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HK Gemdale Properties and Investment will Aim at Real Estate Finance

2013-11-26 Source:  Size:TTT
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[Abstract] According to the business achievements in the first half of this year, Wins Investment under Gemdale Corporation increased investment of RMB 930 million which has been invested in some real estate projects including Gemdale’s. The assets management scale of Wins Investment has exceeded 7 billion Yuan and has earned profits.

  Contractual amount in the first half of 2013 was 19.72 billion Yuan, up 46.5% compared to the same period in last year, which almost approximated a half of the sales objective (42 billion Yuan) of Gemdale Corporation in 2013. However, the event attracting the most attention should be its business transformation of real estate finance. According to the business achievements in the first half of this year, Wins Investment under Gemdale Corporation increased investment of RMB 930 million which has been invested in some real estate projects including Gemdale’s. The assets management scale of Wins Investment has exceeded 7 billion Yuan and has earned profits.
     
    “We are researching new equity investment and commercial investment forms so as to develop more equity project cooperation. Finance will be an important field and also a new profit-earning point of Gemdale”, an insider of Gemdale Corporation disclosed during the interview. Wins Investment mainly raised money from overseas channels. Now, it’s mainly seeking institution investors and raising equity type funds. Presently it’s raising a fund specializing in commercial property investment. In the coming 3~5 years, commercial property fund will be its first business.

Profit Margin of Real Estate Drops 

  In the semi-yearly report of 2013 issued by Gemdale Corporation on Aug. 17, multiple data go upward. 
     

  In the first half of year, the company realized sales area of 1,501,000m2 and sales amount of 19.72 billion Yuan, respectively up 32.2% and 46.5% compared with the same period in last year.

  The business income increased to 8,795 million Yuan, up 35.9 %. The settled area of real estate project achieved 612,600m2 and settled income achieved 8,234 million Yuan, respectively up 30.3% and 35.9% compared with the same period in last year.

  However, although growth of business achievements was obvious, net profit in the first half of year dropped greatly in the meantime. In the semi-yearly report of 2013, Gemdale realized net profit of 304 million Yuan and net profit margin of 3.5%, respectively down 39.5 % and 4.3% compared with the same period in last year. 

  Moreover, gross profit also dropped. The settled gross profit margin of its real estate business was 27.16%, down 8.85% compared with the same period in last year.

  Gemdale explained there were more cooperative projects carried forward in the report period, and also acknowledged that sales promotion by cutting price in early period and successive carry-forward of other products with low gross profit also pulled the profit margin down.

  However, one analyzer from Dongguan Securities held that Gemdale previously acquired land at high price but its sales price was influenced by the real estate regulation and control policies, thus its gross and net profits both dropped, which continued to be reflected in the statement. “But, in our opinion, the proportion of such projects has been gradually reduced. In this half of year, Gemdale actively accelerated land acquisition and construction starting and endeavored to realize product structure adjustment”. The analyzer thought Gemdale obviously accelerated its development and its subsequent operation achievements would improve.

Real Estate Finance Creates Profits 

  Gemdale Corporation is one of the earliest enterprises entering the business of real estate finance which has been creating profits for Gemdale. 

  As introduced by an insider, in the first half of this year, Wins Investment under Gemdale Corporation increased investment of RMB 930 million; its assets management scale has exceeded 7 billion Yuan; it has set up branches in Hong Kong, Beijing, Shanghai, Shenzhen and Tianjin; and it manages one USD real estate fund and multiple RMB real estate funds.

  As one of the earliest enterprises entering the business of real estate finance, Gemdale also encountered difficulties on the way. Wins Investment suffered losses in previous years and started to earn profits this year. 

  “We keep exploring on this way. In order to adapt to industrial development, Wins Investment readjusted business in terms of management scale, innovation ability and product lines, and we turned losses into profits from last year”, disclosed by an insider.

  First, turned from equity fund to bond fund; second, turned from individual investment to institution, and raise equity fund from institution investors; and third, turned from investment in residence to investment in commercial property and tried to invest in commercial office property. Last year, Wins Investment introduced new strategic cooperative partners, set up a JV real estate fund management company and issued the first RMB equity fund. 

  An experienced securities analyzer specializing in real estate research forecast that, Wins Investment mainly invests in the early stage of project development, but it’s likely to turn to the late possessing stage in the real estate industry in the future five years, with annual earning rate gradually conforming to market principle. This opinion was confirmed by an insider who further disclosed that Gemdale was raising a special fund of commercial property investment, and commercial property fund would be its first business in the future 3~5 years; and Gemdale Properties and Investment in Hong Kong would be an important financing platform for commercial property development, and overseas bond issuing would be the focus of its financing.

KeyWord:Real Estate Finance, Financial Business, Assets Management
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