Chinese developer Yuzhou Properties Co. Ltd. said it has "full confidence" it will achieve its ambitious 2018 contracted sales target of 60.00 billion yuan, even after recording just 14.37 billion yuan worth of sales in the four months to April 30.
"We plan to release a total of about 92.00 billion yuan worth of new flats within this year, with 35% in the first half and the remaining 65% in the second half," Executive President Cai Minghui told reporters during a media briefing June 5. "From June, we will accelerate sales launches, including projects in Suzhou, Fuzhou, Hefei and other [Chinese] cities."
Shanghai-based Yuzhou Properties set the 60.00 billion-yuan annual sales target at the beginning of 2018, which marks a nearly 49% jump over its 2017 sales of 40.30 billion yuan.
Despite sustained government cooling measures on the housing market, Yuzhou Chairman Lam Lung-on said the company would stick to its land purchase budget of 30.00 billion yuan, a third of which would be invested in the Guangdong-Hong Kong-Macau Greater Bay Area.
In the face of a more challenging financing environment for the real estate sector, Lam stressed the company would control its leverage levels.
"The development of a company should rely more on its sales rather than liabilities," he said.
The chairman also said Yuzhou had an abundance of financing channels, with about 3.00 billion yuan worth of unused onshore bond issuance quotas, as well as US$500.0 million in offshore bond quotas.
Lam added that although home prices in large Chinese cities are unlikely to rise for a while under current strict price controls, but transaction volumes may still climb as many cities have launched favorable policies to capture demand from university graduates and professionals.
Meanwhile, although the industry's overall gross profit margins will inevitably decline due to increasingly more expensive land prices and manpower costs involved in development projects, Lam said the company's gross margin would remain "above average," staying at around 30% for the next three years, thanks to its strong land bank.
In January, Yuzhou paid 3.80 billion yuan to acquire a subsidiary of Coastal Greenland Ltd., which owns multiple property projects, so as to obtain quality land resources at lower prices and speed up its nationwide expansion.
As at end-March, the developer said it secured a land bank totaling 15 million square meters with an aggregate stock value of 300.00 billion yuan.
As of June 5, US$1 was equivalent to 6.41 Chinese yuan.
