R&F Properties Announces Interim Results 2016
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Revenue and Net Profit up by 76% and 43% to RMB22.39 Billion and RMB2.424 Billion Respectively
Focus on Development in First and Second Tier Cities With the First Entry into Shenzhen Market
(24 August 2016 - HONG KONG) Guangzhou R&F Properties Co., Ltd. ("R&F Properties" or together with its subsidiaries the "Group"; stock code: 2777) announced its unaudited condensed consolidated results for the six months ended 30 June 2016 ("the Period under Review").
In the first half of 2016, the Group's turnover increased by 76% to RMB22.39 billion. Net profit increased by 43% from RMB1.70 billion to RMB2.42 billion when compared with the same period last year. Turnover and net profit from the Group's core business of property development increased by 85% and 69% respectively to RMB20.50 billion and RMB2.07 billion. Gross profit margin and net profit margin remained robust at 25.4% and 10.8% respectively.
During the Period under Review, the Group's contracted sales rose by 44% year-on-year to approximately RMB29.79 billion, most notably driven by a corresponding increase in saleable area sold of 2,435,400 sq.m., an increase of 43% year-on-year. Recurring revenue from property investments and hotel segment increased by 9% to RMB1.036 billion, among which profitability from property investments continued to provide an important contribution to the Group with gross profit margin of 80% and net profit margin (excluding revaluation) of 39%. The Board of Directors declared an interim dividend of RMB0.30 per share.
Mr. Li Sze Lim, Chairman of R&F Properties, said, "Coupled with the progressive policy easing in the first half of 2016 and a more stable market, the property market had a solid recovery in China. The Group recorded a significant increase in contracted sales, especially in first tier cities such as Beijing and Tianjin. During the Period under Review, we entered into Shenzhen market for the first time. After observing land price trends in the first half of the year, and the so-called 'land king' purchases were emerging, the Group chose to remain disciplined about making additional land acquisitions. In addition, the availability of significant onshore liquidity at low interest rates has also provided the Group with financial flexibility to seek and capture opportunities as and when appropriate."
The Group completed and delivered properties in 20 cities during the Period under Review. The amount of recognized saleable area increased by 50% from 1,249,100 sq.m to 1,873,400 sq.m., and the overall recognized average selling price increased by 22% from RMB8,900 to RMB10,900 per sq.m. Based on turnover distribution by cities, Taiyuan had the largest turnover amongst the cities, which amounted to RMB2.54 billion or 12% of total turnover. Shanghai and Beijing ranked second and third respectively and contributed turnover of RMB2.37 billion and RMB2.13 billion, respectively. The turnover from the top three cities accounted for 34% of total turnover.
In the first half of 2016, the Group made land acquisitions of 1,490,000 sq.m. of gross floor area in China. The Group's land bank is currently made up of approximately 38.2 million sq.m. of attributable saleable area, predominantly in China, Malaysia (Johor Bahru), and Australia (Melbourne and Brisbane). Based on the estimated sales value of our attributable land bank, 32% is in first tier cities and 45% is in second tier cities. The overall attributable land bank remains cost-effective at RMB1,700 per sq.m.
The Group's entry into Shenzhen for the first time consolidates its strategy of focusing on first and second tier cities. The Group acquired 248,000 sq.m. (attributable) through two acquisitions at an average price of approximately RMB8,000 per sq.m. Moreover, the Group is also in discussions over the potential acquisition of further projects involving over one million sq.m. of saleable area in Shenzhen. After successful completion of the Shenzhen acquisitions, the Group's land bank exposure in the first tier cities will be further enhanced.
The Group had a number of noteworthy developments with regards to financing activites that have provided positive effects to the Group's cash flow and profitability. During the Period under Review, the Group had issued public bonds totalling RMB12.5 billion at interest rates of between 3.48% p.a. and 3.95% p.a.; and as of early July, the Group further issued additional tranches of private domestic bonds totalling RMB24.3 billion at interest rates of between 5% p.a. and 5.2% p.a. The capital raised from the issuance of bonds significantly enhances the Group's liqudity and lowers the overall cost of debt to historically low levels.
Mr. Li concluded, "In addition to the robust demand in China's property market, the control measures remain focused on achieving long-term sustainability, and hence the expected momentum in the property market should continue into the second half. Leveraging on the success of our sales and marketing strategies, as well as the saleable resources from 68 projects in 29 cities in China and overseas, we are confident of achieving our contracted sales target for the full year to ensure a strong finish."
Corporate Information
Founded in 1994, R&F Properties is one of the leading property developers focusing on medium and higher-end property developments and targeting its sale to middle and upper-middle income residents. Today, the Company has expanded out from Guangzhou into another 30 cities and areas, Beijing and Vicinity, Tianjin, Shanghai and Vicinity, Hangzhou and Vicinity, Xian, Chongqing, Hainan, Taiyuan, Shenyang, Huizhou, Nanjing and Vicinity, Chengdu, Harbin, Datong, Wuxi, Changsha and Vicinity, Meizhou, Fuzhou and Vicinity, Guiyang, Nanning, Foshan, Zhuhai, Baotou, Zhengzhou, Shijiazhuang, Shenzhen, Ningbo, Malaysia (Johor Bahru), and Australia (Melbourne and Brisbane). These expansion plans have driven the size and scope of its business to another level. In addition to developing and selling quality private residential properties, the Group also develops, sells and leases commercial and office spaces, as well as engaging in other ancillary property-related services including architectural and engineering design, engineering supervision, property management and property agency services. R&F
Properties has recently diversified its property portfolio by developing hotels and shopping malls. Today, we are proud owners of the Ritz-Carlton, Park Hyatt, Grand Hyatt and Holiday Inn Airport Zone in Guangzhou, Marriott Renaissance and the Holiday Inn Express in Beijing, Renaissance Huizhou Hotel, Intercontinental Huizhou Resort, Hyatt Regency Chongqing Hotel, Holiday Inn in Chongqing University Town, Ritz-Carlton in Chengdu, Pullman Hotel in Taiyuan, Marriott Resort & Spa in Hainan Xiangshui Bay and DoubleTree Resort by Hilton Haikou-Chengmai.
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