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Sino-Ocean Land's Core Net Profit for 2014 Soars 17% to RMB 3,566 Million

[News]         Date of issue:2015-03-17

 

 

RMB million

For the year ended

31 December

Change

2014

2013

Contracted sales

40,142

35,818

+12%

Revenue

38,896

31,099

+25%

Gross profit

8,167

7,547

+8%

Profit       attributable       to

owners of the Company

 

4,597

 

4,075

+13%

Profit       attributable       to owners of  the Company

excluding one-off items

 

 

3,566

 

 

3,036

 

+17%

Basic earnings per share

(RMB)

 

0.590

 

0.592

 

Total dividend per share

(HKD)

 

0.240

 

0.230

 

+4%

Dividend payout ratio

31%

31%

Cash on hand (As at 31

December)

16.3 billion

16.0 billion

+2%

 

(Hong Kong, 17 March 2015) Sino-Ocean Land Holdings Limited (“Sino-Ocean Land” or the “Company”, stock code: 3377), one of the leading property developers with developments in key economic regions in the PRC, today announced  the annual results of the Company and its subsidiaries (collectively known as the "Group") for the twelve months ended 31 December 2014 (the "Period").

During the Period, the Group achieved a remarkable growth and recorded revenue of RMB38,896 million, up 25 % from a year ago. Its gross profit soared 8 % year-on-year to RMB 8,167 million, profit attributable to owners of the Company increased 13 % to RMB4,597 million from the previous year. Basic earnings per share remained the same at RMB0.590. The Board of Directors recommended paying a final dividend of HKD0.165 per share with a scrip dividend option. Together with an interim dividend of HKD0.075 per share, total dividend for the year was HKD0.240 per share.

Sales hit new record as a result of visionary planning and marketing strategy

The Group’s contracted sales for the Period expanded 12 % year-on-year to RMB40,142 million, a record high of the Group. As at the end of 2014, the Group’s locked in contracted sales of approximately RMB 47.4 billion will be recorded in 2015 and the following fiscal years. This provides a high future earning visibility.

Prioritizing the principle of efficiency, the Group continued to improve its cost control by enhancing the information management systems. Since launching the Seagull II system in 2013, management efficiency has improved significantly. During the reporting period, the Group realigned its resources and further controlled the costs and expenses. Construction and installation costs as a ratio of total cost were 4%pts lower year-on-year, while finance, administrative and marketing expenses were also maintained at a low level.

Increasing more than 7 million square meters of land reserves and optimizing resource structure

The Group adhered to its investment strategy of focusing on small and mid-scale projects with fast turnaround, and continued to develop actively in China’s first-tier and booming second-tier cities. During the period, the Group acquired 17 new projects with total planned area of 7.06 million sqm. Average land cost is approximately RMB4,300 per sqm. Of the new projects, 94% are located in first-tier and second-tier cities. New land bank in the Beijing-Tianjin-Hebei Region accounted for 71% and further consolidated the Group’s established advantages in the region.

During the period, the Group adopted a forward-looking strategy, reduced its operations in third-tier cities in China and redirected the resources to develop in first and second-tier cities, thus improving the Group's location planning and asset structure. The land bank value of first-tier and second-tier cities reached 98 % which will continue to be a major driving force for the Group's development. As of 31 December 2014, the Group's total land bank reached 19,880,000 sqm which will meet the Group’s development need in the next 3 - 5 years. The new projects are expected to bring stable and substantial revenue for the Group.

Investment properties yielding returns and promising remarkable potential

For a more balanced development in the medium to long term, Sino-Ocean Land has been increasing its stakes in investment properties in recent years with visible results. During the period, total leasable area of investment properties reached 680,000 sqm and total revenue increased 28% year-on-year to RMB 1.13 billion, exceeding RMB 1 billion for the first time. The Group is confident in its sustainable development.

In 2014 Ocean International Center Phase II, Beijing and Sino-Ocean Taikoo Li, Chengdu commenced operation. Ocean International Center Phase II, Beijing is the Group’s    third self-owned-brand retail property. Popular with many retail brands, the retail space has been enjoying an occupancy rate of over 95% since its opening in June 2014. Commercial complex Sino-Ocean Taikoo Li, Chengdu started operation at the end of 2014. With over 200,000 sqm of commercial area, it is expected to contribute over RMB 1.2 billion annually in rental income upon maturity.

The Group has been partnering with prominent enterprises to explore new investment property projects. In August 2014 the Group joined force with Taiwan’s Shin Kong Group to win an integrated project in the business area of Tongzhou, Beijing, with a total construction area of approx. 340,000 sqm. The project is expected to be completed in 2017. With new projects coming into operation, investment properties will generate an estimated rental income of approx. RMB 3.5 billion.

Awarded first-time credit ratings and issued US dollar bonds at low cost

In July 2014 the group was awarded investment grade ratings of BBB-, BBB- and Baa3 by Fitch, Standard & Poor’s and Moody’s respectively for the first time. The rating agencies acknowledged that the Group has outstanding performance in core markets, excellent land reserves, diversified business structure and financing sources. Strong support from two major shareholders China Life Group and Nan Fung was also recognized by the agencies.

Mr. LI Ming, Chief Executive Officer of Sino-Ocean Land, said, "This is the first time our Company was granted investment grade ratings. The three major international agencies have given us positive evaluation and recognition. We are deeply encouraged and grateful for all the support we have received. We will continue to optimize our business to achieve higher ratings."

The Group issued 5-year and 10-year bonds for a total of US$1.2 billion in July 2014. It was the largest first time offshore bond issuance by PRC property companies and the largest order book in PRC property among all issuances in 2014. In January 2015, the Group issued another US$1.2 billion notes. The coupon rates for the 5-year bonds and 12-year bonds were 4.45% and 5.95% respectively. They were the lowest coupon rates offered by property companies in the US dollar bond market.

In 2014, the Group's interest-bearing debt was kept at around RMB 45.6 billion. During the period, the Group continued to improve its debt structure and thus reduced its finance costs by 25 basis points to 7.08% compared to a year ago.

As at 31 December 2014, the Group’s cash-in-hand was approximately RMB 16.3 billion with approved but unused credit facilities of approximately RMB 51.6 billion. The strong financial position lays a solid foundation for its future development.

Synergy arising from closer partnerships with major shareholders

The Group’s two major shareholders, China Life and Nan Fung continued their strong support to the group by appointing an additional director each to the Board. They also subscribed to two trenches US dollar bonds issued by the Group for more than US$700 million. In addition, the two major shareholders will share resources and seek joint-venture opportunities with the Group.

Meanwhile, the Group has become the designated developer for China Life's self-use office buildings and the two companies will also seek opportunities in senior living business together with Sino-Ocean being the designated builder. All parties concerned will be able to reap the benefits of synergy through various partnerships. Sino-Ocean Land and Nan Fung are going to explore joint-project opportunities in Hong Kong and the Mainland.

Mr. Li Ming said, "I am very pleased with the closer relationships that Sino-Ocean Land enjoys with China Life and Nan Fung. It enables us bigger business diversity. We will continue to strengthen our relationships with these shareholders for more resources and new opportunities."

Developing a “diversified business with four focuses” to meet future challenges

In an ever changing real estate market, the Group has formulated a forward thinking strategic positioning – providing customer centric high-quality real estate products and related services. The Group will fully use its strengths to build  a “ diversified  business  with  four  focuses”  comprising  residential development, investment properties, customer service and real estate financing.  The  “ diversified  business  with  four  focuses”  will  be  driving business and synergy within the Group for greater profitability.

With a promising outlook for the Group, Mr. Li Ming said, “Leveraging on our excellent property development base, Sino-Ocean Land will continue to provide personalized and high-quality service to satisfy customers’ different needs. The Group will be fully-prepared for the competition and challenges in the future."

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