(Yicai Global) April 26 -- Greenland Holdings Corp. [SHA:600606], China's fourth-largest property developer, reported a net profit margin of just 3.8 percent for last year, compared with an industry average of 10 percent, amid its ongoing diversification away from real estate.
In its annual earnings statement, the Shanghai-based company attributed the narrow margin to long development periods for real estate projects and profit booking lagging that of revenue. In fact, it could be related to the firm's lower-margin infrastructure segment.
Net profit jumped 37 percent to CNY14.4 billion (USD2.09 billion) in the 12 months through last December on a 19 percent gain in revenue to CNY247.4 billion.
The state-owned company signed new infrastructure projects worth CNY97.1 billion last year, an increase of 52 percent over the previous 12 months, according to the statement. Despite strong revenue growth in its infrastructure segment, the profit margin was narrow, weighing down on the company's overall net margin.
Greenland continued to underperform the industry average in the traditional property segment, an area it has been diversifying away from.
Property sales reached CNY255 billion last year, up 11 percent year on year. Property revenue stood at CNY202.5 billion, up 50 percent from a year ago.
Last year, residential projects accounted for 64 percent of the company's total property sales and 74 percent of total floor space sold, while commercial projects made up 36 percent and 26 percent, respectively.
These figures show that last year Greenland had substantial improvements in the traditional property segment from a year ago, in terms of both the ability to collect revenue and product mix. But, the company was still behind its peers. The ratio of revenue received to revenue booked is over 90 percent at many developers, but is about 80 percent at Greenland.
Commercial property projects as a percentage of total projects are also higher at Greenland than its competitors. The company has run into difficulties selling commercial properties in Beijing and Shanghai as first-tier cities have clamped down on their real estate sectors.
But the company's finance unit, its most profitable, made a decent return, notching up a CNY3.9 billion profit last year, a 21 percent gain on the year earlier. The company also made progress in the financial segment as it seeks to establish a presence along the entire financial industrial chain by promoting investment and investment banking businesses.