Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
SPG LAND
HKEx Stock Code : 00337 
 
Corporate Profile
Principally engaged in property development, property and hotel investment, property management and education.

Business Review - For the year ended December 31, 2012

Property Development

During the year, the total GFA sold and delivered amounted to 84,863 square meters, a 80% decline from the 429,646 square meters sold and delivered during 2011. The average selling price increased from RMB12,539 per square meter 2011 to RMB15,082 per square meter in 2012. Revenue derived from property sales in 2012 was approximately RMB1,415 million.

During the year, the Group's contracted sales reached RMB3,008 million, compared to RMB3,207 million in 2011. Aggregate contracted GFA reached 287,413 square meters, compared to 188,904 square meters in 2011. The average contracted selling price was approximately RMB10,466 per square meter, compared to RMB16,979 per square meter in 2011. Despite the challenging business environment in 2012, the Group managed to maintain its average unit contracted selling price above RMB10,000, which was higher than the average market prices in the cities where the Group's projects are located.

During the period under review, projects in second tier cities continued to be the main contributors of contracted sales. The key projects that contributed significant portions of contracted sales are in Wuxi (34%), Haikou (25%), Changshu (17%), Kunming (9%), Taiyuan (6%), Suzhou (4%) and Shanghai (5%). The diversified geographical locations of these projects highlight the Group's strategy of making presence nationwide. These are all quality products located in cities with highest disposable income to capitalize on the strong demand for upgrades in living environment by homebuyers.

The Group's quality products continued to be highly appreciated by the market and its flexible marketing and sales strategy paid off during the period. Hai Chang Liu in Haikou, for instance, recorded a total sales of 260 units on the first day of its sales campaign on 2 December 2012, a record for the city. Close to 700 units were sold during the month of December.

Land Bank

The Group's current land bank is sufficient to support its development pipeline for the next years, and it is continuously looking for high quality lands with great potentials. As at 31 December 2012, the Group held a land bank of approximately 4.7 million square metres or 3.9 million square meters on an attributable basis, with prime sites strategically located in key cities in the Yangtze River Delta and provincial capital cities with regional economic importance.

Hotel Development

The Group's hotel portfolio continued to perform within expectations during the year, with revenue increased by 75% from RMB81 million in 2011 to approximately RMB142 million in 2012. The award-winning Peninsula Shanghai and the strategically located Holiday Inn Kangqiao Shanghai continued to achieve steady performance despite intensive competition in the hotel market in the city.

Peninsula Shanghai continued to win prestigious recognition for its superior design and services. In December 2012, Peninsula Shanghai Residence was named ¡§Owner of the Year 2012 and the Best Luxury Hotel Serviced Apartment¡¨ by Insider Magazine.

Fraser Suite Suzhou, occupying one of the two towers in Global 188, continued to be well received by the market. Together with Fraser Suites, offices and shopping mall, Global 188 will enjoy great synergy of housing facilities for dining, shopping, living and working all under the same roof.

The Hidden Tiger Golf Club in Huangshan, Anhui Province, the first completed phase of the Taiping Lake holiday resort, achieved an encouraging utilization rate during the period. The Crowne Plaza Hotel, also located in the resort, is scheduled to be completed by the end of year 2013.

Investment Properties and Ancillary Services

The Group holds a total GFA of 145,173 square meters in investment properties. As at 31 December 2012, 171,159 square meters of the total GFA have been leased, generating approximately RMB51 million in rental revenue, accounting for approximately 2.9% of the total revenue for the Group during the year.

The Group continued to develop its education business by operating one of the most prestigious kindergartens in Shanghai, the China Welfare Institute Kindergarten; a postsecondary college, Shanghai Sipo Polytechnic; and a training centre, Shanghai Sipo Vocational Technical Training Centre. Revenue from the Group's education business contributed approximately 4.2% of the Group's total revenue during the year.

Property Management and Related Services

During the year ended 31 December 2012, revenue from the Group's property management and related services amounted to approximately RMB84 million, an increase of approximately 28% from 2011. The Group provided property management services to properties with a total GFA of 1,656,278 square meters in 2012.

Project Disposals

(1) Disposal of Wuxi Chao Yang Men Project

On 30 June 2012, the Group entered into an agreement with Evergrande Group to sell its interest in a company that holds a project located at the south of Taihu Dadao and the west of Youyi Lu, Xishan District, Wuxi, with a total site area of approximately 263,300 square meters at a consideration of RMB965.7 million.

(2) Disposal of Huangpu Zhongxin City Project

On 20 November 2012, the Group announced the disposal of its equity interest in a company that owns land in Huangpu District in Shanghai on which a twenty-storey office building with a gross floor area of approximately 31,067.44 square meters is constructed, for a total consideration of RMB95 million.

(3) Disposal of Wuxi Jin Gui Li Project

After the end of the financial year 2012, the Group entered into an agreement with Wuxi Taihu New Town Development Group Co., Ltd on 4 January 2013 regarding the disposal of the Group's 60% equity interest in Wuxi Xindu Real Estate Development Limited for a total consideration of RMB1,098,776,400.

These disposals represent good opportunities for the Group to enhance its financial position, improve its liquidity and reduce its future financial commitments. They also provide additional capital resources for the Group to capture other investment opportunities in the real estate market.

Business Outlook - For the year ended December 31, 2012

On 28 January 2013, SPG Land celebrated its 15th anniversary. Through its commitment to quality products and services, the Group has established itself as a premier developer based in Shanghai over the past 15 years, with a strong brand in the Yangtze River Delta Region and beyond.

The Group's ¡§2+X¡¨ strategy has been proved to be successful. Over the past 15 years, the Group has developed a series of landmark projects that redefined industry standards. Looking ahead, the Group will continue to build its project portfolio that comprises large-scale highend residential communities, city-centre integrated projects and travel & leisure projects. The diversified product and services offering under this model also ensures a healthy income stream for the Group under varying market environments.

Despite the challenging macroeconomic environment and the expected continuous implementation of policies and measures that are aimed at curbing property speculations, the Group will manage the pace of development of its real estate projects in a cautious manner. To cope with the changing market environment, the Group will pursue projects with shorter development cycles, in order to provide greater flexibility for swift responses, and adopt flexible marketing strategies according to specific locations, local market conditions and characteristics of different projects.

With a persistent focus on organizational optimization, the Group will seek further enhancement in internal control and cost efficiency. At the same time, the Group will strive to enhance profitability and financial strength by seeking various forms of partnerships to codevelop its projects and further diversify its refinancing channels. These measures will ensure strong financial position and empower the Group to capture investment opportunities in the market that will drive the Group's business development in the coming years, thereby further strengthening its position as a premier property developer in the Yangtze River Delta Region.

Source: SPG Land (00337) Annual Results Announcement
Chairman WANG Weixian Issued Capital (shares) 5,256M
Par Value HKD 0.1 Market Capitalisation (HKD) 9,881M
 
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