Shenzhen based property developer China Resources Land Ltd (CRL) has raised its contracted sales target to 78 billion yuan ($12.5 billion) for this year after failing to accomplish its 70-billion yuan pledge for 2014.

According to the 2014 results of the subsidiary of China Resources Holdings announced on Tuesday, core profit attributed to the company's owners, excluding revaluation gain from investment properties, reached HK$11.8 billion, up by 25 percent on a yearly basis.

Contracted sales amounted to 69.2 billion yuan, with a contracted gross floor area of 6.6 million square meters, up by 4.4 percent and 14.2 percent year-on-year, respectively.

"Influenced by a slumping sales and credit environment, although we've set the 2014 target of about 70 billion yuan, we managed to accomplish the amount a bit below that," said James Yu Jian, senior vice-president and chief financial officer of the company.

"While we have revised our target to 78 billion yuan in 2015, we expect the gross margin to remain the same level as last year," he added.

The company reported an improvement in the consolidated gross profit margin from 28.2 percent in 2013 to 30.6 percent last year. Yu explained that the rise was caused mainly by shifting investment attention to first and second-tier cities as well as increased gross margin in second and third-tier cities last year.

However, the company admitted that the new target will not be a conservative estimate as the general industry is still facing an overstock situation but is benefiting from the government's credit easing policies.

"We have to admit that demand and supply are still imbalanced in the mainland property market, which has led to clearance sales for the entire property industry," said Tang Yong, the company's vice-chairman.

But he does not think there's a need for a sharp price drop. "In addition, as we're seeing the volatility inside the industry as well as its own continuing polarization, we hope to maintain our current gross margin level in the next few years."

The company has pledged to optimize its investment strategies to shift its focus from third- and fourth-tier cities on the mainland to first- and second-tier cities, as the major cities have been proved to be more secure markets over the years.

It will also keep improving its product structure, as a recent change in property purchasing behavior, especially among first-time homes buyers, has emerged on the mainland due to eased restrictions on property purchases. At the same time, it promised to strengthen control over product design and costs to better balance the cost and price of products.

According to CRL, its consolidated revenue for 2014 reached HK$88.4 billion, a 23.8-percent increase over 2013. Development venue increased by 24.2 percent year-on-year to HK$80.5 billion, while rental income of investment properties, including hotels, surged by 17.6 percent to HK$5.4 billion.

The company's share price advanced 3.2 percent at the close of trading on Monday.

agnes@chinadailyhk.com

A preview of China Resources Land's residential project Wuhan Phoenix City. Property developers on the mainland are scratching their heads to confront downward pressure. Provided to China Daily

(HK Edition 03/24/2015 page10)