Financial ReviewDuring the Period Under Review, turnover amounted to HK$1,184.0 million (2019: HK$1,036.9 million), and gross profit amounted to HK$662.2 million (2019:HK$682.4 million). Due to reduced higher-margin leasing revenues, gross profit margins dropped to 56% from 66% in 2019. The Group was also negatively impacted by a HK$98.4 million revaluation loss on its investment properties. This marks a reversal of the HK$91.9 million in gains recorded for 2019. As a result, net profit declined 36% to HK$241.6 million. Basic earnings per share amounted to HK39.5 cents, while basic earnings per share for the same period in 2019 were HK52.8 cents.

Business ReviewAs regards residential projects, contracted sales were extremely sluggish during the first quarter of the year because of the impact of COVID-19, with sales offices closed and as local governments encouraged people to stay home. As COVID-19 infections were contained, GDP resumed its growth and with the support measures taken by the government, market conditions for residential properties started improving in the second quarter. In the second half of the year, contracted sales reached RMB320.2 million, an increase of 82% compared to the level in the first half of the year, although still 5% lower compared to the same period in 2019.

However, leasing revenues from commercial projects did not show much improvement. Revenues from property leasing declined as the COVID-19 epidemic resulted in reduced demand for office and retail properties. Demand for office properties dropped amid reduced business activity, the government's encouragement of office workers to work from home, and oversupply of office properties. In addition, the government's discouragement of people from leaving their homes and from attending group gatherings reduced foot traffic in retail malls. As a result, instead of an expected increase in leasing revenues following the Group's recent completion of two major office buildings, leasing revenues during the year declined 7% to HK$333.4 million.

ProspectsThe continuing impact of COVID-19 around the world, resulting in negative worldwide growth and recession, as well as trade tensions with the United States, will continue to adversely impact the Chinese economy and the property markets. The PRC government's recent policies to control property prices and to reduce risks in the property industry by limiting leverage will continue to have an adverse impact on the industry.

However, the economy is expected to continue improving in 2021, the Group expects moderate growth for residential sales. With regard to existing residential properties, the Group will continue focusing on sales of its residential properties in Tianjin and Shenyang. COVID-19, the reduced demand for office and retail space and the oversupply of commercial property in Shanghai will continue to put pressure on the Group's projects including Shanghai Landmark Center and Sinar Mas Plaza. There are signs of improvement at Group's investment properties in Shenzhen. In Nanxun, the Group is progressing on developing the expansion of its Nanxun furniture and trading material trading center.

For CRE, it will benefit from the full year operation of Songxian which was completed in May.

On 12 January 2021, the Company received a privatisation proposal offered by Genesis Ventures Limited by way of a scheme of arrangement. The procedures are underway and are expected to be completed in the first half of 2021.

Copyright 2021 ACN Newswire. All rights reserved. www.acnnewswire.com