China-based property developer Sino Horizon Holdings Ltd (鼎固控股), which is slated to list on Taiwan’s main bourse next month, said yesterday the firm is less vulnerable to unfavorable policy measures because of its leasing-centric business strategy.
The Cayman Islands-registered company made the statement at an investors’ conference in Taipei, ahead of its primary listing on Dec.7, with an initial public offering (IPO) price tentatively set at NT$20 per share.
“The impact of China’s tightening measures [against the housing market] is less evident at Sino Horizon as the company increasingly leases rather than sell its properties,” Sino Horizon chairman Richard Chang (張洪本) said.
Sino Horizon was set up by the family of Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) chairman Jason Chang (張虔生) and engages in property development in major Chinese cities, such as Shanghai, Beijing and Chongqing, according to the company’s prospectus.
Richard Chang, younger brother of Jason Chang, said the strategy had allowed the developer to benefit from stable rental yields as well as capital gains. He added that an investment return rate of 2 percent was sufficient as property prices in China have increased rapidly in recent years.
The Chang brothers each own a 30 percent stake in Sino Horizon, which is capitalized at NT$16.8 billion (US$576.8 million).
The company plans to issue 400 million new shares on the local market, which may raise an estimated NT$800 million based on the IPO value, or about 2 percent of its capital, according to underwriter Fubon Securities (富邦證券).
For the first six months, the company posted NT$889 million in net income, or NT$0.53 in earnings per share (EPS), with profit margin standing at 41 percent of revenue, the report indicated. EPS stood at NT$0.74, NT$0.63 and NT$3.02 for 2009, 2010 and last year respectively.
Richard Chang, who is also ASE president, attributed the sharp increase in profit last year to one-off sales of office buildings.
He is upbeat about the developer’s earning outlook on the back of 1.9 million square meters of land inventory purchased prior to 2008 at low prices. China’s urbanization efforts would also help boost earnings in years to come, the developer said.