China Overseas Net Rises 21% on Property Sales, Revaluation

China Overseas Land & Investment Ltd. (688), the country’s biggest developer by market value listed in Hong Kong, said 2012 profit climbed 21 percent on gains from property revaluations and the sales of stakes in some projects.

Net income rose to HK$18.7 billion ($2.4 billion), or HK$2.29 a share, from a restated HK$15.5 billion, or $HK1.89 a share, a year earlier, the company said in a Hong Kong stock exchange filing today. That compares with the HK$16.9 billion average estimate of three analysts, according to data compiled by Bloomberg News. Sales rose 26 percent to HK$64.6 billion.

The state-owned developer benefited from focusing on so- called first-tier cities, which include Beijing and Shanghai, as home prices rebounded in the second half after interest rates eased. Prices in Beijing rose 5.9 percent last month from a year ago, the biggest gain since February 2011, while those in Shanghai jumped 3.4 percent, a government data today showed.

The Hong Kong-traded stock fell 2.1 percent to HK$21.10 at the close of trading, after the earnings were announced during the midday break. That extends its losses this year to 8.7 percent, compared with a 6.3 percent decline in the Hang Seng Property Index (HSP), which tracks the nine-biggest Hong Kong-listed builders, including China Overseas.

Toughest Curbs

China on March 1 imposed its toughest curbs in a year, ordering the central bank to raise down-payment requirements and interest rates for second mortgages in cities with excessive price gains. It also enforced a property sales tax and told local governments with the biggest price pressures to tighten home-purchase limits.

China’s new home prices posted the broadest advance since December 2011, with 62 out of 70 cities the government tracked in February, the National Bureau of Statistics said today.

China Overseas, which builds homes and offices in 34 cities in the mainland, said operating profit from its property development business in China rose 17 percent to HK$21.6 billion, accounting for 80 percent of the group’s total profit.

Profit excluding revaluations, or core profit, increased 21 percent to HK$15.8 billion from 2011, China Overseas said.

The developer’s contracted sales rose 49 percent in the first two months of this year from the same period in 2011 to HK$25.5 billion, it said in an e-mailed statement on March 8. Hong Kong and Chinese developers begin selling properties while they’re still in construction and book profit upon completion.

Selling Properties

The company targets to sell no less than HK$100 billion worth of properties this year, Chairman Kong Qingping said at a briefing in Hong Kong today. It will build projects in three or four cities for the first time this year, he said.

The company sold a total of HK$111.5 billion worth of properties during 2012, up 28 percent from a year earlier, it said today. That compared with the 30 percent growth in 2011.

It bought 20 parcels of land with a total gross floor area of 6.6 million square meters (71 million square feet) during the year, it said.

China Overseas said it will pay a final dividend of 24 Hong Kong cents per share, more than the 20 Hong Kong cents a year earlier.

To contact Bloomberg News staff for this story: Bonnie Cao in Shanghai at bcao4@bloomberg.net; Kelvin Wong in Hong Kong at kwong40@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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