2015.08.05

On the morning of August 4th, Times Property Holdings Limited (01233.hk) announced its Financial Performance Report for the first half of 2015 in Hong Kong. Shum Chiu-hung, Chairman of the Board, and Lui Wai Pang, Chief Finance Officer, attended the press conference.

• The Press Conference

 

Although the first quarter of this year witnessed a downturn in the real estate market, Times Property still delivered an impressive record. The company's contracted sales increased by 27% to 7.6 billion Yuan from a year back, taking up 46% of the company's annual sales target. Such high target completion rate took the lead in all listed real estate companies operated in China's Mainland. The net profit in the first half of 2015 reached 456 million Yuan, up by 10% over the same period of last year, showing a robust momentum for growth.

 

460 million Yuan in the first half with an outperforming increase

According to the company's Performance Report, by June 30th, 2015, Times Property had achieved contracted sales revenue of 7.6 billion Yuan, representing a year-on-year increase of 27%, and the actual floorage increased by 68% to 890,000 m2 from the previous year. The company had accomplished 46% of its full-year sales target set at 16.5 billion Yuan in the beginning of this year.

Since April this year, thanks to the “New Policies on the Housing Mortgage released on March 30th” and the interest-rate cuts by the People's Bank of China, the real estate market had recovered a bit, but the developers still faced difficulties in delivering an impressive overall performance due to the market downturn in the 1st quarter of this year. According to the TOP 100 China’s Real Estate Enterprises by Sales for the First Half of 2015 released by CRIC, the sales revenue of the top 50 housing companies had grown by 9% year-on-year, while 20 typical companies completed 41% of their annual sales target. Thus, it is fair to say that Times Property outperformed the market in terms of both sales growth and target completion rate in the first half of 2015.

• The Press Conference

 

The Performance Report also shows that the operating income of Times Property hit 4.04 billion Yuan in the first half of 2015, an increase of 78.2% from a year before. The revenue from the property sales increased by 82% on a year-on-year basis and reached 3.85 billion Yuan. In addition, thanks to the increase in property delivery, the revenue from the property management services had increased by 18% to 76 million Yuan compared with the same period of last year.

In terms of profitability, the net profit of the company reached about 460 million Yuan in the first half of 2015, a 10% increase from the previous year. After excluding the variations in fair value of the investment properties and the financial derivatives including the convertible bonds, the company achieved a core net profit of about 450 million Yuan, an increase of 21% over the same period of last year. The basic earnings per share increased to 0.26 Yuan, up by 8.3% on a year-on-year basis.

In the second half of 2015, Times Property plans to launch new projects in Guangzhou, Foshan and other cities. With the abundant stocks, clear positioning, and the philosophy of leading a high quality life, the company's products will gain an increasing popularity in the market, which boosts the company's confidence in fulfilling its annual sales target.

 

A more balanced market layout with timely refill of land reserve

As of the first half of 2015, Times Property had in total 30 projects in different stages of development, including 29 projects distributed in the major cities in Guangdong Province, such as Guangzhou, Foshan, Zhongshan, Zhuhai and Qingyuan, and one project in Changsha in Hunan Province.

In recent years, Times Property has been focusing on a more appropriate strategy layout in the Pearl River Delta region, with the top priority given to a more in-depth regional development in the area, which also witnessed striking results. The contracted sales distribution shows that Guangzhou contributed 3.16 billion Yuan to the total sales revenue, the same as that in the first half of 2014. Foshan, Zhuhai, Zhongshan, and Qingyuan also recorded satisfactory results. As having been long expected, they took up the share of 53.3% from 44.5% in overall sales, reflecting a substantial increase in the acceptance of Times Property in the local market.

In addition, given the downturn in the land market in the 1st quarter of this year, Times Property has been working hard to refill its "granary". In the first half of this year, the company purchased four parcels of land in Guangzhou and Foshan at a total cost of about 3.9 billion Yuan with a total planned floorage of ??about 680,000 m2.

In January alone, Times Property won the bid for three parcels of commercial and residential land in the Science City in Luogang District and Zengcheng City in Guanghzou, a major move to supplement the land supply in the area. At the end of the first half of 2015, Times Property recorded a land reserve of over 10 million square meters, which would be sufficient to support the company's development in the next three to five years.

 

Issuance of domestic corporate bonds with 6.6 billion Yuan held in cash

In the first half of this year, Times Property actively explored new financing channels and optimized its financial structure.

According to the Performance Report, the net gearing ratio of Times Property fell to 88.2 percent in the first half of 2015, down by 9.2% compared with the rate at end of last year. The cash and the bank deposit balance was 6.6 billion Yuan, seeing an increase of 1.2 billion Yuan over the end of last year. This illustrates the company’s robust financial status.

Moreover, Times Property successfully broke the ice in domestic financing. It was reported that on July 14th, the company issued the five-year domestic corporate bond worth 2 billion Yuan with a 6.75% coupon rate. The AA bond has been well received by many institutional investors with good results in subscription.

The successful issuance of domestic corporate bonds holds great significance for Times Property in lowering its financing costs. Due to the withdrawal of QE in the United States, the mainland real estate companies have experienced increasing costs in overseas financing. As the company successfully opened the domestic financing channel, Times Property is likely to have a sharp decline in its financing costs, which will be a strong guarantee for profitability.

• Leadership at the Press Conference

 

Looking ahead into the second half of 2015, Times Property predicted that with the introduction of stable and moderately easy domestic monetary policies, the overall national economy in the second half of 2015 was expected to run slightly better than that in the first half. With adequate housing demand, the housing prices in the first-tier cities will steadily pick up. In particular, in the cities with large trading volume and little stress on stocks digestion, housing price will see a more robust rise and the price in the major second-tier cities will also stabilize.

In the near future, the company will still follow its strategy and focus on the regional development, the residential projects, as well as the customers with rigid demand and improved demand to enhance its capability to create value for our customers so as to achieve a healthy and robust growth.