Shui On Land Ltd. (00272.HK) is mulling plans to sell some assets that have been generating relatively low returns, chairman Vincent Lo Hong-sui said, indicating that the group might trim its portfolio by as much as 50 percent.
The property developer and investor aims to improve its profitability by 2016-2017 by lightening its portfolio and increasing its asset turnover rate, the Hong Kong Economic Journal reported Monday.
Lo was quoted as saying that Shui On will no longer take part in any land development projects that involve lengthy relocation of people. He cited the group’s experience from previous investments of HK$35 billion in town redevelopment in mainland China.
As of the end of June last year, the company had total assets of HK$117.72 billion, with a gearing ratio of 64 percent.
The asset turnover ratio was as low as 9 percent, compared to a market average of 27 percent and 60 percent at some rivals.
Lo said he hopes to lower Shui On’s gearing ratio to 50 percent in two to three years and reduce the financing cost from the current 7 to 8 percent levels.
Translation by Vey Wong
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