CJ Land Holdings Limited, a mainland-based real estate developer specializing in high-end residential projects in Shanghai, plans to use 78 percent of the new capital to be raised in its Hong Kong Initial Public Offering starting today to build up its land bank, the company said Thursday.

"We will continue our focus on the Greater Shanghai economic circle, namely Shanghai, Jiangsu province and Zhejiang province. With a strategy of 'buy on the dip', we will seek and acquire suitable land parcels in our current and target cities in the future," said Zhao Changjia, CJ Land founder and chairman, said to a press briefing for the IPO.

The company plans to offer a total of 1.0 billion shares at a price range of HK$3.20 to HK$4.80 per share. Net proceeds from the offering are estimated to reach HK$3.424 billion, assuming an offer price of HK$4.00, mid-point of the price range.

CJ Land's global offering has garnered three cornerstone investors, namely Chosen Elite Group, Chow Tai Fook and Taiwind Group, each of which has committed HK$ 390 million in investment.

The Hong Kong public offering commences today until next Wednesday. The trading of its shares on the main board of the Stock Exchange of Hong Kong is expected to commence on November 11.

Other than boosting land bank, the company plans to use 17 percent of net proceeds to repay existing loans owed to offshore banks.

According to Chia Tze Kun, CJ Land's chief financial officer, the company's gross profit grew at a 77 percent compound annual growth rate (CAGR) from 2007 to 2009, which was 34 percent higher than the industry average. During the same period, the company's core net profit grew at a 28 percent CAGR, 12 percent higher than the industry average. At end-2009, the developer's debt to asset ratio was 23 percent, 5 percent lower than the industry average.

The company forecast that net profit will be no less than 710 million yuan for 2010. The company set a target to pay out no less than 20 percent of annual net operating profit to shareholders as dividends.

Chairman Zhao said CJ Land will maintain its focus on the high-end market, which offers developers stronger pricing power. Meanwhile, cooperation with local government, meaning to undertake projects with specific purposes, will bring the developer more low-priced land parcels. The company will stick to the existing dual development mode, which combines 30 percent commercial properties and 70 percent residential properties. Zhao said good commercial projects that generate consistent rentals are favored by banks when trying to secure loans.

China Daily

(HK Edition 10/29/2010 page3)