01/09/2008
After a 16.8 per cent interim net asset value increase, China Real Estate Opportunities has more developments lined up.
The Shanghai-based company, which turned a £3 million loss into a £15 million pre-tax profit in the six months to June on net rental income of £11.67 million, says its portfolio of Chinese projects rose 19.6 per cent in value to £762 million between December and June, helped by an 87 per cent appreciation in exchange rate of China’s currency, the Renminbi.
AIM-quoted China Real Estate, whose net assets increased from 834p to 974p a share over the same period, expects building to start next month on the Beijing Logistics Park next to the city airport’s giant new Terminal Three, says Richard David, managing director of Treasury Holdings China, which manages the company’s investments and developments.
China Real Estate argues the Beijing project should be completed next June. Also next year, the company’s Tangdao Bay officer, hotel, retail, flats and marina development in Qingdao (where the Olympic sailing was staged), should get under way, after doubling in size to 430,000 square metres, says David, whose company recently received £3.6 million in China Real Estate shares as a performance fee.
China Real Estate says further Renminbi gains are expected. David maintains sticking to commercial development has spared the company undue exposure to the more volatile residential sector, which he says forms only 15 per cent of the portfolio.
He argues China Real Estate has established sufficient banking lines for currently envisaged projects and has established a good local network, so that the company is shown worthwhile projects and has a promising pipeline.
Similarly, he contends recent plunges on the Shanghai stockmarket are unlikely to wash through to commercial property, but instead reflect a switch into property and out of shares by local investors.
The shares, which have soared from 140p to £12.25, now trade at 645p, valuing the company at £330 million.
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