 yesterday after it reported a 42.2 per cent drop in first-half attributable profit to HK$1.13 billion. Rising cost of sales and finance and lower revaluation gains from investment properties were blamed for the sluggish results.

The company would redouble efforts to sell down its stock of luxury homes through better marketing and more flexible prices, said deputy general manager Ye Liwen.

"We had completed yet unsold homes worth 14.5 billion yuan [as at the end of June]," Ye said. "We will mainly produce homes for end users in the future and the inventory level should improve."

Most mainland developers are seeing profit margins squeezed by the rising cost of land and labour, but Poly Property is among the minority to post lower profits in the first half.

Turnover rose 8.2 per cent to HK$11.2 billion, but the cost of sales jumped 17.7 per cent to HK$8.4 billion. Finance charges rose 57.6 per cent to HK$415 million and gross profit fell 12.7 per cent to HK$2.8 billion.

No dividend was proposed.

The company's property sales fell 20 per cent in the first seven months of the year to 13.4 billion yuan - 48 per cent of its full-year target.

In the first half, it had 44 projects for sale, including three new ones. In the second half, it plans to launch eight projects for sale, making available products worth 24.6 billion yuan.

The company bought nine land parcels in the first half, including land in Hong Kong and Guilin, in Guangxi province, for the first time. That pushed land reserves to 2.25 million sqmetres, and saw its gearing ratio rise to 73 per cent from 70.6 per cent at the end of last year.

Separately, Soho China reported yesterday a surge in core profit of about 128 per cent to 1.22 billion yuan for the first half. However, its share price fell 1.84 per cent to close at HK$6.40, reflecting investors' concern about the sustainability of its profit growth.

The mainland's largest developer of prime office space said it would continue to explore buying opportunities in Beijing and Shanghai to take advantage of a residential market downturn.

Soho recorded a turnover of 4.75 billion yuan as property sales rose 83 per cent to 4.59 billion yuan. Rental income rose 84 per cent to 164 million yuan.

Net profit grew 29 per cent to 2.7 billion yuan.

A dividend of 12 fen a share will be paid.