Franshion Properties (China) Limited Announces 2009 Interim Results

Franshion Properties (China) Limited ( Franshion Properties or the Company , Stock Code: 00817) today announced its unaudited interim results for the six months ended 30 June 2009.
During the period, the total revenue of Franshion Properties increased by 45% y-o-y to HK$2.549 billion (1H2008 restated: HK$1.759 billion). This was mainly due to the increased sales of properties. Excluding fair value gains on investment properties and net of deferred tax, profit attributable to shareholders of the Company amounted to HK$419 million, representing an increase of 17% over the corresponding period last year.
As there was decrease in the fair value gains on investment properties held by the Company for the period under review as compared to the corresponding period last year, if the effect of fair value gains on investment properties was taken into account, profit attributable to shareholders of the Company amounted to HK$434 million, representing a decrease of 61% as compared to the 2008 interim period. Basic earnings per share were HK$5.40 cents.
The Board of Directors of Franshion Properties did not recommend payment of an interim dividend for the six months ended 30 June 2009 (1H2008: Nil).
At the beginning of the year, the Company completed the acquisition of the remaining 26.77% interest of China Jin Mao (Group) Co., Ltd., ( Jin Mao Group ), and further consolidated three major business segments, namely property development, property leasing and hotel operations. The property development, property leasing and hotel operations segments accounted for 50%, 17% and 28% of the Company s total revenue respectively.
During the period, property sales surged by 96% to HK$1.270 billion, mainly contributed by the booked revenue of certain units on site B of Shanghai Port International Cruise Terminal Project. Revenue from the Company s property leasing and hotel operations segments amounted to HK$429 million and HK$723 million, respectively, an increase of 19% for both segments over the same period in 2008. Total gross floor area of the three business segments reached 2.28 million square meters. As of 30 June 2009, cash and cash equivalents held by the Company amounted to HK$3.574 billion.
Mr. He Cao, Chairman of Franshion Properties, said, During the first half of 2009, capitalizing on the organic development in our three major business segments and the complementation among themselves, together with the outstanding quality of our assets, the Company s risk resistant ability had been well proven. We are delighted with the excellent performance of all three business segments under such a tough and challenging environment.
Property Development
During the period under review, with the gradual recovery of China s property market, the Company achieved relatively satisfactory performance in the sale and pre-sale of property development projects. Franshion Properties has almost completed the sale and pre-sale of the Site B of Shanghai Port International Cruise Terminal Project, which is located on the west bank of Huangpu River, North Bund of Hongkou, Shanghai. Two office buildings of the project, covering approximately 31,034 square meters were handed over in the first half of the year. Pre-sale of Building No.3 on Site B of Shanghai Port International Cruise Terminal Project has also been successfully completed. In addition, nine out of a total of eleven office buildings have realized sale or obtained intent for sale. Floor area having been sold, pre-sold and obtained intent for sale accounted for 77% of the total gross floor area expected available for sale upon the completion of the project.
Furthermore, we have completed the preliminary preparation work of the Shanghai International Shipping Service Centre Project, which is also located on the west bank of the Huangpu River, North Bund of Hongkou district, Shanghai. Construction of the project was commenced in March this year. Currently, the progress is satisfactory.
Property Leasing
Leasing properties of Franshion Properties include Central and West Towers of Beijing Chemsunny World Trade Center, Sinochem Tower and Jin Mao Tower. They are located at prime location of first-tier cities, have provided a stable income source for the Company. Despite the impact of the global financial crisis on the overall high-end office market in the first half of this year, three properties in the leasing segment of the Company still enjoyed relatively high occupancy rate for their excellent qualities. As of 30 June 2009, occupancy rates of the Central and West Towers of Beijing Chemsunny World Trade Centre, Sinochem Tower and Jin Mao Tower were 95.9%, 93.4% and 92.2%, respectively. The total gross floor area of investment properties of the Company is 364,000 square meters.
Hotel Operations
The Company owns a total of six high-end hotels in China, including the Ritz-Carlton, Sanya, Westin Beijing, Chaoyang, Grand Hyatt Shanghai, Hilton Sanya Resort & Spa, Wangfujing Grand Hotel and JW Marriott Shenzhen, with total number of guest rooms reaching 2,888. During the period under review, the hotel operations segment of the Company was impacted by the overall market conditions, especially its high-end hotels in Beijing, Shanghai and other first-tier cities. Whereas two high-end luxury hotels of the Company located in the tourist resort of Sanya, Hainan Province experienced minor impact. In particular, the Ritz-Carlton, Sanya even seized the opportunity emerged in the crisis, and became one of the domestic hotels with best performance in the first half of 2009.
Reserved Projects
Currently, the Company has four reserved projects, including Site No. 15 of Guangqu Road, Beijing, the Shanghai Chongming Island Project, two projects located in Lijiang of Yunnan Province, namely, Jin Mao World Heritage Park Redevelopment Project and Jin Mao Yulong Snowy Mountain Resort Hotel Project.
On 30 June 2009, the Company won the bid of site No. 15 of Guangqu Road, Beijing for a consideration of RMB4.06 billion. The site has an area of approximately 155,918 square metres and an estimated total gross floor area above the ground of approximately 280,121 square metres. The project is located at Baiziwan Section, Chaoyang District, adjacent to the CBD area. It is also close to cluster of bus lines with all-rounded supplementary facilities and other commercial facilities and existing high-end properties in the neighborhood. The site was named as the only remaining prime site in the region in Beijing for its excellent location. Franshion Properties plans to develop it into a large high-quality urban complex.
Chairman Ho said, In the second half of this year, there are still uncertainties and risks within the global economy. In this regard, opportunities and crisis will co-exist in China s property and hotel markets. We will continue to work up to the best of our efforts to ensure stable growth of Franshion Properties. In terms of property development, we will develop and prepare for the completion and handover of the office buildings in the front row of Shanghai Port International Cruise Terminal Project and the sale of unsold office buildings. Besides, we will prepare for the development of reserved projects, including Site No. 15 of Guangqu Road, Beijing, the Shanghai Chongming Island Project and Yunnan Lijiang Projects, which will lay a solid foundation for our revenue in 2011 onwards. In view of the property leasing segment, we will continue to enhance our quality services, improve satisfaction of our clients and maintain the occupancy rates at above 90% to provide the Company with a stable source of cash flow. Finally, as for our hotel operations, we will adopt flexible sales and marketing strategies to capitalize on the opportunities arising from the economic recovery and to raise the occupancy rate.
Looking ahead, we have full confidence in the outlook of China s economy, and we are optimistic about China s commercial property market and the development of the Company s business. Franshion Properties will adhere to its strategy of developing and holding top quality commercial properties in prime locations of first-tier cities , dedicate more efforts in expanding our property development segment, focus on the development of urban complex projects, develop high-end residential properties as and when appropriate, continue to maintain a steady growth, and vigorously strengthen the Company s market position as China s leading commercial property developer, said Chairman Ho.