Hong Kong-listed mainland property developer Hopson Development Holdings has seen a mild slowdown in its business during the first quarter of this year, but the company's chief executive officer (CEO) said he is satisfied with the results thus far.

The developer signed contracted sales of 1.21 billion yuan in the first quarter this year, compared with last year's 1.5 billion yuan, according to CEO Chen Changying.

The total sales area in the first quarter was 1 million sq m, compared with 1.4 million sq m last year.

Still, given the market conditions, Chen was optimistic.

"The property market showed obvious signs of recovery in March, boosting our March sales by 45 percent," Chen said.

The mainland's tightening policies on the property market are reining in profits from real estate companies. AFP

He estimates property prices on the mainland, in general, will continue to consolidate in the first half of this year as the prices keep going up.

Hopson's contracted sales dropped 4 percent to HK$10.97 billion in 2007. Gross floor area (GFA) sold dropped 21 percent to 909,321 sq m while GFA delivered increased 17 percent to 1.13 million sq m.

Guangdong and Beijing accounted for 51.8 percent and 32.9 percent of the total contracted sales, respectively, during the period.

Tianjin and Shanghai accounted for 6 percent and 9.3 percent, respectively. The average selling price went up 19.1 percent to 11,759 yuan per square meter during the period.

"The fall of contracted sales is due to the macro-tightening measures, deferring the sale of some projects including Hainan," Chen said. "But I don't believe this will happen again, and there will be 13 projects for pre-sale this year."

Deferred revenue amounted to HK$4.98 billion, representing 511,480 sq m of the total GFA, which will be recognized in 2008 or later.

Turnover of the Guangdong-based developer increased 61 percent to HK$11.13 billion while profits surged 126 percent to HK$3.52 billion. Earnings per shares increased 98 percent to HK$2.49.

The company has entered into various transfer agreements involving total GFA of 1.17 million square meters in core cities and neighboring districts such as Shanxi, Dalian, Hangzhou and Qinhaungdao, boosting the projected land bank to 22.36 million next year.

The company has HK$2.26 billion in cash and cash equivalents, compared with HK$2.57 billion last year.

Hopson will continue to focus on residential property development in Guangzhou, Beijing, Tianjin and Shanghai while expanding into second- and third-tier cities.

It currently has 1.88 million sq m worth of commercial properties under development, and they will diversify part of the company's risks in the future, Chen said.

(HK Edition 04/17/2008 page2)