Sunac to slow pace of land buying

Sun Hongbin, chairman of Sunac [Photo/CHINA DAILY]

Sun Hongbin, chairman of Sunac, said at its interim results news conference in Hong Kong that the company will follow more prudent land acquisition principles amid an overheated land market, while speeding up the construction of its ongoing projects, and increasing sales turnover to bring in more revenue.

Sunac targets to cut its net gearing ratio to 90 percent by next year and 70 percent by 2019 from a 260 percent net gearing ratio it recorded on June 30.

Gao Xi, Sunac company secretary and vice-president, said buying land and strategically investing in LeEco hurt the company's net debt ratio performance in the first half of this year. Debt ratio doesn't automatically represent the safety of a company's cash flow in the real estate industry, however, and Sunac had been keeping safe and ample cash flow, which mostly relied on property sales.

Sunac's land bank carried 101 million square meters, excluding the 13 Wanda cultural and tourism projects, as of August 25, across eight regions including Beijing, Northern China, Shanghai, Southwest China, Southeast China, Central China, Guangzhou-Shenzhen and Hainan, with an attributable land bank of 69.44 million square meters.

The company cash had reached approximately 92.4 billion yuan ($14 billion) and rigid interest-bearing liabilities due in the second half of the year will be less than 15.8 billion yuan.

The company in January announced it would acquire 8.61 percent of the issued shares of Leshi Internet, 15.71 percent of Leshi Pictures, and 33.5 percent of Leshi Zhixin, with total capital of 15.04 billion yuan. All payments had been made to LeEco. According to the company, the investment would not result in any change in total assets, total liabilities or net assets of the group.

Sun said that he appreciated the former chief executive of Le.com and LeEco Jia Yueting's entrepreneurial spirit and his foresight on internet TV business.

He thinks the foundation of LeEco's business is good and he aims to build up the company's business.

In July, Sunac also announced it would acquire Dalian Wanda Commercial Properties' assets－91 percent equity interest in the 13 cultural and tourism project companies.