1H 2008 Net Profit Increase Hits Record High

On 29 Jul 2008, the company announced that its 1H 2008 net profit will likely increase by 9800%, or RMB 89 mln, based on its net profit of RMB 896,700 in 1H 2007, as a result of a soar in sales revenue in commercial housing properties.

In fact, the company's net profit in 1Q 2008 totaled RMB 105 mln, however it suffered losses in 2Q 2008, which differed greatly from the company’s performance in 2007, when net profit in 1Q was RMB 30 mln, but shrank to RMB 896,700 in 2Q.

Zhu, a spokesman of the company’s board of directors, stated in the China Business News, that losses of 2Q 2008 are mainly attributable to dismal sales in April to June 2008. However, Ren Weijie, a senior investor, concluded that annual earnings can not be estimated based on quarterly reports.

Zhu also noted that the company's dramatic performance in 1H 2008 is due to asset injections by Nangfang Heungkong Group Co., Ltd., the company's major shareholder, including a 70% stake in Wuhan Jinhaima Real Estate, which contributed greatly to the company's 1Q 2008 revenue, as well as a 51% stake in Guangzhou Panyu Jinjiang Real Estate Co., Ltd., a 90% stake in Baoding Hehungkong Haotiandi Real Estate Co., Ltd., a 100% stake in Chengdu Hehungkong Furniture Industry Investment and Development Co., Ltd., a 20% stake in Tianjin Huayun Commercial Trade Properties Co., Ltd. and a 90% stake in Guangzhou Zengcheng Hehungkong Real Estate Co., Ltd.

Subsequent to the aforementioned asset injections, the company operates a large number of real estate commercial projects and numerous real estate housing projects, while, Nangfang Heungkong only controls four real estate companies at present, including a commercial real estate company in Shenyang which did not perform well in 1H 2008 whereas another three residential real estate companies in Tianjin are the main source of profit for Nangfang Heungkong in 1H 2008.


Source: China Business News

Date: 31 Jul 2008

CN01/BG/JL/BT/KM