- Project Development Progressing Steadily Seizing Opportunities for Future Development
HONG KONG, March 25, 2013 /PRNewswire/ -- Zall Development Group Ltd. ("Zall Development", or the "Group", 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 annual results for the year ended 31 December 2012.
During the period under review, despite the difficult macro conditions domestically and abroad and the rise of commodity prices and cost, the Group’s profit for the year amounted to RMB1,170 million which was at the same level as that of last year. The Group’s gross profit margin increased slightly to 72.7%, benefitting from the increase in the average selling price of the wholesale shopping mall units in the North Hankou International Trade Center ("North Hankou Project"). However, the Group’s turnover decreased to RMB1,490 million as a result of a significant reduction in the total GFA delivered during the year.
The Board of Directors has recommended a final dividend of HK6 cents per share (equivalent to approximately RMB4.87cents per share).
In 2012, with the reduction in the delivery of GFA at the North Hankou Project, the Group’s revenue from sales of properties was RMB1,460 million. The Group’s rental income surged 79.7% from RMB11.05 million last year to RMB19.86 million, mainly attributable to the increase in the number of leased wholesale shopping mall units at the North Hankou Project. As of 31 December 2012, the Group had land reserves of approximately 5.1 million sq.m., all of which have been granted land use rights certificates. The land reserves are expected to be able to meet the Group’s development needs over the coming three to five years.
Mr. Yan Zhi, Chairman and CEO of Zall Development, said, "The global economy was overshadowed by the European debt crisis and the U.S. fiscal cliff issue last year and China’s GDP and household consumption also experienced a slowdown in growth. To sustain steady growth, the Chinese Government, through taxation and policies that support sector development as well as boosting domestic demand has made consumption goods the largest driving force behind economic growth. At the Group’s flagship North Hankou Project which is a wholesale shopping mall of consumer goods such as apparel and small household goods, sales from goods traded hit record high during the period under review."
North Hankou Project
During the period under review, the average selling price of the North Hankou Project increased 34.9% year-on-year to RMB12,112 per sq.m. However, due to the decrease of total GFA delivered, the revenue from sales of North Hankou Project amounted to RMB1,451 million, representing a decrease of 39.6%. During the year, the total GFA sold and delivered in the North Hankou Project amounted to 119,797 sq.m.
The total leased area of North Hankou Project amounted to approximately 138,486 sq.m., and the total rental income was RMB19.9 million, representing an increase of 79.7% year-on-year. As at 31 December 2012, approximately 20 markets had been closed in Hanzheng Street and most of the original occupants have moved to the North Hankou Project. In order to facilitate the planning and construction of Hanzheng Street market relocation to North Hankou Project, the local government completed the renovation of Tazihu East Road and Daijiashan Bridge during the year. When the light rail No. 1 extension connecting North Hankou Project and the extension of Jiefang Avenue is completed, North Hankou Project will become a traffic hub, easily accessible by expressways, highways, roads to the airports and the railway network.
No.1 Enterprise Community
As at 31 December 2012, construction of phases I to III and No.1 high-rise office tower of No.1 Enterprise Community – Wuhan were completed with a total GFA of approximately 400,000 sq.m. Phase IV is expected to be completed in the first half of 2016. The construction of No.1 Enterprise Community – Changsha has commenced during the year, with a total GFA of 76,000 sq.m. Phase I is expected to be completed in 2013, and is expected to attract major PRC enterprises and medium-sized enterprises in Hunan Province to set up offices there.
Wuhan Salon
In close proximity to Wuhan town centre, Wuhan Salon is a multi-structural and multi-functional cultural center providing diversified cultural experience for customers. It is the Group’s key large-scale city complex project equipped with cultural and art exhibitions, arts trading center, cultural and creative center and hotel facilities. In addition, Wuhan Salon was also listed as one of the major cultural investment projects under Wuhan’s "12th Five Year Plan." Wuhan Salon will be developed in 3 phases with Phase I expected to commence operation in 2013. In addition, the first four blocks of high-rise service apartments of Wuhan Salon has launched for presale during 2012.
Shenyang Salon
Shenyang Salon is an integrated culture-themed urban complex project which includes eco-apartments, commercial SOHO, luxury hotels, brand stores, cultural market, media complex and central park. The project will be developed in two phases. Phase I of the project has a planned total GFA of over 300,000 sq.m. Construction work has started during the year with expected completion in 2014.
Prospects
In the second half 2012, the Chinese Government through measures such as interest rate cuts, has enhanced market liquidity, which in turn stimulated the property market in China. In addition, Zall Development is expected to benefit from positive factors such as increased urbanization efforts as proposed during the China’s 18th National Congress to boost local consumption. The Group will continue to focus on developing its unique wholesale market business to seize the market opportunities brought by the economic recovery, as well as pushing forward new projects such as the construction of Zall No.1 Enterprise Community - Changsha, Shenyang Salon and the planning of the apparel processing industry park in North Hankou. The Group will tap the rising domestic demand by replicating its success to other regions in China and actively grasp opportunities brought about by the domestic market demand.
Mr. Yan Zhi, Chairman and CEO of Zall Development, concluded, "Steady global economic recovery and policy relaxation in 2013 will fuel consumer spending, which in turn drive the growth of the commercial property market. Chinese Government will step up its efforts in urbanization to expand domestic market and stimulate consumer spending. The Chinese Government will also focus on accelerating the modern logistics development, all of which will help drive the Group’s growth. We are confident that we will seize the market opportunities to continue our business expansion. We will work together with our customers to create mutual benefits that will bring good results and favorable returns for shareholders."
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, Shenyang, and Changsha. 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 rights obtained in Central China, comprising more than twenty 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.
