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Singapore-listed CWG International, being a developer of overseas property projects, recognises revenue upon completion of projects.
Thus, its revenue and profit/loss are likely to be lumpy from quarter to quarter as projects take 1-2 years to complete.
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This year, CWG will launch 11 projects while delivering (and recognising revenue of) 6 major projects.
In 1Q2017, despite China's market-cooling measures, CWG achieved pre-sales of RMB1.8 billion, which is higher clip than the RMB1.6 billion recorded in 4Q2016. And it's a big jump from the RMB826 m achieved in 1Q2016.
CWG looks to be on track to achieving its target, announced in end-2016, of achieving RMB10 billion of pre-sales this year.
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RMB6.5 billion to be recognised |
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♦ In 1Q17, revenue from properties sold but not yet recognised stood at RMB6.5 billion. This is unsurpassed in CWG’s nine-year history, except in 3Q16 when the figure stood at RMB7.0 billion. |
Explaining how this figure was arrived at, Mr Chua said CWG planned to launch RMB14 billion worth of projects this year and expects to achieve sales for some of its unsold inventory from projects that have achieved TOP.
Where will the action come from? In 1Q17, in China:
♦ By value: Suzhou, a second-tier city, contributed 48% of pre-sales while the rest of China (mainly third-tier cities), 44%.
♦ By GFA: Suzhou accounted for 32% while the rest of China, 68%.
This table shows the 6 projects that will achieve TOP this year. Revenue recognition is skewed towards 4Q -->
|
Project |
GFA (sqm) |
ASP (RMB |
Equity stake |
% sold |
Total cost (RMB ‘m) |
TOP date |
|
|
Shanghai Royal Palace |
37,764 |
10,882 |
100 |
70 |
293.2 |
1Q17 |
|
|
Xuzhou Royal Palace |
117,533 |
5,792 |
80 |
90 |
540.2 |
2Q17 |
|
|
Xuancheng Chiway |
58,422 |
4,612 |
100 |
90 |
198.9 |
4Q17 |
|
|
Suzhou Chiway |
73,819 |
20,560 |
75 |
50 |
1,088.80 |
4Q17 |
|
|
Suzhou Ind Park Royal Mansion |
43,360 |
39,118 |
60 |
50 |
787.8 |
4Q17 |
|
|
Uptown (Australia) |
16,249 |
14,500 |
60 |
80 |
161 |
4Q17 |
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While it is developing projects, CWG has been seeking to acquire landbank too. Mr Chua highlighted that CWG has been prudent in its landbanking, giving some information on the 10 sites that CWG aborted its tenders in Feb-April 2017 because prices have gone up beyond its comfort levels.
CWG will increasingly seek to do joint ventures with established developers and collaborate with state-owned enterprises that have existing landbanks.
To this end, the Group has acquired a 60.0% stake in Suzhou Xinglun Tourism Co., Ltd. from the Singapore Suzhou Industrial Park, which owns the iconic Suzhou Ferris Wheel Theme Park, for RMB197.2 million.
|
CWG |
1Q17 |
1Q16 |
|
NAV/share |
S$0.38 |
S$0.32 |
|
Gearing |
402% |
280% |
|
Share price |
S$0.168 |
S$0.075 |
|
Market cap |
S$111 m |
S$50 m |
Post-acquisition, CWG will own two plots of land with a total GFA of 75,797 sqm on which a landmark integrated development will be built comprising serviced apartments, premium residential units and retail space.
In addition, CWG has also entered into a joint venture with Modern Land (China) Co., Limited, to develop a residential project in Wuhan.
CWG has entered into a strategic partnership with a state-owned enterprise, Shanghai Lingang Economic Development (Group) Co Ltd, the third largest industrial park developer in China, in April 2017.
For more info, see CWG's presentation materials here.
For an idea of CWG's projects, watch our video of an analyst visit in Sept 2016 -->