SOHO China, a Beijing-based commercial property developer, is ready to pursue acquisitions after a year of inactivity.
"The impact of the financial meltdown on the mainland was beyond our expectations and we adopted a winter sleep strategy," chairman Pan Shiyi said. "We are now awake and see good opportunities to acquire assets in Shanghai and Beijing."
Mr Pan said some cash-strapped foreign investors and local developers were selling distressed assets at up to half their purchase prices.
The China Banking Regulatory Commission s decision to relax loans for mergers and acquisitions would allow banks to provide lending for up to 50 per cent of a deal, he said. This would facilitate future acquisitions, but he admitted the outlook for the property market was still hazy.
Mr Pan would not elaborate on acquisition plans but said SOHO China was keen only on completed or partially built projects in prime sites in Beijing and Shanghai. He said some deals could be done this year.
The firm had a cash position of 10.69 billion yuan (HK$12.12 billion) and undrawn facilities of more than 20 billion yuan at the end of last year, which will help fund acquisitions.
SOHO China reaped 7.72 billion yuan from presold projects last year, a 91.81 per cent jump year on year. Average selling prices rose 36.18 per cent to 48,718 yuan a square metre.
About 4.3 billion yuan in revenue and 1 billion yuan in net earnings from pre-sales will be deferred until this year as the construction of Sanlitun SOHO was delayed because of the Beijing Olympics.
Companies can only book revenue and profit from property sales when projects are completed.
Analysts also noted that a higher than expected 477 million yuan provision for land appreciation tax had eroded the company s profit.
It built projects with a total of 208,582 square metres of floor area last year and aimed to complete a further 296,480 square metres this year, including Sanlitun SOHO.
Still, it would pay a final dividend of 10 fen a share, the same as in 2007.
"The dividend payout only accounts for a small portion of our cash and will not hinder our future acquisitions. Our profit drop was just due to the delays in completion," said chief executive Zhang Xin, noting business remained strong.
The stock fell 2.56 per cent to close at HK$2.66 yesterday.
