China Overseas Land H2 profit jumps 62%

But group expects little growth in sales volume this year

China Overseas Land, the country’s largest property firm by market value, posted strong half-year profit growth and said it would increase spending by almost a third this year.

China Overseas Land & Investment Ltd earmarked HK$54.5 billion (S$9.8 billion) for 2010 capital expenditure on land purchases and property development, up from HK$41.7 billion last year, chairman Kong Qingping said yesterday.

But China Overseas sees little growth in sales volume, with analysts saying government measures to keep prices from rising too sharply may dampen the financial performance of property developers.

China Overseas, a unit of construction firm China Construction Engineering Corp, sees no growth in volume sales this year from last year’s 4.8 million square metres.

The company, and its rivals Vanke and Soho China, benefited from a property boom last year that was fuelled by nearly 10 trillion yuan (S$2 trillion) in new lending and massive economic stimulus spending. A strong rebound in the property market prompted consolidation of prices at a high level.

‘Some recent policies and measures have already affected the property market in the short term,’ the company said in a statement, though it remains upbeat about the long-term development of China’s property market.

Executives from the Hong Kong-listed company did not rule out a China listing, but declined to elaborate at yesterday’s news conference.

July-December profit rose 62 per cent to HK$4.43 billion from HK$2.74 billion a year earlier, according to Reuters calculations, beating consensus forecasts for HK$3.44 billion by Thomson Reuters I/B/E/S.

Full year net profit was HK$7.47 billion, versus a year-earlier HK$5 billion, on revenue nearly doubled at HK$37.3 billion.

China Overseas shares fell 1.6 per cent after the results, closing at HK$16.90, while the main market slipped 0.25 per cent.

Shares in China Overseas have gained 3 per cent this year, beating a broader market that has dipped 2.5 per cent.

Source : Business Times – 19 Mar 2010