Bloomberg - SOHO China Shares Gain Most Since May as Profit Jumps

By Chia-Peck Wong and Susan Li

March 12 (Bloomberg) -- Soho China Ltd., the biggest developer in Beijing s central business district, jumped as much as 9.1 percent in Hong Kong trading today, the most since May, after saying 2009 profit surged more than eightfold.

Soho China traded 7.4 percent higher at HK$4.38 at 11:36 a.m. Hong Kong time, bringing the stock s gain this year to 4.3 percent, compared with the Hang Seng Index s 2.9 percent drop.

The company is benefiting from rising property prices in China after banks flooded the financial system with money to drive a rebound from the global recession. Soho China will post another record year in 2010 in terms of underlying profit, as the developer has already locked in 90 percent of earnings from property sold in 2009, Chief Executive Zhang Xin said in a Bloomberg Television interview today.

The consensus forecast for Soho China s 2010 underlying profit, excluding revaluations, is 3.14 billion yuan ($460 million), an 86 percent increase from last year s 1.69 billion yuan, Zhang said. Net profit including revaluations jumped more than eightfold to 3.3 billion yuan in 2009, Soho China said yesterday.

Property prices will continue to go up in China as long as bank lending remains high as Premier Wen Jiabao targets economic growth of more than 8 percent, she said.

With the lending, the property prices will continue to go up, she said. With inflation coming, people s fear of inflation always translates into buying hard assets and prime location property is always a target.

February Price Jump

China s property prices rose 10.7 percent in February from a year earlier, the fastest pace in almost two years, the statistics bureau said March 10. Still, growth in sales by area slowed, a sign that the government s measures to cool the market are having an effect.

Sales of residential and commercial property rose 38 percent to 71.6 million square meters in the first two months of 2010 from a year earlier, the statistics bureau said. That is 3.9 percentage points lower than the growth rate for the whole of 2009, the bureau added.

Slowing bank loans will be the most effective way to cool property prices, Zhang said.

Banks extended 700 billion yuan of new loans in February, central bank data showed yesterday. That compared with 1.39 trillion yuan in the previous month and 1.07 trillion yuan a year earlier.

The data came on the same day as China reported inflation reached a 16-month high. Consumer prices rose 2.7 percent in February from a year earlier, the National Bureau of Statistics said in Beijing, compared with the 2.5 percent median estimate of 29 economists surveyed by Bloomberg News.