R&F Properties Announces Annual Results for FY2016
Mar 14, 2017

Revenue increased by 21% to RMB53.73 billion
Net profit increased by 5% to RMB7.06 billion
Contracted sales up 12% to RMB60.86 billion

Continued profitability growth on the back of a larger scale
Increased geographical diversification of revenue and lower financing costs

Financial Highlights

Revenue increased by 21% to RMB53.73 billion

Net profit increased by 5% to RMB7.06 billion

Revenue from sales of property increased by 21% to RMB49.49 billion

Core profit increased by 10% to RMB6.57 billion

Effective interest rate was lowered to 6.3% p.a.

Sufficient liquidity with cash of RMB45.97 billion

Proposed final dividend of RMB0.70 per share - including interim dividend of RMB0.30 per share, full year dividend was equivalent to RMB1.00 per share

(10 March 2017 - HONG KONG) Guangzhou R&F Properties Co., Ltd. ("R&F Properties" or together with its subsidiaries the "Group"; stock code: 2777) announced the consolidated results for the year ended 31 December 2016 ("the Period under Review").

In 2016, the Group's revenue reached a historical high of RMB53.73 billion, representing a growth of 21% year-on-year. Net profit for the year increased to RMB7.06 billion, representing a 5% growth year-on-year. Similarly, revenue and net profit from property development increased proportionally to RMB49.49 billion and RMB6.06 billion, respectively. The Group's core profit increased to RMB6.57 billion after eliminating non-operating and one-off items whilst overall gross profit increased to RMB15.19 billion. Gross profit margin and net profit margin remained relatively stable. The Group proposed a final dividend of RMB0.70 per share.

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During the Period under Review, contracted sales recorded a historical high of RMB60.9 billion, representing year-on-year growth of 12%, while the corresponding GFA increased by 14% year-on-year to 4,693,500 sq.m. mainly attributable to policy easing and the availability of liquidity. Mr. Li Sze Lim, Chairman of R&F Properties, said, "With financing in place and completion of several land acquisitions, we are optimistic about the outlook of the industry and hence have set a contracted sales target of RMB73 billion for 2017."

The Group has strategically increased the geographical diversity of contracted sales to minimize concentration risk and capture opportunities across more cities. In 2016, the Group's tier 1 cities (Guangzhou, Beijing and vicinity, Shanghai and vicinity, Tianjin, and Hangzhou and vicinity) contributed to 49% of total contracted sales. However, the sales volume in non-tier 1 cities have also grown such that it demonstrates the current depth of the Group's sales distribution network.

Given active competition for land bank, the average cost of land bank has been increasing such that the Group sought alternative means of acquiring land such as mergers and acquisitions to replenish land bank. Hence, through strategic acquisitions, the Group acquired a local project company in Shenzhen with development rights for approximately 248,000 sq.m. of attributable land bank and another potential for up to another one million sq.m. of GFA. In addition, the Group officially commenced a redevelopment project in Guangzhou Maogang West Urban Village with potential development GFA of approximately 940,000 sq.m. of GFA situated to the east of the city of Guangzhou. The various means of acquisitions ensures land acquisitions costs are controlled.

During the Period under Review, the Group acquired 5,040,000 sq.m. of land bank spread across five key areas: Pearl River Delta, Beijing-Tianjin-Hebei, the Yangtze River Delta, Taiyuan, and Hainan. The average cost of land acquired by the Group was RMB3,500 per sq.m..

During the Period under Review, the Group took advantage of favourable financing markets to actively refinance the Group's higher cost debt to reduce the overall carrying cost. The result of the overall refinancing was an improvement in financial liquidity and lengthening of the maturity profile. During the year, the Group issued RMB42.5 billion of domestic bonds at a weighted average cost of 4.65% p.a. which provided the necessary funding for repayment and refinancing of debt . As a result, the effective cost of all debt decreased to 6.3% p.a.. In addition to the issuance of domestic bonds, the Group still has access to other financing products such as medium-term notes as available future sources of capital that will provide further financial flexibility.

In 2017, one of the key objectives of the Group is to continue to push the A-share IPO application. With the pace of new listing approvals accelerated in the latter half of 2016, the Group has been actively working to advance its listing approval process. While listing approval is subject to satisfactory review by the China Securities and Regulatory Commission, the Group remains confident that the approval will be forthcoming.

Mr. Li concluded, "The Group continues to grow in terms of scale and competitiveness as its no longer hindered by access to capital. With the current funding channels, land bank in place and potential dual listing ahead, the Group is positioned to take advantage of the current favourable sentiment to move to a higher platform."

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