"Developing commercial and residential properties in parallel" Brings Stable Results and Contracted Sales Performance

(22 August 2012 - Hong Kong) China Aoyuan Property Group Limited ("Aoyuan" or the "Company", together with its subsidiaries the "Group"; Stock Code: 3883), one of the leading property developers in Guangdong Province in China, is pleased to announce its unaudited interim results for the six months ended 30 June 2012.

During the period under review, the Group"s revenue reached RMB1,684.9 million. Benefited from the strategy of developing commercial and residential properties in parallel, the proportion of revenue from delivered commercial and villa projects increased to 79.4% (1H 2011: 72.4%) among the overall revenue from delivered projects. The average selling price for recognized revenue from property development amounted to RMB10,621 per sq.m. (1H2011: RMB11,012 per sq.m.) Gross profit increased 4.8% to approximately RMB525.5 million, while gross profit margin remained steady to 31.2%. Profit attributable to shareholders was RMB283.7 million, representing year-on-year growth of 0.3%. Basic earnings per share amounted to RMB10.85 cents (1H 2011: RMB10.82 cents). 

Strategy of developing commercial and residential properties in parallel effectively lowered market risks

Facing the challenging market environment during the first half of the year, the Group insisted on its product strategy of "developing commercial and residential properties in parallel" and adjusted its product mix in response to market changes. In addition to the residential properties launched for end-user demand, the Group launched more commercial properties which are not subject to the restriction policies on home buying and mortgage. The contracted sales of the Group amounted to RMB2.3 billion for the first half of 2012, of which the sales of commercial properties showed an obvious increase accounting for 52% of the total amount. The properties in Guangdong province and Shenyang city were the main source of the Group"s contracted sales revenue during the first half of 2012 and various projects including Shenyang Aoyuan·The Metropolis, Zhongshan Aoyuan, Aoyuan Health Plaza and Shenyang Aoyuan·Convention Plaza achieved satisfactory sales results, among 

 which Shenyang Aoyuan·The Metropolis and Shenyang Aoyuan·Convention Plaza ranked top ten in terms of the sales amount and sales area of commodity residential housing in Shenyang city during the first half of the year. In addition, as for the hotel, the trial operation of The Aoyuan Golf Hotel has been actively undergoing, which will formally open for operation in the second half of the year.

Commenting on the interim results, Mr. Guo Zi Wen, Chairman of Aoyuan, said, "In the first half of the year, there were still a lot of uncertainties over the market, and we grasped the opportunities to continue to pursue the strategy of developing commercial and residential properties in parallel. The strategic layout we set earlier allowed us to adjust our product mix with more flexibility, and we have been insisting on implementing our brand philosophy of ‘building a healthy lifestyle" for our entire property development to bring quality products and services to our customers. This helped the Group to maintain stable performance even though the overall market sentiment has not been restored."

The Group maintained a healthy financial position with abundant cash flow. As at 30 June 2012, the Group"s cash (including restricted bank deposits) amounted to approximately RMB3,959.8 million. Net gearing ratio was at approximately 11.1%, a very low level of the industry. The strong and stable financial position of the Group assures its rapid development of quality projects and provides resilience to cyclical market changes, thereby further boosting its future business growth momentum.

By virtue of its healthy financial position, the Group actively grasped the development opportunity in the land market, focusing on the development in Pearl River Delta and where it already has existing projects, to gradually radiate the development into other areas and insisting on the investment in such areas with strong end-user demand, high growth potential as well as commercial projects matching its criteria. 

At the end of January 2012, the Group acquired a plot of commercial and residential site in Jiulongpo District of Chongqing by means of listing at a total consideration of approximately RMB218 million. The newly acquired site is in the vicinity of the Group"s successful flagship project "Chongqing Aoyuan·City of Health". The total GFA of the new land is about 117,200 sq.m. and the average land cost is approximate to RMB1,860 per sq.m. This acquisition at a competitive price will further strengthen the Group"s land portfolio and facilitate the Group"s development and brand promotion in Chongqing. Moreover, the Group acquired a quality commercial and residential project with site area of 52,000 sq.m. and GFA of 103,000 sq.m. in Dongguan Houjie, at a consideration of RMB156 million in June. The Group planned to develop the site into an ecological boutique residential property. The acquisition was the Group"s first property project in Dongguan, Guangdong Province, which was in line with the Group"s long-term development strategy. The Group believes it does not only strengthen the land bank portfolio, but also consolidates the Group"s leading position in Guangdong Province. In addition, the Group also acquired a land site in Zhuzhou, Hunan in the third quarter of 2012 at consideration of approximately RMB194 million.

Currently, the Group"s land bank comprehensively covers five major economic circles in the PRC, namely Pearl River Delta, Yangtze River Delta, Pan Bohai Rim, Beibuwan as well as Central and dWestern China. As at 30 June 2012, the total GFA of the Group"s land bank amounted to 8.81 million sq.m., with an average land cost of only approximately RMB800 per sq.m., which is sufficient for the Group"s development in the coming five years.

"Looking ahead, we consider that there are still uncertainties over the property-related policy in the second half of the year, yet, we remain cautiously optimistic about the development of the industry. We will continue to maintain prudent financial strategies. At the same time, we will implement the standardized project development model to accelerate the project development in order to further enhance our competitiveness of each business segment, facilitate the return of funds from sales, and increase the value of commercial properties by highly efficient commercial operations. We aim at bringing stable returns with sustainable growth to our shareholders," Mr. Guo Zi Wen concluded.