(Yicai Global) March 25 -- Shui On Land’s shares soared after the up-market Chinese property developer returned to profit last year as revenue almost tripled thanks to a big contribution from sales of luxury homes in Shanghai.

Shui On Land [HKG: 0272] ended 7.3 percent higher at HKD1.17 (15 US cents) today, after surging nearly 11 percent at one point.

Profit attributable to shareholders was CNY1.64 billion (USD258 million) in the year ended Dec. 31, the Shanghai-based firm said in an earnings report released late yesterday. It lost CNY740 million in 2020 due to the Covid-19 outbreak.

Annual revenue surged 282 percent to CNY17.6 billion (USD2.8 billion), when the income of many Chinese real estate developers was sluggish, “due to a significant increase in property sales and a strong recovery in the commercial portfolio,” it said.

Three luxury residential projects in downtown Shanghai contributed contracted sales of about CNY24.4 billion, accounting for about 81 percent of Shui On Land’s total contracted sales, according to the report. They sold at CNY61,700 (USD9,698) to CNY165,000 (USD25,934) per square meter.

Confirmed property sales revenue for the year hit about CNY13.6 billion, an increase of 8.4 times from the period year, according to Chief Financial Officer Sun Xihao. If the equity income of joint venture projects is included, then total income from property sales was more than CNY22 billion, he added.

With many luxury projects scheduled to open this year, and thousands of investors having clearly expressed their willingness to buy, the strong momentum for property sales is expected to continue in 2022. Chief Executive Wang Ying said Shui On Land has a total of 346,900 sqm of property ready for presale and sale this year, of which 68 percent is in Shanghai.

Robust Leasing

The robust recovery of the commercial property leasing market also contributed to Shui On Land’s better results. At the end of last year, the occupancy rate of its major commercial properties in the cities of Shanghai, Wuhan and Chongqing exceeded 93 percent and that of several mature properties, including Xintiandi in Shanghai, was close to 100 percent.

That drove Shui On Land’s rental and related revenue 21 percent higher to nearly CNY2.3 billion last year from a year earlier, according to the company.

In terms of the major adjustment facing the real estate sector, “it is expected that in the next 12 to 18 months, there will be quite a few companies in need of selling their assets, which will provide firms like Shui On Land with an opportunity to buy good assets at reasonable prices,” said Executive Director Luo Baoyu.

“The industry will remain in an adjustment period in the next two or three years,” he added.

Shui On Land will still mainly invest in Shanghai, Wuhan, and major cities in the Greater Bay Area and the Yangtze River Delta region, Sun said, adding that the targeted assets will consist of both development and existing commercial projects.

Editors: Tang Shihua, Peter Thomas