Agile Property Holdings Ltd, one of the major developers on the mainland, will likely continue to benefit from its strategies of focusing on tier-2 cities and its large-scale operation in Hainan province, after more than tripling its net profit for the first half of 2010.

The Hong Kong-listed developer, whose housing projects scatter over 20 mainland cities - mostly tier-2 ones - reported Friday a net profit of 3.21 billion yuan for the six months ended June, a 355 percent surge over the same period last year. The rise was in large part the result of a 3.09 billion yuan revaluation gain on investment properties as well as increased property sales and higher selling prices. Excluding the revaluation gain, net profit stood at 1.07 billion, up 51.3 percent from a year ago.

The average contracted price for the period stood at around 10,000 yuan per square meter, up 49 percent from a year ago. Turnover increased 26.2 percent to 7.08 billion yuan. Gross profit margin rose 12.6 percentage points to 46.7 percent.

"As home prices in tier-2 cities like Nanjing are comparatively lower than those in tier-1 cities such as Shanghai, Beijing and Shenzhen, I believe home prices in those areas could still manage to rise in the second half of the year," said Agile Chairman Chen Zhuolin at the media briefing for the interim results in Hong Kong.

The Central Government lifted the down payment requirement for second homes and banned bank loans for third home purchases in some cities where property prices have run too fast earlier this year.

Chen said the contracted prices for regular apartments sold during the period was only around 6,000 to 8,000 yuan per square meter, a level that many home aspirers could afford and the government feels comfortable with.

He believes the strong demand for properties on the mainland would continue to boost its property sales. The government may take further tightening measures but developers should all have prepared "some alternative choices" to deal with it, Chen said.

Agile's projects in Guangdong contributed over 60 percent of its overall turnover in the first half. However, the company owns huge land banks in Hainan province, which represent over 30 percent of the group's total land bank.

"Although home prices in Hainan are not inexpensive now, since the province is developing into a global tourist destination, the market will less likely become the target of tightening measures," Chen added.

Agile generated contracted sales of 3.2 billion yuan in its Hainan Clearwater Bay project during the first six months. Chen expects the whole-year contracted sales in the Hainan project will exceed 7 billion yuan.

"Since nearly 70 percent of home buyers in our Hainan project paid in lump sum cash for their purchases, I don't think government measures, if there are any in the future, will affect our business there significantly," said Agile's deputy general manager Michael Huang.

China Daily

(HK Edition 08/21/2010 page2)