For Immediate Release
China South City Announces 2009/10 Interim Results
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Better Than Expected Sale of Phase II Trade Center Units at CSC Shenzhen
Profit Attributable to Shareholders Reached HK$246 Million
Financial Highlights:
|
HK$ |
For the six months ended 30 September |
|
2009 |
2008 |
Change |
|
Revenue |
HK$249.6 million |
HK$96.8 million |
+157.9% |
|
Gross Profit |
HK$119.9 million |
HK$25.5 million |
+370.6% |
|
Gross Profit Margin |
48.0% |
26.3% |
+82.5% |
|
Profit /(Loss) Attributable to Shareholders |
HK$245.7million |
(HK$319.2 million) |
+HK$564.9 million |
|
Basic Earnings / (Loss) per Share |
5.45 HK cents |
(7.09) HK cents |
+12.54 HK cents |
Hong Kong, 15 December 2009 -- China South City Holdings Limited (“China South City” or “the Group”, stock code: 1668.HK), a leading developer and operator of large-scale, integrated logistics and trade centers in China, today announced its first interim results since its listing on the Main Board of Hong Kong Stock Exchange Hong Kong. For the six months ended 30 September 2009, the Group’s performance was vastly improved from that of the same period in the previous year. Revenue was up 157.9% to HK$249.6 million from the corresponding period last year. Gross profit surged 370.6% to HK$119.9 million, while gross profit margin increased to 48.0%. Profit attributable to shareholders during the period substantially rose by HK$564.9 million to HK$245.7 million. Basic earnings per share were HK5.45 cents. The Board of Directors declared that no distribution of interim dividend for the six months ended 30 September 2009.
“The successful listing of China South City marked an important milestone in the development of the Group. Through the listing, we will be able to further enhance the profile of China South City and widen our financing channels, thereby laying a solid foundation for our expansion in the future. China South City Shenzhen performed well during the period under review and achieved far better than expected results in the sale of Phase Two trade center units. This reaffirms the effectiveness of China South City Shenzhen’s business model of integrated logistics trade center and the market’s confidence in our future growth. Our unique business model has gained the support and recognition from many local governments, and we are pleased that the Group’s projects in Nanning, Nanchang and Xian are progressing ahead of schedule,” said Mr Cheng Chung Hing, Co-Chairman and Executive Director of China South City.
China South City Shenzhen (“CSC Shenzhen”)
As at 30 September 2009, approximately 990,000 square meters of trade center units and supporting facilities in Phase One and Phase Two of CSC Shenzhen were operational. About 13,013 square meters of trade center units were sold during the period, which lifted sales revenue 14.2 times higher to HK$173.3 million, with average selling price of HK$14,023 per square meter. The Group has signed agreements to sell about 23,996 square meters in Phase Two’s leather and accessories trade center at an average price of HK$15,156 per square meter. During the period under review, there was no revenue recognized for Phase Two leather and accessories trade center as its construction only completed in early October 2009.
As at the end of November 2009, including sales contracts and letters of intent, the Group has completed about 95% of its target to sell 108,000 square meters of trade center units this financial year.
For the leasing business, about 2,560 tenants have opened for business at Phase One trade centers and Phase Two’s textile and clothing trade center as at 30 September 2009, with an average effective monthly rental rate of RMB23.9/square meter at Phase One trade centers while that at Phase Two was RMB31.2. Phase One trade center’s total occupancy rate reached 82%, and the Group was able to achieve a lease renewal rate of more than 90% for leases that expired on 30 November 2009. Tenants have been moving in to Phase Two’s textile and clothing trade center since June this year. Currently the Group has let about 25% of the total rentable area that has been launched.
In October 2009, the Group co-hosted the 1st China (Shenzhen) International Industrial Fair, in conjunction with the China Council for the Promotion of International Trade, China Chamber of International Commerce and the Shenzhen Municipal Government. The Fair attracted the participation of 1,091 enterprises and organizations from both locally and 46 overseas countries. Over 82,000 people visited the Fair, which resulted in the signing of contracts totalling RMB6 billion in value. Held in spring and autumn each year, the Fair is expected to help enhance the profile of the Group, boost both traffic and business at the centers.
For China South City Nanning, Phase One’s construction will commence in the first half of 2010. In October 2009, China South City Nanning was confirmed as the successful tenderer of a plot of land in Nanning, the PRC, by entering the Land Use Right Bid Confirmation with Nanning Land and Resources Bureau. The land, with a site area of approximately 890,177 square meters in Nanning with an aggregate consideration of approximately RMB351.3 million. Served by an extensive transportation network in the town center of Nanning, China South City Nanning geographically is in close proximity to Southeast Asia. It will be developed into one of the most modernized large-scale integrated industrial materials and commodity trade centers with Southeast Asia as its key market.
China South City Nanchang (“CSC Nanchang”) will commence construction in the first half of 2010. Upon completion, CSC Nanchang will be a large scale integrated industrial materials and commodity trade center in Central China. Under the latest development plan, CSC Nanchang will have a total Gross Floor Area (GFA) of approximately 3,530,000 square meters, providing trade centers and supporting facilities such as integrated logistics and warehousing facilities, integrated commercial facilities, integrated residential facilities and car parks. On 9 December 2009, the Group was confirmed as the successful tenderer of a plot of land in Nanchang, the PRC, by entering the Land Use Right Bid Confirmation with Nanchang Land and Resources Bureau, with a site area of approximately 1,056,000 square meters located at Honggutan New District in Nanchang, Jiangxi Province. The aggregate consideration is RMB555.35 million. The Group will acquire the land for CSC Nanchang in two transactions. Following the first acquisition, the Group will acquire the remaining land in the next acquisition.
China South City Xian (“CSC Xian”), located in the northeast area of Xi’an city, has a planned total site area of approximately 10 square kilometers. The Group plans to undertake the construction in three phases. The construction of an integrated logistics and trade center will take up five square kilometers while the other five will be used for the construction of complexes for residential and commercial uses as well as ancillary facilities. On 3 November 2009, China South International Industrial Materials City (Shenzhen) Co. Ltd., a wholly owned subsidiary of the Group (“China South International”), the Xi’an International Trade and Logistics Park Management Committee, Xin Hao Da (Hong Kong) Holding Company Limited (“Xin Hao Da”) and Xi’an Government entered into a Project Agreement for the Xi’an project. Pursuant to the Project Agreement, China South International and Xin Hao Da will form a Joint Venture Company, which is 65% and 35% owned by them, respectively. The development of the Xi’an Project provides an excellent opportunity for the Group to extend its geographical reach to strategic locations in the northwest of the PRC.
Prospect and Outlook
Looking ahead to the second half of the financial year, the Group expects a stable recovery in China’s economy to provide a favorable environment for the sale and leasing of the Group’s trade center units. Sales of units at CSC Shenzhen Phase Two’s textile and clothing trade center and leather and accessories trade center continued to do well in the months of October and November 2009, while selling prices have also increased along with a gradual recovery in Shenzhen’s property market. The Group is confident in achieving the target of selling 108,000 square meters of trade center units in the financial year. The leasing of units was also encouraging with considerable growth in lease renewal rate and new rental rate at CSC Shenzhen Phase One, and in the take up of trade center units newly launched to the market at Phase Two.
“China South City is a vibrant, fast-growing company. Apart from the above factors and the fact that we can replicate our successful business model across the country, the rental rate at China South City Shenzhen, at just roughly 5% of those mature trade centers with long operating history in the region, also represents tremendous room for growth. Along with the rollout of our new projects in Nanning, Nanchang and Xi’an, as well as our existing projects becoming more established, we expect the rental rate of trade centers to climb steadily, land reserves to increase, and more areas to be made available for sale and lease, which will in turn expand our earnings base and contribute to a sustainable growth in revenue,” Mr Cheng concluded.
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About China South City Holdings Limited
Established in December 2002, China South City Holdings Limited is one of the leading developers and operators of large-scale, integrated logistics and trade centers in China. China South City sells and leases trade center units to domestic and international suppliers, manufacturers and distributors of raw materials and finished goods. It offers a comprehensive range of trade, logistics and supporting facilities and services. The Group’s first project, China South City Shenzhen, is strategically located in the Shenzhen Longgang Pinghu Logistics Base with a total site area of over one million square meters and a GFA of approximately 2.6 million square meters. It serves five complementary light industries of the region including (i) textile and clothing; (ii) leather and accessories; (iii) electronic accessories; (iv) printing, paper and packaging and (v) metals, chemicals and plastics. To replicate the successful business model of China South City Shenzhen in other strategic economic regions in China, the Group has identified 3 new sites for properties for future development in Nanchang, Jiangxi Province (“China South City Nanchang”), Nanning, Guangxi Zhuang Autonomous Region (“China South City Nanning”), and Xi’an (“China South City Xian”).
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