HONG KONG, May 11, 2015 /PRNewswire/ -- Logan Property Holdings Company Limited, ("Logan Property" or "the Group", HKEx stock code: 3380), a leading property developer in the PRC focusing on the residential property market in Guangdong, Guangxi and Pearl River Delta region, is pleased to announce that Fitch has affirmed the Group's Long-Term Foreign-Currency Issuer Default Rating and Senior Unsecured Rating of 'BB-', with a Stable Outlook. This is a strong testament of the Group's stable business profile and sound recognition of its financial profile.
Fitch has given high recognition to Logan Property's established market position and track record of developing residential properties. Logan Property's contracted sales grew to RMB13.4 billion in 2014, which were mainly generated from residential property projects located in 11 cities from economically prosperous regions, including Guangdong, Guangxi and Pearl River Delta. The Group continued to be the sales leader in Huizhou, Shantou and Nanning in the past four years, and is expected to use its strong track record in these locations to grow its business scale.
In view of the uncertainties in the property market in recent years, Fitch is positive on the Group's resilience to risk, mainly attributable to its market leadership in existing locations, as well as its quality land bank. As of 2014, the Group's total land bank reached approximately 13.68 million square meter, including a project acquired through equity acquisition, with the rest acquired through public tendering, auction and listing. Out of the Group's total land bank, 53% is located in the Pearl River Delta, the most economically prosperous region in China, of which 35% caters to the Shenzhen market. The Group's land bank is expected to be sufficient for the Group's development for the next five to six years, which Fitch considers key to the Group's operational flexibility in terms of land acquisitions. Furthermore, the Group has kept its land cost relatively low, at an average of just RMB1,368 per square meter, or about 19% of the average selling price for contracted sales in 2014. The Group also had minimal outstanding land premium at the end of 2014.
The Group's recent land acquisitions have been largely in the Guangdong area, which is believed to have more stable demand given the higher population and more prosperous economy. The Group recorded a strong sales performance on the whole in April 2015. In particular, its flagship project "Logan City" achieved the highest-ever monthly sales. The Group is also planning to launch the new "Jiulongxi" project in Shenzhen, Longhua centre Baishilong in October this year, which will be a strong growth driver for the Group's full-year sales results in 2015. Fitch expects that Logan Property will record growth in both contracted sales and average selling price in 2015.
Fitch also mentioned that over 80% of the Group's projects are carried out by its own construction arm, Logan Construction. The integrated property development system not only gives the Group better control of project scheduling and product quality, but also generates synergy for the Group to control construction cost effectively, contributing to higher profitability. The Group's gross profit margin was 30.4% in 2014, with Fitch expecting the Group's profitability to remain stable in 2015.
About Logan Property Holdings Group Limited
Logan Property Holdings Group Limited is a property developer in the PRC focusing on the residential property market, with products that are primarily target first-time homebuyers and upgraders. In 2015, the Group was ranked the 38th-largest property developer in the PRC in terms of overall business strengths. Logan Property had residential development projects in 14 cities in economically prosperous and emerging regions of the PRC such as Guangdong and Guangxi Provinces. Logan Property has established a land bank comprising land the Group has acquired at competitive prices, and strives to build its land bank by establishing and expanding its presence in economic regions which the Group believes hold high growth potential. As of 31 December 2014, the Group has 87 projects at various stages of development in 13 cities and a land bank with an aggregate GFA of 13.68 million square meters. Logan Property has been assigned ratings of "Ba3" and "BB-" with a Stable Outlook by Moody's and Fitch, respectively. Based on publicly available information, among Hong Kong-listed Chinese property developers, Logan Property received the best first-time credit ratings in the last three years, demonstrating market recognition of the Group's "low cost, high profit" core strength. Logan Property is a constituent stock in the MSCI (Morgan Stanley Capital Investment) China Small Cap Index Series and Hang Seng Composite LargeCap/MediumCap Index. Subsequently, Logan Property is also included on the list of eligible stocks for southbound trading of the Shanghai-Hong Kong Stock Connect.
The Group was awarded a number of honours by various independent institutions, including Top 5 in a financial security ranking jointly issued by the Beijing Beta Consulting Centre and Capital Week, "China Top 100 Real Estate Developers 2015 -- Top 10 by Profitability" jointly bestowed by the Enterprise Research Institute of Development Research Centre of the State Council, the Institute of Real Estate Studies of Tsinghua University and China Index Academy, as well as "The Highest Development Potential Real Estate Enterprise" by Hexun.com.
