CHINA Merchants Property Development Co Ltd, a major publicly listed real estate developer in the country, said yesterday it plans to raise as much as 8 billion yuan (US$1.1 billion) through a new share sale, mainly to fund 14 projects in six mainland cities including land acquisition and property development.
The 14 projects, mainly residential ones as well as some office and industrial developments, will need a total invesment of about 17.1 billion yuan, the Shenzhen-based company said in a filing to the Shenzhen stock exchange yesterday.
Eight of the projects are located in Shenzhen, two in Shanghai and one each in the cities of Tianjin, Chongqing, Suzhou and Zhuhai.
"The new share sale plan will certainly help CMPD further expand its presence in the country's property market," said Xue Hebin, a real estate industry analyst at Orient Securities Co.
"We believe the company, which now develops real estate projects in 12 cities nationwide, will be able to maintain its fast-growing pace in the coming 2008," said Xue.
According to the annual report released by CMPD yesterday, net profit soared 83.38 percent to 1.158 billion yuan last year amid strong sales growth.
Twelve-months sales of residential properties reached 2.628 billion yuan, a year-on-year increase of 81 percent.
In addition, revenues from leasing properties rose 25 percent to 383 million yuan in the report period and gains from brokerage services jumped 71 percent to 103 million yuan, the report said.
China's real estate developers, no matter big or small, are facing stringent capital flows as the country's lenders are all tightening their credit controls to prevent the economy from overheating.
Continuous increases in benchmark lending rates and reserve requirement ratio required by the central bank has made borrowing costs higher and financing more difficult for domestic developers.
In 2007 alone, the People's Bank of China raised its interest rates on lending six times and asked banks on ten occasions to put more money aside to cover lending.