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PAN Hong Property Group suffered a net loss of 36.99 million yuan for the the 15 months ended March 31, 2009.
This compares with a net profit of 184.86 million yuan for the 12 months ended Dec 31, 2007. The niche property developer has changed its financial year-end from Dec 31 to March 31.
Its revenue for the 15 months to March 31, 2009, was 39.86 million yuan, down from 2007's 564.86 million yuan. This was due to the lower number of residential units available for sale at Phase 1 of the property development, Nanchang Honggu Kaixuan, said the group.
The 15-month period saw the group's 'other operating expenses' surge to 42.96 million yuan from 547,000 yuan because of impairment.
Pan Hong had to make an impairment provision of 16.2 million yuan for its investment properties, as well as 6 million yuan for goodwill arising from the acquisition of Huzhou Hongjin Market Construction & Development Co Ltd in 2006. The latter owns commercial units at Wuxian Balidian Market held for investment.
The group also made a provision of 19.8 million yuan to the book value of the car park lots at Nanchang Honggu Kaixuan Phase 1, where the realisable average selling price was lower than expected.
But it achieved healthy gross margins of 41.9 per cent in FP2009, slightly higher than 40.8 per cent in the 12 months ended Dec 31, 2007, as it was able to maintain the average selling prices of its projects by scaling back on construction and sales.
Things may be looking up now, after a pick-up in sales transactions in the first quarter on the back of favourable government policies and easier access to mortgage financing.
As at May 24, the aggregate value of its pre-sales for three projects in Nanchang, Huzhou and Hangzhou cities rose to 503.6 million yuan, from 157.5 million on Feb 9, 2009.
'We have seen a revival in property transactions over the last few months, driven mainly by owner-occupiers who had largely stayed on the sidelines during 2008,' said Pan Hong's executive chairman Wong Lam Ping.
In response, the group is releasing additional units for sale at Nanchang Honggu Kaixuan Phase 2 and is preparing to launch new project Hua Cui Ting Yuan in Huzhou City.
The sustainability of any recovery is, however, subject to the macroeconomic situation in China among other factors, the group said. It is therefore cautiously optimistic of its performance for the 12 months ending March 31, 2010.
At the end of March, Pan Hong's total borrowings amounted to 349.7 million yuan, of which 244.6 million yuan come under current liabilities.
The group's net gearing as at March 31 was 12 per cent.
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