Sun Hongbin, chairman of Sunac China Holdings, has high hopes for development in Hainan province where the company has bought a slew of projects from the financially strained HNA Group on the island set to be turned into a free-trade port.
“Unlike other countries, the US for example, where you can go to Hawaii or Florida, China does not have many choices. Hainan is the best holiday spot,” said the tycoon.
“Thus, I am particularly optimistic about its development, not to mention the fact now the government will give more incentives to pave the way to make Hainan the new free-trade port.”
Sun was speaking on Friday after the company announced its core profit had almost quadrupled in the first half.
Sunac China, the fourth largest developer in China by sales, recently took over several of HNA’s projects in Hainan.
These include a commercial project site belonging to the Chinese conglomerate in Haikou, Hainan’s capital city, which is approved for construction of a 27-storey building in August.
But the company has no further plans to buy more of the finance-to-aviation conglomerate’s assets, Sun said.
The transaction, though, has already been the company’s third acquisition from HNA this year, following two in Haikou in March, for which Sunac China paid nearly 2 billion yuan (US$290 million) in total.
According to a filing to the stock exchange, by June 30, Sunac China owned 4.4 million square metres of land in Hainan, 3 per cent of the company’s total land bank.
Sunac China posted a thumping 292.3 per cent surge in first-half core profit on Friday on the back of strong home sales.
Interim core profit came in at 6.61 billion yuan, while contracted sales in the first six months of the year jumped 76 per cent year-on-year to 191.53 billion yuan.
The company’s revenue rose 215.3 per cent to 46.58 billion yuan from the same period last year.
The strong home sales and a failed investment in the troubled video streaming platform, Leshi, has made Sunac China concentrate on property development.
Sun said that the company will not go further in diversifying its business.
He is particularly confident in its property development business, shrugging off concerns that the operational environment will get even tougher in the second half of the year.
“Many of our peers are anxious, mainly due to the price cap and cooling down in third- and fourth-tier cities. We do not share those problems,” said Sun. “We always focused in first- and second-tier cities and our profit potential is still pretty large on the back of the rather low prices we paid for land.”
The average cost of the company’s land bank is 4,470 yuan per square metres.
No dividend was declared for the first half.
Shares of the developer jumped 2.5 per cent by Friday’s afternoon.
Sunac had written off most of its investment in Leshi Internet Information and Technology, setting aside 16.6 billion yuan to cover its losses in 2017. Sun has previously admitted that it was a failed investment.
This article Sunac China has high hopes for holiday island Hainan, where it bought projects from troubled HNA first appeared on South China Morning Post