China Overseas Land and Investment Limited 2012 Annual General Meeting Media Q&A Transcript
Author:China Overseas Land and Investment Ltd.
Date : 30 May 2012
Q : Question by media
A : Answer by Chairman Mr. Kong Qingping
| Q: | Can you comment on the adjustment and control policy of the PRC government? |
| A: | In fact I have talked about this many times. China’s macro-economic adjustment and control is a long-term effort. The PRC government may adopt certain measures at any time in response to conditions in its economic performance. In the words of a veteran economist: China is a market economy with planning, therefore the government may make judgments on certain situations or companies from time to time and adopt measures on that basis to bolster the economy. |
| Q: | At the moment, do you have the feeling that the government has loosened its control in the hope of bolstering the economy? |
| A: | Although some policy adjustments relating to the property market have been introduced, they are not sufficient on an overall basis. In general we remain subject to very grim and challenging market conditions. If we want to overcome this, we will just have to keep on doing our business properly. The worst days of the property market are not yet over. In fact they may continue for a prolonged period. It’s hard to predict what kind of adjustments will be made in future. It will mainly depend on market conditions prevailing then. |
| Q: | What kind of loosening measures would you hope for? |
| A: | This is not up to us to decide. The measures required should be determined by the State, based on its judgments on international situations, such as those relating to the sovereign debt issue of the Eurozone, as well as domestic situations. |
| Q: | To be more specific, is there any chance for the down payment ratio to be lowered? |
| A: | A lower down payment ratio might as well provide a solution for first-time homebuyers. |
| Q: | The performance of the property sector seems to have worsened after the lowering of the deposit reserve ratio by the State. Why is that so? Do you anticipate a wave of closedowns of property companies? |
| A: | In fact, we know that the State has invested funds in the infrastructure and service sectors, as well as provided assistance to the automobile sector. These funds are not going to flow to the property market, therefore the property sector will remain subject to strained liquidity, and under such conditions there may be companies who find it difficult to sustain their operations. |
| Q: | In recent days there have been news reports on the launch of the Changfeng project inShanghai at such discount prices that it won’t breakeven. Can you comment? |
| A: | Not breaking even? We have never done loss-making businesses. We all know that very well, so please rest assured that we won’t make a loss. In fact, it has been our traditional strategy to open sales at a lower price level and revise upwards as stocks go. Up until now, we remain confident that we can provide a very good product for consumers and we also believe that we will meet our expected investment targets. |
| Q: | Will there be further price-cut strategies for future projects? |
| A: | The price level is already very low. We launched our projects at reasonable price levels, in the hope that consumers will be offered products that are worth their money and will appreciate the value growth potential of these products. |
| Q: | Is the profit margin of The Amethyst lower than those of previous projects? Would it reach 30%? |
| A: | We are confident that our investment target will be met, but it’s difficult to determine the profit margin of an individual project. Nevertheless, as far as COLI’s overall conditions in future are concerned, we do have sound control over our profit margin. |
| Q: | The Company reported good sales performance for April. Do you think this level of performance can be sustained in the coming months? |
| A: | We are confident that it will be sustained. I have shared this view with you before: I believe the most important thing that a company or enterprise should do is to offer the best possible product. The property sector is an industry that requires significant investments while being subject to high risks. Therefore, we should always maintain very healthy financial conditions. Only in this way will we be able to drive and develop our business according to designated targets under any market conditions. As of now, our sales for the first 4 months have exceeded 40% of our annual sales target. So we are confident that the full year target will be met. |
| Q: | Will you consider revising the annual target upwards? |
| A: | Not for the time being. Given the market environment for the current year, meeting the full year target will be satisfactory. |
| Q: | Do you see any improvements in market sentiments in May? |
| A: | For the industry in general, things have somewhat improved. However, such improvements are not enough for the problem to be solved. It will still take time. For the Company, the most important thing is to run our business properly and maintain sound financial conditions in a consistent manner. We will be able to do this, although conditions in the second half of the year will be somewhat tight. All in all, please rest assured that our results for the second half of the year will show further improvements. |
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