(Hong Kong, 22 March 2017) China Overseas Land and Investment Ltd. (“COLI” or the “Group”, stock code: 00688.HK) announced its 2016 annual results today.
Amid challenges in the industry in 2016, the Group’s total contracted property sales amounted to HK$210.6 billion, 16.6% increase compared to same period last year, achieving the sales target. The corresponding area sold was 13.04 million sq m. During the year, the Group completed a major transaction, the CITIC Assets Acquisition, adding 31.55 million sq m, with interest attributable to the Group of 23.52 million sq m. The acquisition of the CITIC Assets Acquisition are prepared under common control combinations with the financial statements prior to the acquisition has been restated, causing difference in basis which makes the key indicators not entirely comparable with prior years. If the profit/loss generated by the property projects acquired from CITIC Assets Acquisition were excluded, the profit attributable to the equity shareholders of the Company would have increased by 14.1% from HK$ 33.31 billion of last year to HK$ 38.01 billion of 2016. Profit attributable to equity shareholders of the Group increased by 6.9% to HK$37.02 billion. Before the end of 2016, the Group’s shareholders’ funds were up 6.1% to HK$222.25 billion. Average return on shareholders’ funds was 17.1%, maintaining at a higher level compared to the market. Basic earnings per share was HK$3.64, with a proposed final dividend of HK 42 cents per share. Together with the interim dividend of HK 35 cents per share, total cash dividends for the year were HK 77 cents per share, an increase of 26.2% compared with the previous year, standing up to the commitment of 20-30% dividend ratio. In future, the Group’s dividend ratio will gradually rise up to 30%.
During the year, the Group strengthened its position as a leading Chinese property developer by way of asset consolidation. The Company completed the CITIC Assets Acquisition on 15 September 2016, the Company issued shares to CITIC Limited and sold a property portfolio to settle the consideration. In December 2016, the Group completed to sell its projects in several tier-3 cities, including Yangzhou, Huizhou, Huangshan, Weifang, Zibo, Jiujiang and Shantou, to its associate China Overseas Grand Oceans Group Limited (“COGO” or stock code: 00081.HK). These two transactions were both completed in the year, highlighting the Group’s effective resources management and execution ability.
The Group will continue to operate a business structure with residential development as the main element, and commercial property development in a supplemental role. It will balance the allocation of resources for long-term and short-term investment. During the year, in response to the hot land market and taking account of the additional land resources relating to the CITIC Assets Acquisition, the Group (excluding COGO) acquired 17 parcels of land in 13 cities in mainland China, and one parcel of land in Hong Kong, a total additional GFA of 9.72 million sq m, including joint ventures and projects sold to COGO. The year saw 13.35 million sq m GFA completed. During the year, the Group’s investment properties GFA was 2.5 million sq m, the total rental income for the year was HK$2.14 billion, where increasing the proportion of profits from investment property is a long-term goal for the Group. At the end of the year, the GFA of investment property for future development or under construction was 4.4 million sq m, among which 1.2 million sq m was expected to be completed by the end of 2018.
Adhering to prudent financial management, the Group continued to enhance financial resources and optimise its debt structure.
In mid-August 2016, during a low-rate window, the Group issued a 10-year corporate bond with a value of RMB 6.0 billion to take advantage of market conditions. The bond yield was 3.1%, the lowest in the industry for tenors of over 5 years. In the end of the year, among the Group’s 173.80 billion interest-bearing debt, the ratio of Hong Kong dollar and US dollar-denominated debt dropped to 50.8%, while those of RMB rose to 43.5%. At the end of the year, the Group’s cash on hand amounted to approximately HK$157.16 billion. Hence, the Group’s financial position has continued to strengthen. In anticipation of a weaker RMB, the Group will increase cash inflow from mainland to Hong Kong. In 2016, the Group’s investment rankings were affirmed by Moody’s, Standard & Poor’s and Fitch at Baa1/Stable, BBB+/Stable and A-/Stable, respectively, reflecting the capital market’s recognition of the Group in terms of its leadership in China’s property market and financial soundness.
For 2017, the management will strive to achieve steady improvement in its performance. The Group will consolidate and continue to seek to boost its competitiveness and to focus on mid- and high-end residential segments as its core positioning. Against the backdrop of increased consolidation of the mainland property market, the Group will take into account its financial strength and market conditions, to maintain an appropriate scale of investment. On one hand the Group will continue to acquire land in the market, while on the other hand through active cooperation with various entities in the CSCECL group and other organisations with land resources, and also involvement in the redevelopment of shanty-towns and transformation of cities, in order to support stable growth in this 13th Five-Year Plan period.
Mr. Xiao Xiao, the chairman of COLI said, “2017 is expected to be complex and changeable, based on the global and local political and economic environments. The Group will continue to apply its longstanding maxim of “Exercise caution in details and implementation. Build a strong foundation to seek greater success.” With its solid foundation, worldwide vision and exposure, correct development strategies, appropriate nationwide development strategy plus excellent brand name and financial strength, the Group will continue to enhance its competitiveness in the industry through consistent innovation. The Group is confident that it can resolve risks and rise to the challenge and seek progress amid stability. The Board expects that the China property market to remain stable in the next few years and the Company can achieve sustainable and steady growth.
In 2017, the Group expects to commence development of an additional area of over 19 million sq m, bringing the total area under development to a peak of over 33 million sq m. The group will strive to have projects (including the joint ventures) with area of 13.5 million sq m completed and contracted sales (including joint ventures and associates) of not less than HK$ 210 billion achieved.
Caption:
(from left to right) Mr. Luo Liang, Vice President & Chief Architect,
Mr. Xiao Xiao, Chairman,
Mr. Yan Jianguo, Chief Executive Director,
Mr. Nip Yun Wing, Horace, Chief Financial Officer,
at COLI 2016 Annual Results Announcements.
－ End －
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