YING LI: 2014 net profit up 23.6% to RMB254 million

IN ITS first set of results after China Everbright Limited became a strategic investor, Ying Li Real Estate International reported net profit of RMB253.6 million, up 23.6% year-on-year.

YingLi_IFC.7.14

Ying Li International has built iconic real estate assets (such as the Yingli IFC, above) in Chongqing, which is the economic centre of Western China and the most populous city in China with 30 million people. Photo: CompanyRevenue grew 61.3% to RMB1 billion.

China Everbright Limited, a state-owned enterprise, became Ying Li's second largest shareholder by subscribing to 381m new shares (14.9% stake) at 26 cents apiece in Sept 2014.

The No. 1 shareholder is Fang Ming, the Executive Chairman and CEO of the Ying Li, who holds a direct and indirect interest of 35.95%.

No dividend has been proposed but Ying Li held out the prospect of a scrip dividend.

The Board is "currently reviewing the feasibility of declaring a scrip dividend subject to regulatory, audit and tax clearances. The Board is hopeful of being able to update shareholders at the Company’s coming Annual General Meeting," it said in its FY2014 results statement.

Arguably, Ying Li is not your ordinary property developer in China.

Not only has it differentiated itself by attracting China Everbright to come on board, it focuses on urban renewal projects in core CBD areas, and has built a track record in Chongqing in western China.

And its business results continue to be strong, unlike those of many property developers, especially those which focus on residential properties.

Results highlights:

» Revenue growth in 2014 was mainly driven by the handover of completed units at the Ying Li International Plaza project and the full year contribution of rental income from the Ying Li International Plaza retail mall.

» Selling expenses increased to RMB56.2 million (up 48.0% year-on-year), boosted by an increase in property management fees and utility expenses incurred from the full year operation of the retail mall.

» Interest expenses dropped 24.7% to RMB68.5 million, mainly due to the capitalization of interest expenses associated with the construction of the Ying Li Chongqing Financial Street and the San Ya Wan Phase 2 projects.

» Available for sale assets: Valued at RMB500m, this investment in the Beijing Tongzhou project is Ying Li's first outside of Chongqing.

» Debt: Yi Ling has RMB3.1 billion in debt with a weighted average cost of debt at 7.34% per annum. Cash and cash equivalents stood at RMB 965.1m at end-2014.

Here are some highlights from the Q&A session at the recent results briefing:

Q: Only about 47% of Tower 1 of the Ying Li International Plaza (which comprises office units) has been sold since its launch in May 2013. What is the reason for this?

Cai Mingyi, financial controller: The market has been a bit slow. We expect the remaining units to be sold over the next two years -- ie, 2015 and 2016.

Q: How has the entry of China Everbright changed things at Ying Li?

FangMing_JamesPan7.14 Last year at event to mark Everbright's investment in Ying Li: Ying Li chairman & CEO Fang Ming (left) exchanges gifts with James Pan, head of real estate investment, China Everbright.
File photo. Fang Ming, Chairman & CEO: Firstly, in terms of cashflow, we are more secure as we have gained the support of major banks and China Everbright has the resources in the capital markets and the network. Our funding is secured for our projects. Many real estate developers are facing a cash shortfall but this is not the case for Ying Li.

Secondly, operationally, our status has been elevated and we have engaged an external consultant to enable us to undergo an organisation restructuring, which is now in the implementation stage.

Everbright and Ying Li can complement each other. Everbright has strengths in management and operations and in the financial markets while Ying Li has vast experience in the real estate sector. Therefore, together we can improve our business competitiveness.

Q: For the San Ya Wan Phase 2 project, you have launched sales in Oct 2014. How is the sales progress?

Cai Mingyi: We have sold about 20% of those units that were launched. The remaining units are expected to be sold this year.

Sales value is about RMB100 million. Total is about 800 units, with completion in 2016.

Q: What is going to be the capex for this year for the existing two projects? How about 2016?

Cai Mingyi: This year, about RMB500 million and next year, about RMB300 million.

The Powerpoint materials for the results briefing can be viewed here.

YING LI: 2014 net profit up 23.6% to RMB254 million

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