Guangzhou Investment - Interim Results

Guangzhou Investment sustained continuous business growth
Sufficient land reserve expedite future development

(Hong Kong – 16 September 2004) – Guangzhou Investment Company Limited (“GZI” or the “Group”; stock code: 0123), one of the ten largest integrated property developers in Guangzhou, is pleased to announce today its interim results for the six months ended 30 June 2004.

During the period under review, the Group’s turnover amounted to approximately HK$2,266 million, representing a year-on-year growth of approximately 36%. Profit attributable to shareholders was approximately HK$131 million, an increase of about 24% as compared with the corresponding period of the previous year. Basic earnings per share were HK2.08 cents, up by 21% from the HK1.72 cents in the corresponding period of last year. The Board of Directors recommends the payment of an interim dividend of HK0.83 cents per share to reward for the continuous support of its shareholders. (2003: HK0.8 cents)

For the first half of 2004, the Group’s property sales amounted to approximately HK$1,108 million, representing a year-on-year increase of approximately 43%. Total GFA of the property sales in Guangzhou and Hong Kong reached approximately 150,000 sq m, posting a year-on-year growth of approximately 13%. In general, the projects launched during the first half of this year received encouraging response from the market. As a result, the Group achieved a historically low inventory level.

Sales projects were mainly residential properties, including Jiangnan New Mansion Phase I, first phase of Southern Le Sand, Galaxy City, Grandcity Garden and Phase I of Binjiang Yiyuan in Guangzhou city. The superb quality and the convenient location of the Group’s projects led to overwhelming market response for both high-end and mass market residential properties.

As for the Hong Kong market, the Group captured the opportunity brought forth by the market recovery in the first half of 2004 and launched Pokfulam Terrace, a residential property project in Pokfulam. The project was well-received by the market and posted a total sales revenue and total sales area of approximately HK$333 million and 7,700 sq m. respectively during the period under review.

Due to the commencement of operations of various projects including Victory Plaza, Fortune Plaza and Xinchuangju Building in Guangzhou, and Yue Xiu Plaza in Hong Kong.The Group’s rental income derived from its properties in Guangzhou and Hong Kong surged by approximately 44% to approximately HK$203 million during the period under review. For the first half of 2004, total area of rental properties increased by approximately 11% to approximately 500,000 sq m, which mainly included City Development Plaza, White Horse Commercial Building and Jin Han Building. The grading, locations, multiple land use and structures, together with the strengthened market research and operation strategy, further increased the occupancy rates of its rental portfolio. For the first half of 2004, the gross floor area of properties under development reached approximately 1.1 million sq m. All came from projects located in the mainland China, and are expected to provide profitability for the Group in the coming years.

As at 30 June 2004, the Group’s land reserve in mainland China amounted to about 3.58 million sq m. The land reserve in urban area is mainly residential land located in Hai Zhu district. Since the municipal government of Guangzhou promulgated to raise the compensation for urban renewal at the end of 2003, the supply of residential property in urban area will decrease and thus increase the value of the Group’s land in urban area. The Group possesses ample land resources in the new development district of Nan Sha. As Nan Sha entered into the stage of large-scale development, the Group will accelerate the development of Southern Le Sand in Nan Sha, so as to cater to market demand.

For the positioning of the Group’s property business in future, GZI will continue to develop mid-end residential properties with selling prices ranging from RMB 5,500 to RMB 6,500 per sq. m.. Meanwhile, the Group will selectively develop premium offices, shopping malls and high-end residential properties for rental use. Concerning the location, the Group will first develop land reserve located in urban area and develop rural land reserve in mid-term.

During the period under review, GZI Transport Limited (“GZI Transport”; stock code: 1052), the toll road subsidiary of the Group, demonstrated stable business growth. As the economy of Pearl River Delta continued to prosper, there were increases in the traffic flow of several highways including Humen Bridge, Northern Ring Road and Shantou Bay Bridge. GNSR Expressway also posted rapid increase of approximately 135.8% in its traffic flow. As a result, GZI Transport’s profit attributable to shareholders increased by approximately 22% to approximately HK$129 million.

Guangzhou Paper Limited (“Guangzhou Paper”) under the Group maintained a relatively high market share in the domestic newsprint market. During the review period, riding on the growing demand for newsprint in the domestic market, the Group strengthened its management to improve production workmanship, streamlined workforce and made early payment of bank loan. Hence, the sales of newsprint increased by approximately 23% to approximately 150,506 tonnes as compared with the corresponding period of the previous year. These offset the slight reduction of newsprint price and surging prices of raw materials, resulting in a significant increase in profit attributable to shareholders which amounted to approximately HK$19 million for the period under review.

Looking ahead, with the implementation of the macroeconomic control measures and the adjustment of credit policy, the Guangzhou property market is expected to demonstrate healthy growth and regulated development. Open trading for the transfer of land use right is also favourable for large-scale developers. We expect the growing demand, reducing inventory and declining new supply of properties are the growth engines of the Guangzhou property market. The economy of the Pearl River Delta will continue to benefit from a number of favourable conditions, including the gradual implementation of the economic circles of the Pan-Pearl River Delta region and the Closer Economic Partnership Arrangement (CEPA). As GZI’s property ,toll road and paper businesses are based in Guangzhou, we are confident of the future of the Group’s business development. We will continue to enhance our competitiveness and generate fruitful investment returns to our shareholders. 

About GZI

GZI is one of the leading property developers in Guangzhou City. The Group is focusing on middle-class residential projects in Guangzhou. It also develops offices and rural residential projects selectively. In addition, the Group has built up several businesses which consist of property, pulp and paper, and toll roads connecting to the transportation hub of Guangzhou city in mainland China.

For further information, please contact:
iPR ASIA LTD
Ellen Zee/ Jane Yip
Tel: 2136 6184/ 6175
Fax: 2136 6068
Email: ellenzee@iprasia.com.hk /janeyip@iprasia.com.hk
Website: www.iprasia.com.hk