Minmetals Land profit surges 390% to HK$288mn

The company seeks to sustain 331% revenue growth via long-term and prudent development strategy.

Minmetals Land Limited (“Minmetals Land”) is pleased to announce its interim results for the six months ended 30 June 2011. During the period under review, the Company recorded consolidated revenue of over HK$1.7 billion, increased by 331% YoY while gross profit margin increased by 3.3% to 30.5%. This was mainly attributable to record revenue generated from the real estate development business. Deferred revenue increased by HK$950 million from 31 December 2010 to HK$3.55 billion as of 30 June 2011. Such deferred revenue will eventually be recognised as the Company’s income when presold properties are completed and delivered to buyers.

Profit attributable to equity holders of the Company for the period has grown to HK$277 million, increased substantially by 413% YoY. Excluding revaluation gain on investment properties of HK$50.2 million, profit attributable to equity holders of the Company has increased sharply by 568% to HK$226 million while basic earnings per share has increased by 321% YoY from HK1.97 cents as of 30 June 2010 to HK8.29 cents. The Board does not recommend the payment of interim dividend.

As a result of robust profitability and addition of new real estate development projects, the asset base of the Company has expanded substantially during the period under review. As at 30 June 2011, total assets and total equity of the Company has grown by 23% and 7% to HK$19.1 billion and HK$6.73 billion respectively from 31 December 2010 and net asset value per share increased by 4% to HK$1.85 per share. Although the Company’s gearing reached 66% (31 December 2010: 65%), its net debt ratio remained similar to 31 December 2010 around 11% after taking into account of cash and bank deposits of HK$3.6 billion. As at 30 June 2011, the Company has unutilised banking facilities of HK$4.3 billion (31 December 2010: HK$600 million) and unpaid land premium of HK$880 million.

In tandem with its expansion strategy both geographically and in terms of scalability, the Company's real estate development portfolio has reached a higher scale, covering the northern, eastern and southern China that comprised of ten projects in seven cities. Up to 14 August 2011, the Company recorded contracted sales of HK$2.6 billion and GFA of 250,000 square meters. Further, the Company acquired a parcel of quality residential land in Nanjing in GFA of 182,000 square metres. At present, the Company has a land bank in GFA of 4 million square meters.

Mr. He Jianbo, the Managing Director of Minmetals Land, commented, “Various cooling measures, including limiting the number of purchases and raising interest rates, had been implemented by the Central Government since the beginning of this year to restrain out of control real estate prices. Such moves had also been extended to an increased number of second and third-tier cities whose markets have shown signs of over-heating. Since the results of austerity measures had begun to surface, the macro operating environment for real estate development is expected to enter a phase of stability in the second half of the year. We will continue to closely monitor the policy developments of the real estate market as appropriate, to ensure full compliance to prevailing rules and regulatory requirements and take advantage of market opportunities.

With the support of the controlling shareholder, China Minmetals Corporation, there may be a window of opportunity for the Company to expand its land bank in suitable locations at reasonable price levels. In our view, the current adjustment phase in the real estate market should bring benefits to the sustainable progress in the industry in the medium to long term. In contrast with certain developers in the PRC whose liquidity and credit facilities may have been adversely affected by the tightening of bank financing towards real estate developers, the Company is bestowed with sufficient financial means which can be applied in the acquisition of sites, projects or even other property companies should such opportunities arise, according to a Minmetals Land report.

Looking ahead, the company’s business growth will continue to be driven by a sustainable and prudent development strategy. The Company will further expand its real estate development business to attain overall business growth. As the sole listed real estate flagship of the China Minmetals Corporation, the Company aims to continue its expansion on a financially responsible manner and continue to play an active role in the consolidation of the controlling shareholder’s real estate interests so as to enhance its profitability.”