Growing leadership in existing markets(34075)

Growing leadership in existing markets

First half revenue exceeds RMB 10 billion for the first time *** Satisfactory performance in the face of market fluctuation and uncertainty Hong Kong, 6 August 2010 Longfor Properties Co Ltd ( Longfor Properties or the Group , Stock Code in HKEx: 960) is pleased to announce its unaudited interim results for the 6 months ended 30 June 2010. During the period under review, contract sales of the Group increased by 30.7% to RMB10.49billion compared with the corresponding period in 2009. Rental income from investment properties was up32.7% from the same period last year. Gains on investment property revaluation were RMB 2.13 billion. Sold properties will mainly be delivered in the second half, leading to a drop in revenue to RMB3.67 billion. Profit attributable to shareholders increased by 51.4% to 2.2 billion. Excluding the net impact of investment property revaluation gain, core attributable profit rose by18.6% to24.4 % from the same period last year. Selected regional focus strategy achieved encouraging results. Recorded stable development in new regions The Group achieved contract sales of RMB 10.49 billion in the first half of 2010, a record for the Group. Contract sales from the Pan Bohai Rim, the Yangtze River Delta and Western regions were RMB 5.13 billion, RMB 1.21 billion and RMB 4.15 billion and accounted for 49.0%, 11.5% and 39.5% of total sales, respectively. The stable growth reflects the selected regional focus, multiple products strategy has begun to produce encouraging results for the Group. During the review period, the Group continued to maintain its leading position in the markets in which it operates. In Chongqing, the Group continued to be a market leader in terms of contract sales. In Beijing, thanks to its unique and quality products, the Group had been able to achieve two-third of its sales target for the full year and was among the top two in the local market. During the review period, the Group was able to quickly establish a presence in new markets and achieved impressive results. The Group s four newly established regional offices in Sunan, Hangzhou, Shenyang and Qingdao already have started operation. Sales of Wuxi Rose and Ginkgo Villa, the Group s first projects in the markets it entered in 2009, have been launched since the end of May this year. Contract sales of the project reached RMB 450 million within a month after launch and became the month s best seller in Wuxi. The success mirrored that of the Group s strong execution ability and brand recognition even with projects in new cities. There are now six cities contributing to the Group s total revenue compared to five previously. Impacted by a decline in sales in residential market in some of the cities, plus the fact that most of the Group s projects are slated to be launched in the second half, sales by gross floor area declined 28.1% year-on-year to736,648 square meters. A strong increase in revenue contribution from the more high-end properties in the Pan Bohai Rim helped boost the Group s average selling price by 81.7% to RMB 14,234per square meter. During the period, the Group s property development business recorded a revenue of RMB3.47billion. As the delivery of sold properties are concentrated in the second half of 2010, revenue and gross floor area delivered dropped by39.4% and 28.6% respectively. As at 30 June 2010, the Group had RMB25 billion in sold but yet to be recognized contract sales, laying a solid foundation for future revenue growth. Strategic land acquisition. Maintain healthy cash flow The Group topped up its land reserves to an appropriate level. The Group acquired 2.93 million square meters of land, of which94.5% are in coastal regions such as the Pan Bohai Rim and the Yangtze River Delta region, including land lots in Shanghai Songjiang district and Beijing Chaoyang district. Together with the Dalian project secured in the first quarter of 2010, the Group has projects across 11 cities. Under the strategy of selected regional focus , the Group strategically controlled the cost of land acquisitions, and balanced market risks with profitability. The Group won a new project in Chaoyang District of Beijing City at a reasonable price of RMB9,807per square meter. As at 30 June 2010, the Group s overall land reserves amounted to 24. 37 million square meters or 21.24 million square meters on an attributable basis. In pursuing its strategy of selected regional focus , the Group placed its focus on the Pan Bohai Rim and the Yangtze River Delta region. After careful evaluation of the market environment the Group purchased new lands while keeping a tight control on costs and on the payment progress. During the period, gross profit margin of Group s property development business stood at approximately 30%, a level similar to that of the last corresponding period. Wei huaning, the Group s General Manager of Finance Department said, Longfor acquired the lands at very competitive prices. If property prices remained stable after delivery of those projects, there will be room for growth for the Group s overall profit margin. The Group further expanded its financing channel. In April 2010, Longfor Properties obtained a four-year term syndication loan facility of up to HK$2.15 billion from five banks. It is also the longest term overseas loan to have been obtained by a Chinese privately-owned real estate enterprise, a reflection on the international capital market s confidence in Longfor. At the same time, Longfor s strategic partnerships with a number of banks in China have provided stable financing support for the Group in an uncertain market. As at 30 June 2010, the Group s consolidated borrowings have an average length of 3.4 years, up from 2.5 years a year ago, indicating lowered financial risks. The Group continued to keep a tight grip on cash flow with frequent new project launches and quick turnover of existing projects. Investment and operating cost are aligned with cash inflow to help keep debt under control. Rapid growth in rental income. Investment properties became new growth driver Through adjustment in tenant mix and enhancement of shopping mall operation management, the Group s rental income from investment properties grew sharply by 32.7% to RMB114 million during the first six month in 2010. The impressive performance was attributable to the renovation of Chongqing North Paradise Walk, which led to a significant increase in rent. The Group successfully introduced 16 top international trendy brands to Chongqing and Southern-west China for the first time. Thanks to the fast growth in rental income and stable development of new investment properties, Group saw a significant increase in the value of its investment properties. MOCO Centre in Chongqing, Three Thousand Mall in Chengdu and Starry Street in Beijing is expected to start operation between the second half of 2010 and the first half of 2011. The Group booked a RMB 2.13 billion revaluation gain in the investment properties in the first half of 2010, in which the revaluation gain of the three new projects totaled RMB 0.78 billion, while the four existing projects - North Paradise Walk, West Paradise Walk, Fairy Castle, Crystal Palace - recorded a revaluation gain of RMB1. 35 billion. In the coming five years, it is estimated that the Group s investment portfolio will reach 2 million square meters. There will be plenty of room for significant growth for rental income. New project to be launched in new cities in the second half of this year. Quick turnover and flexible strategy for better sales** As at 30 June 2010, the Group had approximately RMB 25 billion in sold but yet to be recognized revenue. This will act as a solid foundation for revenue growth in full year of 2010. The Group plans to complete 2.32 million square meters of properties in GFA terms in 2010, of which about 0.67million square meters already have been completed in the first half of the year. The remaining 1.64 million square meters will be completed in the second half. In the second half of 2010, 13 new projects will be launched. Four new cities, Shenyang, Changzhou, Qingdao and Hangzhou, which the Group entered last year, accounted for six of them. The Group will strive to achieve its sales target and continue to adjust its sales strategy according to market conditions to maintain sales through reasonable pricing and expansion of customer base from different markets. In July 2010, the Group achieved contract sales of RMB 1.94 billion and maintained stable month-on-month growth. Contract sales from January to July 2010 was RMB12.43billion, more than half of the Group s sales target for the year. Wei Huaning said, Just as it has been able to handle the market turbulence since April this year, the Group is well prepared for any further instability for the remainder of 2010. We expect there to be further impact from government policies in the second half. But with our growing business strength in the existing markets and prospects in the new markets we are confident that we will be able to weather any market downturn, and continue to fortify our competitive strength and create encouraging return for our shareholders.

First half revenue exceeds RMB 10 billion for the first time

*****

Satisfactory performance in the face of market fluctuation and uncertainty

Hong Kong, 6 August 2010 Longfor Properties Co Ltd ( Longfor Properties or the Group , Stock Code in HKEx: 960) is pleased to announce its unaudited interim results for the 6 months ended 30 June 2010. During the period under review, contract sales of the Group increased by 30.7% to RMB10.49billion compared with the corresponding period in 2009. Rental income from investment properties was up32.7% from the same period last year. Gains on investment property revaluation were RMB 2.13 billion. Sold properties will mainly be delivered in the second half, leading to a drop in revenue to RMB3.67 billion. Profit attributable to shareholders increased by 51.4% to 2.2 billion. Excluding the net impact of investment property revaluation gain, core attributable profit rose by18.6% to24.4 % from the same period last year.

Selected regional focus strategy achieved encouraging results. Recorded stable development in new regions

The Group achieved contract sales of RMB 10.49 billion in the first half of 2010, a record for the Group. Contract sales from the Pan Bohai Rim, the Yangtze River Delta and Western regions were RMB 5.13 billion, RMB 1.21 billion and RMB 4.15 billion and accounted for 49.0%, 11.5% and 39.5% of total sales, respectively. The stable growth reflects the selected regional focus, multiple products strategy has begun to produce encouraging results for the Group.

During the review period, the Group continued to maintain its leading position in the markets in which it operates. In Chongqing, the Group continued to be a market leader in terms of contract sales. In Beijing, thanks to its unique and quality products, the Group had been able to achieve two-third of its sales target for the full year and was among the top two in the local market.

During the review period, the Group was able to quickly establish a presence in new markets and achieved impressive results. The Group s four newly established regional offices in Sunan, Hangzhou, Shenyang and Qingdao already have started operation. Sales of Wuxi Rose and Ginkgo Villa, the Group s first projects in the markets it entered in 2009, have been launched since the end of May this year.

Contract sales of the project reached RMB 450 million within a month after launch and became the month s best seller in Wuxi. The success mirrored that of the Group s strong execution ability and brand recognition even with projects in new cities. There are now six cities contributing to the Group s total revenue compared to five previously.

Impacted by a decline in sales in residential market in some of the cities, plus the fact that most of the Group s projects are slated to be launched in the second half, sales by gross floor area declined 28.1% year-on-year to736,648 square meters. A strong increase in revenue contribution from the more high-end properties in the Pan Bohai Rim helped boost the Group s average selling price by 81.7% to RMB 14,234per square meter.

During the period, the Group s property development business recorded a revenue of RMB3.47billion. As the delivery of sold properties are concentrated in the second half of 2010, revenue and gross floor area delivered dropped by39.4% and 28.6% respectively. As at 30 June 2010, the Group had RMB25 billion in sold but yet to be recognized contract sales, laying a solid foundation for future revenue growth.

Strategic land acquisition. Maintain healthy cash flow

The Group topped up its land reserves to an appropriate level. The Group acquired 2.93 million square meters of land, of which94.5% are in coastal regions such as the Pan Bohai Rim and the Yangtze River Delta region, including land lots in Shanghai Songjiang district and Beijing Chaoyang district. Together with the Dalian project secured in the first quarter of 2010, the Group has projects across 11 cities.

Under the strategy of selected regional focus , the Group strategically controlled the cost of land acquisitions, and balanced market risks with profitability. The Group won a new project in Chaoyang District of Beijing City at a reasonable price of RMB9,807per square meter. As at 30 June 2010, the Group s overall land reserves amounted to 24.

37 million square meters or 21.24 million square meters on an attributable basis.

In pursuing its strategy of selected regional focus , the Group placed its focus on the Pan Bohai Rim and the Yangtze River Delta region. After careful evaluation of the market environment the Group purchased new lands while keeping a tight control on costs and on the payment progress.

During the period, gross profit margin of Group s property development business stood at approximately 30%, a level similar to that of the last corresponding period. Wei huaning, the Group s General Manager of Finance Department said, Longfor acquired the lands at very competitive prices. If property prices remained stable after delivery of those projects, there will be room for growth for the Group s overall profit margin.

The Group further expanded its financing channel. In April 2010, Longfor Properties obtained a four-year term syndication loan facility of up to HK$2.15 billion from five banks. It is also the longest term overseas loan to have been obtained by a Chinese privately-owned real estate enterprise, a reflection on the international capital market s confidence in Longfor. At the same time, Longfor s strategic partnerships with a number of banks in China have provided stable financing support for the Group in an uncertain market.

As at 30 June 2010, the Group s consolidated borrowings have an average length of 3.4 years, up from 2.5 years a year ago, indicating lowered financial risks. The Group continued to keep a tight grip on cash flow with frequent new project launches and quick turnover of existing projects. Investment and operating cost are aligned with cash inflow to help keep debt under control.

Rapid growth in rental income. Investment properties became new growth driver

Through adjustment in tenant mix and enhancement of shopping mall operation management, the Group s rental income from investment properties grew sharply by 32.7% to RMB114 million during the first six month in 2010. The impressive performance was attributable to the renovation of Chongqing North Paradise Walk, which led to a significant increase in rent. The Group successfully introduced 16 top international trendy brands to Chongqing and Southern-west China for the first time.

Thanks to the fast growth in rental income and stable development of new investment properties, Group saw a significant increase in the value of its investment properties. MOCO Centre in Chongqing, Three Thousand Mall in Chengdu and Starry Street in Beijing is expected to start operation between the second half of 2010 and the first half of 2011.

The Group booked a RMB 2.13 billion revaluation gain in the investment properties in the first half of 2010, in which the revaluation gain of the three new projects totaled RMB 0.78 billion, while the four existing projects - North Paradise Walk, West Paradise Walk, Fairy Castle, Crystal Palace - recorded a revaluation gain of RMB1.

35 billion.

In the coming five years, it is estimated that the Group s investment portfolio will reach 2 million square meters. There will be plenty of room for significant growth for rental income.

New project to be launched in new cities in the second half of this year. Quick turnover and flexible strategy for better sales

As at 30 June 2010, the Group had approximately RMB 25 billion in sold but yet to be recognized revenue. This will act as a solid foundation for revenue growth in full year of 2010. The Group plans to complete 2.32 million square meters of properties in GFA terms in 2010, of which about 0.67million square meters already have been completed in the first half of the year. The remaining 1.64 million square meters will be completed in the second half.

In the second half of 2010, 13 new projects will be launched. Four new cities, Shenyang, Changzhou, Qingdao and Hangzhou, which the Group entered last year, accounted for six of them. The Group will strive to achieve its sales target and continue to adjust its sales strategy according to market conditions to maintain sales through reasonable pricing and expansion of customer base from different markets.

In July 2010, the Group achieved contract sales of RMB 1.94 billion and maintained stable month-on-month growth. Contract sales from January to July 2010 was RMB12.43billion, more than half of the Group s sales target for the year.

Wei Huaning said, Just as it has been able to handle the market turbulence since April this year, the Group is well prepared for any further instability for the remainder of 2010. We expect there to be further impact from government policies in the second half. But with our growing business strength in the existing markets and prospects in the new markets we are confident that we will be able to weather any market downturn, and continue to fortify our competitive strength and create encouraging return for our shareholders.

Growing leadership in existing markets

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