Shanghai-based developer Shimao Property (0813) saw first-half net profit surge 59 percent year-on-year to 3.8 billion yuan (HK$4.64 billion), taking earnings per share to nearly 93 fen.
Shares soared 4.6 percent to HK$8.19 on the news.
Shimao Property Holdings Limited (Shimao Property) is an investment holding company. Through its subsidiaries, Shimao Property is principally engaged in property development, property investment and hotel operation in the People’s Republic of China.
Some of the projects completed by the Company, during the year ended December 31, 2010, included Kunshan Shimao East No. 1 New City, Suzhou Shimao Canal Scene, Ningbo Shimao World Gulf, Fuzhou Shimao Skyscrapers, Kunshan Shimao Butterfly Bay, Yantai Shimao No. 1 The Harbour, Changshu Shimao The Center, Shaoxing Shimao Dear Town, Shenyang Shimao Wulihe, Hangzhou Shimao Riviera Garden, Wuhan Shimao Splendid River, Jiaxing Shimao New City, Wuhu Shimao Riviera Garden, Changzhou Shimao Champagne Lakeside Garden, Shanghai Shimao Emme Country, Mudanjiang Shimao Beishan Project, Taizhou Shimao Riverside Garden, Mudanjiang Shimao Jiangnan Project, Wuhan Shimao Carnival Project, Tianjin Shimao Ecology City and Nanjing Shimao Bund New City.
Profit from core business jumped 38.7 percent to 2.3 billion yuan as 14.3 billion yuan was realized in contracted sales in the six months to June 30. An interim dividend of 22 HK cents was declared.
“More than 50 percent of sales were derived from purchase-restricted areas,” vice chairman Jason Hui Sai-tan said. “We saw a drop in sale price [in those locations], and will, if necessary, cut prices further.”
Discounts of up to 30 percent would not hurt the company, Hui said, because land cost even then would account for just 13 percent of contracted sales amount.
As for home-purchase limits expected to be imposed on second- and third-tier cities, Hui said: “We will launch more small-sized flats [to boost sales].”
Contracted sales in the first eight months of the year hit 20.9 billion yuan – well past the halfway mark at 58 percent of the 36 billion yuan whole-year target.
Average unit sale price during the period was 13,260 yuan per square meter, up 18 percent year-on-year.
“We hope the average sales price will stand at 12,000 yuan psm for the whole year,” Hui said.
Gearing ratio dropped to 60 percent in August from 75 percent as at June 30, indicating reduced dependence on creditors’ funds.
There is cash at hand of 12.2 billion yuan, but 16 billion yuan has been allocated to capital outlay in the second half – of which 4.5 billion yuan will be used to close land possession deals.