China Overseas Land & Investment bets on demand in top cities even as earnings miss estimates
- China Overseas Land & Investment, Guangzhou R&F and Agile Group Holdings’ revenues and profits fall short of analysts’ expectations
China Overseas Land & Investment (COLI), the second-largest Hong Kong-listed Chinese developer by market capitalisation, will focus on residential projects in top cities as the margins are high, the chairman said after its 2018 results failed to impress investors.
“We believe China’s first-tier cities and clusters around them will continue to be the most buoyant economically,” Yan Jianguo told a press conference on Thursday. “We have invested 40 billion yuan (US$6 billion) in Beijing, Shanghai and Hong Kong last year – over a third of our 2018 new investment.”
The state-backed developer earlier on Thursday reported a mere 3.25 per cent growth in revenue and a 8.3 per cent increase in core profits from a year earlier. The HK$171.5 billion (US$21.8 billion) revenue fell short of the HK$198.8 billion expectation polled by Bloomberg, while the HK$37.1 billion core profits missed the HK$39.8 billion estimate.
COLI’s shares fell 3.4 per cent after the results were announced. They eventually ended the day 1.9 per cent lower.
Yan attributed the weak growth in profit to the change in taxation policy, leading to more taxes.
He highlighted the company’s net margin of 26.2 per cent, which Toni Ho, an analyst at RHB OSK Securities Hong Kong, said was one of the highest in the industry.
