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Re:Rokko-An Explosiv... by MOSBY29th, Jul. 11:49 PM http://www.remisiers.org/research//dailyex2307.pdf
TP :$0.30...
CHINA NEW TOWN cautious on land sales outlook
Written by Leong Chan Teik
Thursday, 04 March 2010
Shi Jian, founder and chairman of China New Town. He is also founder and chairman of HK-listed SRE Group, the parent company of China New Town. Photo by Sim Kih
CHINA NEW TOWN struck a cautious note in its recent statement accompanying its full-year results, saying that “market uncertainties would impact the upcoming land sales and, hence, increase unpredictability of our revenue and profit.”
This is a result of the Chinese government’s various policy directives to contain excessive property price appreciation.
“The physical property market has turned quiet, as evidenced by recent reported property sales,” said China New Town in its FY09 results statement.
Within the company itself, there has been a change too from January this year with the redesignation of the CEO, Ben Cheng, to CFO. He has since tendered his resignation.
Mr Cheng’s boss, Mr Li Yao Min, the co-vice chairman, is the new CEO and concurrently co-vice chairman. Mr Li is also the executive vice chairman of the SRE Group, the parent company of China New Town.
Mr Li traveled to Singapore last week to meet analysts and fund managers.
Not only he but other big guns from China New Town were part of the entourage, including Mr Shi Jian, the founder of the Company and the Executive Chairman since April 2007.
Mr Shi is also a co-founder and, concurrently, the Executive Chairman of SRE Group, a company listed on the Hong Kong Stock Exchange.
Last year was a turnaround year (after two consecutive years of losses, see table below) for China New Town, starting from the second quarter when demand for land parcels significantly recovered.
Year to 31 Dec (RMB’m)
2009
2008
% change
Revenue
1,087,355
564,096
92.76
Gross profit
652,307
194,995
234.52
Net profit
166,630
(845,543)
Revenue arising from the sale of two land plots from China New Town’s Shanghai project and two land plots from the Wuxi project was recognized.
Of note, the Shanghai plot sold in September 2009 achieved a historical record average price of RMB13,692 per sq m, which represents a 231% increase from the April sale.
The good news was mitigated by new government policy which led to China New Town reaching an agreement with the local government in July 2009 that its Shanghai Luodian Project would pay a total of approximately RMB600 million additional relocation compensation costs (to incumbent residents).
China New Town bought raw land on which the residents and businesses had to be relocated and compensated.
Another negative piece of news last year was that the Shanghai Municipal Government approved a revised site master plan of Luodian New Town.
The revised plan mainly added few more public facilities to be built (by the Shanghai Luodian Project), such as roads, schools and kindergarten.
As a result, China New Town had to increase the estimated cost budget for such public facilities by about RMB284 million.
Hence, the unit cost for land development (estimated based on budgeted cost of services over relevantarea) was increased from RMB1,192 to RMB2,057 per square metre prospectively in 2009.
The changes reduced the Group’s pre-tax profit by RMB 70 million.
Over the next few years, China New Town has 1,063,921 sq m of residential land in Shanghai Luodian Project (slightly under 50% of the total in the project have yet to be up for auction) to sell.
Some land parcels (3.2 m sq metres of residential land) from its relatively new Wuxi project are expected to be up for grabs this year too, following the successful sale of RMB 203 m of Wuxi land early this year.
For more information on the 2009 results, visit www.sgx.com
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