Top developer raises sales target by 25%

China Overseas Land & Investment Ltd, the mainland's largest property developer by market value, has raised its full year sales target by 25 percent to HK$100 billion after posting strong sales in the first half.

China Overseas, a unit of state-run China State Construction Engineering Corp Ltd, achieved strong pre-sales of HK$65 billion in the first half of the year, up 25 percent compared with the same time in 2011.

Property is a key sector of the world's second-largest economy, but developers have been struggling after more than two years of efforts by the authorities restricting home purchases, in a bid to bring prices under control.

During the sales slowdown, industry leaders such as China Overseas and mass-market producer China Vanke have been gaining business from their competitors, with buyers focusing on brands to avoid purchasing a home made by a company that might run into financial trouble.

"The sales so far this year have been amazing," Sylvia Wong, an analyst with UOB Kay Hian, said ahead of the results, noting that the company's management has designed a well-oiled sales system.

That means the company holds stock on its books for shorter periods than its peers. It also cut prices to attract business in the downturn.

"They have got a good brand and everyone knows them," Wong said. "They've been good at making sure things are running smoothly, and they don't hold onto things unnaturally long."

China Overseas, which focuses on mid- to high-end property, reported on Friday a core profit of HK$6.36 billion for the first half, up 9.3 percent from a year ago. Four analysts surveyed by Reuters forecast an average 16.3 percent rise in interim core profit to HK$6.71 billion.

Its net profit for the period was HK$8.38 billion ($1.08 billion), and earnings per share stood at HK$1.026.

Before the results, 31 analysts forecast on average full-year earnings per share of HK$1.83, according to Thomson Reuters.

First-half revenue rose 9.9 percent to HK$25.3 billion, with the company benefiting from customers gravitating towards developers with better-brand names during the industry slowdown.

It declared a dividend of 15 cents per share, up 15 percent, and a special dividend of 2 cents per share to celebrate the 20th anniversary of its stock listing.

COLI has not had to cut prices as much as its competitors to win business.

"Their prices have been holding up pretty firmly, so margin compression should be less of an issue for COLI," Alan Jin, an analyst with Mizuho Securities, said ahead of the results.