Monday, November 30, 2020
 
Columnist
Martin Hennecke
 
FUTURE LAND
HKEx Stock Code : 01030 
 
Corporate Profile
The principal activities are property development and property investment in the People's Republic of China (the “PRC”).

Business Review - For the year ended December 31, 2012

The PRC real estate market underwent a downward adjustment since the second half of 2011, market sentiment continued to be pessimistic in early 2012. Nonetheless, the Group's management maintained a cautiously optimistic view and actively sought opportunities from the nascent recovery in the latter half of 2012. Since 2011, the Central Government had continued its tightening policies to curb the real estate market, and the Group's operating environment remained difficult. However, the government adopted various credit easing measures in 2012 with an aim to stabilize the economy. This, coupled with the country's on-going urbanisation that drove end-user demand for housing, led to a mild recovery in the real estate market in mainland China in the latter half of the year. The Group is committed to maintaining sustainable growth and operational excellence to maximise shareholder returns. In 2012, the Group focused on improving operations and mitigating risk through rapid asset turnover. Streamlined business processes and standardised product design enabled the Group to shorten the time from site acquisition to pre-sale and the completion of properties. This was exemplified by a number of projects in Shanghai, Suzhou and Wuhan, for which land parcels were acquired in 2012. In each case, presales began and generated cash receipts within six months from land acquisitions. The Group's on-going focus on “rapid asset turnover” is manifest in the replication of successful property development projects, faster sales, higher returns on investment, improved cash flow, and lower liquidity risks.

Since 2010, the Group has endeavoured to improve its service standard for both existing and potential customers. With our property services team participating in project planning, design, construction audit, and inspection procedures, quality and customer satisfaction were greatly enhanced and operating costs were reduced. The success of such initiative is reflected in rising repeat patronage and customer referrals. A third-party study* indicates that customer satisfaction with the Group's products and services was 83 points in 2012, 15 points higher than the industry average, placing the Group among the industry's standard-bearers.

The Group continues to track evolving customer preferences and carry out detailed product researches. This has allowed us to enhance product offerings in terms of flat layout, interior finishing and standardised designs. Our residential product lines became mature and the Group realised appreciable improvements in product development for the medium density properties in 2012. New product designs optimise floor space within the plot ratio, cutting unit costs to meet the needs of a new generation of customers. This has been instrumental in improving our price premium per square meter. The Group's projects, including Future France (香溢紫郡) in Nanjing, Fragrant Legend (香溢瀾橋) in Suzhou, and Future Land Golden County (新城金郡) in Shanghai, were positioned to appeal to first-time buyers and those who were trading up to better flats alike and commanded high selling prices. The Group has developed three major mixed-use complex product lines under the “Injoy (吾悅)” brand. In particular, our landmark mixed-use projects, Injoy Plaza (吾悅廣場) and Injoy International Plaza (吾悅國際廣場) in Changzhou were opened and established a solid foundation for further development of “Injoy (吾悅)” as a premier commercial property brand in the country.

As a leading property developer in the affluent Yangtze River Delta region, the Group always focuses on the middle class segment and seeks to acquire quality land reserves at competitive costs. We acquired eight parcels of land in Shanghai, Suzhou and Wuhan in 2012, adding GFA of 1,218,566 sq.m. to our land bank at an average cost of RMB3,480 per sq.m.. In line with our expansion strategy of extending coverage from our core Yangtze River Delta upstream to central China, the Group successfully entered the Wuhan property market in 2012 on the heels of its Changsha entry in 2011. By the end of 2012, the Group had a total of 78 projects in nine major cities (45 of which were under construction and/or held for future development), representing a total land bank of GFA of 12,647,004 sq.m., of which 8,299,669 sq.m. is attributable to the Group. This is sufficient to support the Group's plans for large-scale property development over the next four to five years. Our land reserves are predominately in economically advanced cities in the mainland China. Notably, our plentiful land bank in Shanghai will strengthen the Group's leading market position in the city.

The Group remains prudent in its financial management and emphasizes on maintaining steady cash flow and ensuring the security of funds. In November 2012, the Company raised HKD2.056 billion through its initial public offering which optimised our capital structure. We then issued USD200 million 10.25% five-year senior notes in January 2013, which further enhanced liquidity and improved the Group's debt maturity profile. Our financial position was further strengthened over the past year as contracted sales increased. As at the end of 2012, the Group held RMB6,000.2 million cash at bank and on hand (including restricted cash) and had RMB6,700 million of unutilized bank credit facilities. Our net-debt-to-equity ratio on 31 December 2012 was 57.1%. Maintaining a sound financial position both undergirds the Group's operations and assures us of a solid base for future growth.

Business Outlook - For the year ended December 31, 2012

Data published in early 2013 indicate that China's gross domestic product growth bottomed in the third quarter of 2012 such that overall growth for 2013 is expected to be 7.5%. Although growth has slowed, China's economy outperformed other major global economies last year as the country was still in the phase of fast economic expansion. China's real estate market is expected to continue to grow, driven in part by economic development, and in part by favourable long-term policies such as urbanization. However, macroeconomic controls to be implemented by the Central Government in the short term remain a challenge to our business operation. Faced with policy uncertainties and volatile market conditions, we will continue to consolidate our leading market position and expand market shares in Yangtze River Delta. Meanwhile, we will adhere to the “Pan-Yangtze River Delta” regional strategy and selectively expand into cities with growth potential within our financial means.

We will continue to focus on product innovation that can command higher price premium while furthering product design optimisation and standardisation. Additionally, we will continue to increase the sales of properties with interior finishing and promote integration of property design, interior decoration and construction of flats with an aim to lower overall costs, reduce carbon emission and meet the demand of environment conscious customers. In terms of cost control, we will strive to streamline decision making and information dissemination processes so as to lower administrative expenses. We will also experiment with new marketing and sales practices in order to reduce selling costs. We will also endeavour to control the cost of capital, accelerate the capital turnover of the projects and expand our financing channels in order to save finance costs.

Despite the uncertain and volatile market environment, we believe that, through well defined strategies, continued product standardisation and disciplined cost control, the Group will continue to grow steadily and generate increased value to our shareholders.

Source: Future Land Deve (01030) Annual Results Announcement
Chairman Wang Zhenhua Issued Capital (shares) 5,668M
Par Value HKD 0.001 Market Capitalisation (HKD) 5,555M
 
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