Thursday, March 28, 2024
 
Columnist
Martin Hennecke
 
OCT (ASIA)
HKEx Stock Code : 03366 
 
Corporate Profile
Principally engaged in the comprehensive development business and the manufacture and sale of cartons and paper products.

Business Review - For the year ended December 31, 2012

During the period under review, Overseas Chinese Town (Asia) Holdings Limited (the “Company”) and its subsidiaries (the “Group”) have set its future strategic goal as to become a prominent developer and operator of commercial complex. Under the guidance of this new strategic goal, we proactively responded to the complicated economic developments both within and outside China and achieved satisfactory operating results. As of 31 December 2012, the Company recorded a turnover of approximately RMB3,453 million, representing an increase of approximately 34.9% over the same period of 2011; profits attributable to shareholders were approximately RMB177 million, representing an increase of approximately 11.3% over the same period of 2011.

Comprehensive Development Business

Relying on its strategic objectives, the Group increased its input into its comprehensive development business during the period under review and put more effort to obtain new project resources. Three newly added projects are Shanghai Suhewan, Tianjian Tianxiao and Beijing Laiguangying. During the period under review, the Company's comprehensive development business recorded a turnover of approximately RMB2,624 million, representing an increase of approximately 50.5% over the same period of 2011; profits attributable to shareholders were approximately RMB154 million, representing an increase of approximately 18.8% over the same period of 2011. The Company currently holds 5 comprehensive development projects in total with controlling interest and participation interest, including Shanghai Suhewan, Chengdu OCT, Tianjin Tianxiao, Beijing Laiguangying and Xi'an OCT projects.

Shanghai Suhewan

The Company holds 50.5% equity interest

On 5 January 2012, the Group entered into a capital increase agreement pursuant to which the Group made capital contribution of RMB2,232 million to Overseas Chinese Town (Shanghai) Land Company Limited (“OCT Shanghai Land”) and acquired 50.5% equity interest in it. The transaction was completed in June 2012 and OCT Shanghai Land became a non-wholly owned subsidiary of the Company.

OCT Shanghai Land is currently engaged in the Shanghai Suhewan project, which is advantageously situated at the junction of Suzhou River and Huangpu River banks in Zhabei District, Shanghai and possesses the scarce landscape resources. The project comprises 1 Jiefang, 41 Jiefang and 42 Jiefang with a total site area of approximately 71,000 sq.m., a gross floor area (above ground) of approximately 280,000 sq.m.and a total gross floor area of approximately 430,000 sq.m.. The project includes multistorey riverside residential buildings, luxury residential properties, apartment-style offices, luxury hotels, boutique business premises and studios for artists. The project is scheduled to be completed in 2016.

The first batch of products of the Shanghai Suhewan project was the apartment-style offices located in 41 Jiefang. Pre-sale started in September 2012 with settlement within the same year. During the period under review, contract sales area and revenue of the project reached approximately 13,000 sq.m. and approximately RMB710 million respectively, while the area and revenue settled were approximately 12,000 sq.m. and approximately RMB680 million respectively.

In 2012, the Shanghai Suhewan project was awarded “21st Century City Composite New Landmark in China for the year 2012” by 21st Century Economy Review.

Tianjin Tianxiao

The Company holds 100% equity interest

On 2 November 2012, the Group entered into an agreement with 天津津濱發展股份有限公司 (Tianjin Jinbin Development Company Limited (“Jinbin Development”) pursuant to which the Company acquired the entire equity interest in 天津天瀟投資發展有限公司 (Tianjian Tianxiao Investment Development Company Limited) (“Tianjin Tianxiao”) and all rights attached thereto for a consideration of approximately RMB385 million and assumed Tianjin Tianxiao's debt in the amount of approximately RMB1,048 million. The amendment of the industrial and commercial registration were completed by Tianjin Tianxiao in December 2012.

The major asset of Tianjin Tianxiao project is a piece of land located in the area of Jintang Road, Hedong District, Tianjin, the PRC. The land has a total site area of approximately 132,000 sq.m.. The land is at early stage of development and will be developed into residential and commercial properties, including high-rise residential properties, multi-storey residential properties and shops with a total maximum gross floor area of approximately 316,000 sq.m.. The project is currently at the stage of planning and design. It is expected that construction to be commenced in the second half of 2013, pre-sale in 2014 and completion of development in 2016.

Beijing Laiguangying

The Company holds 33% equity interest

On 12 December 2012, the Group entered into a capital increase agreement with 招商局地產(北京)有限 公司 (China Merchants Property Development (Beijing)., Ltd) and 大連盈致企業管理有限公司 (Dalian Yingzhi Corporate Management Limited), pursuant to which the Company made capital contribution in cash to Beijing Guangying Residential Property Development Limited (“Beijing Guangying”) in the amount of approximately RMB42 million. It has also been agreed that the total accumulative amount of shareholders' loan and guarantee to be provided shall not exceed RMB924 million. The transaction is completed in January 2013.

The major assets of Beijing Guangying project are two pieces of land lots located in the area of Laiguangyingxiang in Chaoyang District, Beijing, the PRC. The land has a total site area of approximately 73,000 sq.m.. At present, the land is at the early stage of development with a total maximum gross floor area of approximately 182,000 sq.m. for residential development. The project will commence construction and pre-sale in mid-2013 and is scheduled to complete development in 2016.

Chengdu OCT

The Company holds 51% equity interest

Chengdu OCT Project is located in Jinniu District, Chengdu City, Sichuan Province, the PRC which is to be developed into a composite project, comprising residential, commercial properties and a theme park, occupying a total site area of approximately 1,827,000 sq.m. and gross floor area of approximately 2,250,000 sq.m.. During the period under review, Chengdu OCT recorded a turnover of approximately RMB1,980 million. The contract sales area and revenue of the residential property project reached approximately 137,000 sq.m. and approximately RMB1,680 million respectively, while the settled area and revenue were approximately 160,000 sq.m. and approximately RMB1,830 million respectively. The major products launched in 2012 were high-rise residential properties, part of the low-density residential properties and multi-storey residential properties. The current rentable area for commercial use is approximately 65,000 sq.m., of which 99% has been occupied. Chengdu OCT's theme park, “Chengdu Happy Valley”, has attracted approximately 2.44 million visitors throughout the period under review, which was in line with that of the past year.

Xi'an OCT

The Company holds 25% equity interest

Located in Qujiang New District, Xi'an City, Shanxi Province, Xi'an OCT Project is in proximity to several famous scenic spots. The land has a total site area of approximately 137,000 sq.m., all products are low-density residential properties. During the period under review, the products launched by Xi'an OCT included duplex, compound and detached houses. The contract sales area and revenue reached approximately 45,000 sq.m. and approximately RMB950 million respectively. The settled area and revenue were approximately 39,000 sq.m. and approximately RMB830 million respectively. Investment income which the Company obtained according to its equity interest in Xi'an OCT was approximately RMB40 million.

Business Outlook - For the year ended December 31, 2012

Paper Packaging Business

The Group has over 20 years of experience in the packaging and printing industry. It has set up four manufacturing bases in the Pearl River Delta and Yangtze River Delta, the most economically developed regions in China, and branches located in places such as Huizhou, Zhongshan, Shanghai, Chuzhou, Wuhan, Kunshan, and has built up the “Huali” brand with solid customer base and good market reputation.

2012 was a year featured by sluggish performance in the European and American economies, a large number of foreign companies shifted their production, reduced output and laid off employees. Sales to our key Japanese customers decreased and the Company's paper packaging business faced various challenges. During the period under review, the Company has adopted a number of strategies to, on one hand, expand its market and identify new major branded customers, and formed a larger and more stable sales scale, on the other hand, through enhancing the Company's management, to achieve higher efficiency with lower cost. Besides, in order to be more competitive in the market, the Company introduced new printing equipments, increased the automation level of the Group, and maintained its leading position in technology amidst a situation of higher cost and keen market competition. During the period under review, paper packaging business recorded a turnover of approximately RMB829 million, representing an increase of approximately 1.7% over the same period of 2011. Profits attributable to shareholders amounted to approximately RMB23.28 million, representing an decrease of approximately 21.4% over the same period of 2011.

OPERATING RESULTS

As at 31 December 2012, the Group's total assets amounted to approximately RMB20,138 million, representing an increase of approximately 225% over that as at 31 December 2011; total equity amounted to approximately RMB4,830 million, representing an increase of approximately 111% over that as at 31 December 2011.

For the year ended 31 December 2012, the Group realized sales of approximately RMB3,453 million, representing an increase of approximately 34.9% over the same period in 2011, of which, sales of the comprehensive development business was approximately RMB2,624 million, representing an increase of approximately 50.5% over the same period in 2011; and sales of the paper packaging business was approximately RMB829 million, representing an increase of approximately 1.7% over the same period in 2011. Profits attributable to owners of the Company were approximately RMB177 million, representing an increase of approximately 11.3% over the same period in 2011, of which, profits attributable to owners of the Company of the comprehensive development business were approximately RMB154 million, representing an increase of approximately 18.8% over the same period in 2011, mainly as a result of the newly added project, Shanghai Suhewan project, recorded profit in this year; and profits attributable to owners of the Company of the paper packaging business were approximately RMB23.28 million, representing an decrease of approximately 21.4% over the same period in 2011, mainly as a result of market downturn and increase in operating costs. The basic earnings per share for 2012 were RMB0.35, as compared to RMB0.31 for 2011.

During the period under review, gross profit margin of the Group was approximately 34.3% (2011: approximately 30.2%), representing an increase of 4.1% over the same period in 2011. Of which, the gross profit margin of the comprehensive development business was approximately 41.3%, representing an increase of 2.8% over the same period in 2011, mainly due to the products sold in the year were products with high gross profit margin; and the gross profit margin of the paper packaging business was approximately 12.3%, which was substantially the same as compared with the same period in 2011. Net profit margin attributable to owners of the Company was approximately 5.1% (2011: approximately 6.2%), representing an decrease of 1.1% as compared with that of 2011. Of which, the net profit margin attributable to owners of the comprehensive development business was approximately 5.9%, representing an decrease of 1.5% over the same period in 2011; and the net profit margin attributable to equity holders of the paper packaging business was approximately 2.8%, representing an decrease of 0.8% over the same period in 2011.

Source: OCT (Asia) (03366) Annual Results Announcement
Chairman Wang Xiaowen Issued Capital (shares) 650M
Par Value HKD 0.1 Market Capitalisation (HKD) 2,664M
 
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