Zall Announces its 2011 Interim Results

• Revenue Increases 17 Folds to RMB1.65 Billion Driven by Strong Sales in North Hankou Shopping Mall Units
• Takes Full Advantage of the Demolition of Hanzheng Street to Expand Market Footprint

HONG KONG, Aug. 29, 2011 /PRNewswire-Asia/ --

Financial Highlights:

Zall Development (Cayman) Holding Co., Ltd. ("Zall Development" or the "Group"; SEHK stock code: 2098), a leading developer and operator of large-scale, consumer product-focused wholesale shopping malls and commercial properties in China, announced today its interim results for the six months ended 30 June 2011. It is the first set of interim results upon Zall Development's listing on the Main Board of The Stock Exchange of Hong Kong Limited on 13 July 2011.

During the period under review, the Group recorded a turnover of RMB1,652.0 million, an increase of approximately 17 folds compared to the same period last year. This was mainly driven by significant increases in both total GFA sold and the average selling price of the Group's flagship project, the North Hankou International Trade Center ("North Hankou"). Gross profit surged approximately 25 folds to RMB1,152.8 million, while gross profit margin rose to 69.8% from 48.1% over the same period last year. Net profit rose 292.3% to RMB853.1 million, higher than the Group's forecast of a minimum RMB780 million profit in its prospectus.

For the six month ended 30 June 2011, the Group's earnings per share tripled to RMB0.24. The Board has declared an interim dividend of HK7 cents per share (or equivalent to approximately RMB5.74 cents per share).

Mr. Yan Zhi, Chairman and CEO of Zall Development, said, "The demand for consumer products has been rising in the domestic market amid the continued growth in China's economy and per capita income. During the first half of 2011, total retail sales of consumer goods in the country grew 16.8% year-on-year to RMB8.58 trillion. The Central Government reiterates the stimulation of domestic spending as a top a priority in its 12th Five-Year Plan. Zall Development aims to seize opportunities arising from the fast-growing wholesale market along the supply chain of consumer goods through its one-stop logistic support model to help enhance procurement efficiency among retailers. During the period under review, strong sales of the North Hankou shopping mall units is a testament to the success of the Group's business model of consumer goods wholesaling and also brought lucrative returns to the Group."

Revenue from the sales of property increased by over 17 folds to RMB1,648 million, accounting for 99.8% of the total turnover for the six months ended 30 June 2011. The increase was primarily attributable to the sales of North Hankou Project's wholesale shopping mall units, office and retail units of No. 1 Enterprise Community Project. The Group's rental income increased by 115.6% to RMB3.1 million, as it started to retain more wholesale shopping mall units at the North Hankou Project for leasing.

As at 30 June 2011, the Group had land reserves of approximately 5,347,623 sq.m., all of which had been granted land use rights certificates. It is expected that the land reserves can meet the development needs of the Group over the coming three to five years.

North Hankou Project

As the largest consumer product-focused wholesale shopping mall in Central China, North Hankou Project is designed to take full advantage of opportunities arising from the demolition and relocation of the traditional wholesale trading district on Hanzheng Street in Wuhan. As at 30 June 2011, construction of a GFA of approximately 656,723 sq.m. at the North Hankou Project was completed, including footwear and leather products mall Phase I, small household items mall Phase I, hotel products and supplies mall Phase I, cotton knitwear mall Phase I and its affiliated residential property and apparel mall Phase I. During the period under review, a total GFA of 189,200 sq.m. was sold. The average selling price was approximately RMB8,638 per sq.m., representing an increase of 42.0% compared with the corresponding period last year. During the period under review, the North Hankou Project provided a total leasable area of approximately 133,000 sq.m.

In the first half of 2011, over 3,500 occupants were doing business in the North Hankou Project, of which 80% were from Hanzheng Street. In addition, there will be 3,200 apparel mall occupants and 3,500 small household items mall occupants starting their business later this year. Furthermore, 5,900 occupants from Hanzheng Street have registered with the Group and are ready to move into the North Hankou Project, of which approximately 2,500 occupants would be moving into our small household items mall, including the Hanzheng Street Bedding Chamber of Commerce, which will occupy an area of 150,000 sq.m., and also various gifts and stationery wholesalers occupying a total area of 300,000 sq.m.

No. 1 Enterprise Community

No. 1 Enterprise Community is a business park located in the Panlongcheng Economic and Technology Development Zone. It comprises low-density, low-rise, single-tenant office buildings and high-rise office towers. The total GFA will be approximately 1,100,000 sq.m. and is expected to be fully completed by 2014. As of 30 June 2011, the construction of a GFA of over 170,000 sq.m., has been completed, of which, phases I and II of low-rise office buildings and No.1 high-rise office tower have been completed. During the period under review, the total GFA sold was 2,271 sq.m., accounting for total sales revenue of RMB13.8 million with an average selling price of RMB6,070 per sq.m., an increase of 109.7% as compared with the corresponding period in 2010.

Phase III of low-rise office buildings is expected to be completed by early 2012. The construction of No. 2 and No. 3 high-rise office towers and service centers will commence in October 2011 and are expected to be completed in December 2012 and March 2013 respectively.

Prospects

The development of North Hankou's large-scale, consumer product-focused wholesale shopping mall is consistent with the Wuhan government's initiatives to upgrade and modernize the city by promoting urbanization, starting with the accommodation of occupants relocating from the Hanzheng Street wholesale market. Strong government support has been provided to the North Hankou Project, which has been listed in the Hubei provincial government work report for the third consecutive year. The government has also bolstered peripheral infrastructure construction and transportation network enhancement efforts to further boost the development of the North Hankou Project. The relocation will create an excellent integrated bus network to direct pedestrian traffic, commercial activities and logistics to North Hankou, benefiting the Group's long-term development. As the occupants of Hanzheng Street gradually settle in, it is expected that it will bring significant sales revenue to the Group. Benefiting from the rapid growth in traffic and business flow, the transaction volume of North Hankou's occupants has kept rising since the launch of the project. In particular, the hotel products and supplies mall and footwear and leather products mall have already become the largest markets enjoying the highest transaction volumes in Central China for their respective industries.

Apart from developing our flagship project, North Hankou Project, the Group will also spend efforts on other projects in the Wuhan area to reinforce its leading position in the local commercial property market in order to create synergies between projects, which include the existing projects, namely Wuhan Salon, No. 1 Enterprise Community, Hupan Haoting Residences, Zhujinyuan Residences and Central China Logistics Enterprise Community.

On 21 August 2011, the Group announced that it acquired a 51% interest in Zhen An Wuhan Company Limited ("Zhen An"). Through the acquisition, the Group acquired a 51% interest in a first-grade commercial building project in the high-end financial district of central Wuhan. The project occupies a total site area of approximately 10,000 sq.m., with a total GFA of over 97,000 sq.m. The project has obtained all the necessary permits and approvals for planning, construction and land development. The development project is in progress and is expected to be completed in 2013. Upon completion of the construction, the property will be named Zall Yulong International Finance Center and will be positioned as a high-end commercial center and a first-grade office building. The property will cater to the increasing demand for quality commercial buildings in Wuhan, enabling the Group to have a more extensive footprint in the commercial property market and unlocking the synergy in the Group's current property portfolio in Wuhan.

In the second half of 2011, the Group will negotiate and enter into master agreements, cooperation or investment agreements with government authorities to carry out new development projects in Xiangyang, Tianjin and Shenyang. These projects include Xiangyang Salon in Xiangyang, Zall Northern China International Trade Center, Binhai Salon and No. 1 Enterprise Community Northern China Headquarters Business Park in Tianjin, and Northeastern China (Shenyang) International Trade Center, No. 1 Enterprise Community Northeastern China Headquarters Business Park and Northeastern Logistic Enterprise Community in Shenyang.

Mr. Yan Zhi, Chairman and CEO of Zall Development, concluded, "Looking forward, China's economy and demand in the consumer market would continue to grow steadily as the Government continued to move forward its policy of promoting domestic demand. Through our comparative advantages, Zall Development will seize market opportunities arising from domestic demand and develop its projects to their full potential in our bid to enhance Wuhan's leadership in the wholesale market. Furthermore, the Group will strive to expand the success of its business model in Wuhan to other markets in China. We will actively diversify, improve and enrich our land reserves and develop different projects in phases at opportune times while maintain a close watch on operational risk control. The Group will strive to enhance its leading position in the consumer product wholesale market and commercial property market in the PRC."

About Zall Development

Zall Development is a leading developer and operator of large-scale, consumer product-focused wholesale shopping malls, as well as commercial space provider, in China. Headquartered in Wuhan, Hubei province, Zall Development primarily engages in selling and leasing consumer product-focused wholesale market properties and other commercial spaces. The Company's major clients include suppliers, manufacturers, dealers and other small to medium sized local wholesale enterprises. Besides developing and operating wholesale market properties, Zall Development offers a comprehensive range of integrated logistics and trading facilities and services.

Zall Development's major projects and land bank are mainly located in Wuhan, Xiangyang and Tianjin. Its property portfolio comprises wholesale market properties and commercial properties. The Company's flagship project, the North Hankou International Trade Center ("North Hankou"), is the largest consumer products interstate-trading platform in China. According to Savills, North Hankou is the largest consumer product focused wholesale market in terms of planned GFA with land use right obtained in Central China, comprising more than ten wholesale shopping malls that respectively focus on leather footwear, small household items, hotel products and supplies, cotton knitwear, apparel, home textiles and home appliances, international brands, general products, gift and accessories, and automobiles, just to name a few.

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