1H 2018 profit attributable to shareholders amounted to HK$23.22 billion,
net profit margin 26.2%
cash on hand of HK$127.93 billion and net gearing of 28.1%
(Hong Kong, 23 August 2018) China Overseas Land and Investment Ltd. (“COLI” or the “Group”, stock code: 00688.HK) is pleased to announce its 2018 interim results today.
In the first half of 2018, the Group achieved better and faster development with each of its major operation indicators reaching new historic high. In light of the property price stagnation and sales volume decrease in first-tier and second-tier cities in mainland China, the Group achieved a fairly rapid growth. The Group series of companies achieved faster growth in the scale of sales, where the total contracted property sales amounted to HK$150.85 billion, 18.5% increase compared to same period last year. The Group series of companies effectively responded to the impact of policy regulation, including purchase and signing restrictions as well as credit tightening, with its sales collection rate increased by 16.8% same period last year and collection amount reaching new high at HK$134.12 billion.
Profitability remained at industry-leading level. In the first half of 2018, the Group’s revenue amounted to HK$88.6 billion; operating profit and profit attributable to shareholders amounted to HK$35.75 billion and HK$23.22 billion respectively, with net profit margin reaching 26.2%, and remained at industry-leading level. The Group proposed an interim dividend of HK40 cents per share. In the first half of 2018, the Group’s shareholders’ funds were up to HK$275.88 billion, with net asset value of HK$25.18 per share, maintained at an industry leading level.
Financially stable with sufficient cash. Adhering to the healthy and prudent financial strategy, the Group maintained its lowest gearing among the real estate peers whose annual sales exceed HK$100 billion. In the first half of 2018, net gearing ratio and asset liability ratio of the Group were 28.1% and 59.96% respectively, while cash on hand was HK$127.93 billion. At the same time, weighted average borrowing costs was 4.27%, which remained as one of the lowest in the industry. The Group believes that with credit tightening, its strength of having healthy financial management and control, sufficient cash and low cost financing will continue to enhance its competitiveness.
Steady investment strategy, pushing land bank GFA to new high. In the first half of 2018, the Group acquired 26 parcels of land, adding GFA of 7.89 million sq m (attributable interest of 6.64 million sq m), with a total attributable land premium of HK$45.95 billion on land. At the end of June 2018, the GFA of the Group Series of Companies’ land bank reached 87.36 million sq m. Due to increasing financial strain in real estate industry in mainland China, the Group expects better investment opportunities in the second half of 2018.
Newly commenced and under construction areas reached new historic high and saleable resources were adequate. In the first half of 2018, the Group Series of Companies had newly started and under construction areas of 15.97 million sq m and 44.56 million sq m respectively, increasing by 43% and 56% compared to last year, with a larger construction scale and adequate value reserve. Balanced distribution of newly commenced and under construction areas in all regions of the Group ensures sound and rapid growth this year and next, and substantially enhances the momentum of sustainable development.
Group-owned commercial assets and rental income continued to expand in size. In the first half of year, the Group’s total revenue from commercial properties was HK$2.03 billion, representing an increase of 46% compared to the corresponding period last year, of which, 38 were China Overseas Grade A office buildings, with a total operating area of over 2.29 million sq m, making it one of the largest single-title office developers in mainland China.
The Group series of companies has 12 integrated shopping malls such as Unipark (環宇城), Unipark Shopping Mall (環宇薈) and Mid-Town, and 12 star-rated hotels. The Group has 5 additional asset-light commercial projects in operation, covering an operating area of 280,000 sq m. The Group’s co-working brand Officezip launched new products in Beijing, Shanghai, Chengdu, Jinan, Wuhan, where its average occupancy rate exceeded 90% with an effective rent premium of 160% compared to that of traditional office buildings. In the first half of 2018, Xiong An Citizens Service Centre project which the Group took a lead role to invest, construct and operate, had come into operation. The super high-rise project over 600 meters in Chengdu Tianfu New District invested and constructed by the Group had also completed smoothly. The Group is also developing and building multiple long-term rental apartment projects.
Orderly propelling innovative businesses, with a number of new businesses ready to launch. The Group established innovative business focusing on education, culture, elderly care and logistics. It also operates and manages China Overseas Logistics Technology Park in Tianjin Binhai New District covering over 500,000 sq m; three K12 schools in Dongguan and Foshan with enrolment rate topping the list; Shenzhen Contemporary Art Centre and Urban Planning Exhibition Hall has held over 10 provincial and municipal exhibitions attracting more than 350,000 visitors. In the first half of the year, Qingdao COLI academy, Dongguan badminton court and Hainan sailing camp opened. In the second half, four kindergartens in Dongguan, Foshan, Jinan, Changsha, as well as Guangzhou COLI Academy, Lane No. 4 Tianjin Nursing Home and Qingdao Elderly Apartment will come into service.
In a market that is going through adjustments, the Group attaches great importance to the growth momentum brought by quality management. Since last year, the Group has implemented the development and application of more than 60 information management systems. To date, the Group has completed and applied more than 30 information systems, including city maps, omnipresence project management plans, supply-marketing-inventory systems, three-tier customer inventory, cost management, sales and commission management, and CRM. The integrated digital control platform is basically completed, and the business progress and operation level of the whole process of property development are under precise control. The Group has set up a customer research centre to establish a multi-level, multi-type product research and development system that serves five categories and ten types of customer, to meet the needs and sensitivities of different customers, to combine standard and innovative design with cost flexibility. Additionally, a new series of new residential projects that reflect confidence in contemporary Chinese culture have been well received by the market. The Group enhanced its quality control procedures, improving the implementation process in construction through new technologies and conducting mystery customer visits and customer interviews. The Group proactively seeks to understand customer needs and offer responsive solutions, and organises a series of customer care and social activities so that customer satisfaction levels continue to improve. The Group believes that the continuous promotion of quality management will not only improve the competitiveness of the Group in the market but also strengthen its business efficiency and implementation.
Smooth implementation of share option scheme and “Professional Manager” system. The Group launched its share option scheme, granting share options comprising 107 million shares to 404 middle to senior executives in the first half of the year. In next few years, the Group will launch the share option scheme in phases. The Group is listed by the Central Government as a pilot organization for the “Professional Manager” system. Our senior executives all signed a professional manager agreement pledging their commitment to effectively enhancing the ethos of career community professionalism in middle to senior management.
Maintained highest industry credit-rating. In the first half of 2018, the Group’s investment rankings were affirmed by Moody’s, Standard & Poor’s and Fitch at Baa1/Stable, BBB+/Stable and A-/Stable respectively and remained its highest industry credit-rating, which reflected the capital market’s recognition of the Group in terms of its leading position and financial stability in China’s property market.
View and development strategy for real estate market in China in the second half of 2018:
The Central Government proposed to “resolve the problems of the real estate market; continue to apply city-specific policies; promote balanced supply and demand; manage expectations, regulate the property market and hold down prices”. The Group expects to see tighter regulation and control of the real estate market in the second half of the year, likely depressing prices and sales and potentially stimulating market volatility. At the same time, the Central Government emphasised “stabilizing employment, finance, foreign trade, foreign investors, foreign investment and future tasks”. The Group believes that the aim is to promote a long-term mechanism for housing with multiple sources of supply that delivers secure housing affordability through a variety of channels, encouraging both housing purchases and rentals. In this way, the real estate market in China gives the Group great confidence in its medium- and long-term prospects.
The Group will continue to focus on cities with strong economies and continuous population influx, maintaining its positioning in major cities, mainstream areas and mainstream products, deeply developing markets in more than 60 cities in mainland China, Hong Kong and Macau; increasing the local market share; improving management efficiency; strengthening cost control; speeding up turnover, creating excellent products, excellent services to achieve excellent effectiveness, and to move forward to a better and faster development.
Mr. Yan Jianguo, Chairman and Chief Executive Officer of COLI, expressed that: “Currently, the real estate regulatory policies continues to be tight, related long-term mechanism policies are approaching, and the market is facing more downward pressure. In the second half of 2018, COLI will proactively respond to policy and market changes, accelerate development, accelerate sales, accelerate payment collection and accelerate the operational scale and income growth of Group-owned commercial properties, steadily expand new businesses, strengthen cost control, quality management, continuously improve product and service quality, maintain adequate cash reserves, insist on a stable financial strategy, and maintain a defensive and offensive development approach, to reward shareholders and the society with continuous development.”
– End –
COLI management at 1H 2018 Interim Results
From left: Guo Guanghui, Vice President; Yan Jianguo, Chairman & CEO; Lou Liang, Executive Vice President, COO & Chief Architect; Eddie Lui Sai Kit, CFO
Related news
