Hang Lung Properties Ltd. (101) needs to invest at least HK$25 billion ($3.2 billion) in capital expenditure and land acquisitions for its China projects over the next four years, said Chairman Ronnie Chan.
Hong Kong’s third-biggest developer by value had net cash of HK$10.5 billion at the end of June after raising about HK$11 billion selling shares in Hong Kong in November last year. It kept its dividend unchanged after full-year profit fell 59 percent as it held off selling HK$6 billion of completed residential units in Hong Kong.
The People’s Bank of China raised interest rates five times from October 2010 to July and boosted banks’ reserve requirements nine times, to a record 21.5 percent for the biggest lenders, before last week cutting the amount of cash lenders must set aside as reserves for the first time in three years.
“If you’re in a position where you need to borrow from Chinese banks now, you’re in big trouble,” Chan said in an interview at the Greater China Conference in Hong Kong today. “Many people have asked why we’re holding onto so much cash, but if we didn’t do that, we probably would have to borrow now.”
Chan said in October the company is “warming up” to more developments after having already pledged as much as HK$50 billion in mall projects in the country.
The company is scheduled to complete at least one shopping mall in Chinese cities including Dalian, Wuxi and Shenyang every year until 2015. The construction of those projects will cost about HK$20 billion, Chan said.
Hang Lung also will need to pay for two sites in Kunming it bought in September for 3.5 billion yuan in its first land purchases in the country since May 2009, Chan said. That project is expected to be completed in 2016, he said.
The company, which has been focusing on building commercial properties in China, plans to add residential units at its projects in Wuxi, Shenyang and Kunming, Chan said today.
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