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China Resources Land targeting 20% jump in contracted sales in 2018

State-run China Resources Land Ltd. has set a 2018 contracted residential sales target of 183 billion yuan, representing a 20% rise from 2017 sales.

China's housing market is expected to see steady growth in 2018 as the central government continues to crack down on real estate speculation in big cities, Vice Chairman Tang Yong told reporters during the company's annual earnings briefing March 20.

China Resources Land has been speeding up its new project launches and property sales since the second half of 2017 in an effort to maintain its position in the top 10 Chinese developers by sales amid increasingly fierce competition, Tang said.

The company projects its development property gross margin will further improve to around 45% in 2018 given a number of high-margin residential projects that are set to be booked within the year. The company's 2017 gross margin increased to 39.8% from 32.3% in 2016.

"Our [average] selling price increased by 5.9%, while costs declined by 3.7% in 2017," said James Yu, senior vice president and CFO at China Resources Land.

Outside the residential sector, the company is expecting rental income from its investment properties to exceed 10 billion yuan in 2018.

The developer plans to open eight new shopping malls across China in 2018, Tang said, adding that roughly 70% to 90% of the spaces in the properties are pre-leased or have received a letter of intent from prospective tenants.

China Resources Land has 66 shopping malls under management or construction.

Tang also said the company is studying the potential spinoff of its commercial property and property management units, but no timetable could be disclosed at this stage.

As of March 19, US$1 was equivalent to 6.33 yuan.