'Unrecognized revenue' of 22.04 billion yuan on mainland looms as 2nd boost to gains

China Resources Land Ltd, a new member of the Hang Seng Index, has more than doubled its net profit to HK$4.41 billion in 2009 by selling more properties, and is also looking forward to another good year ahead.

The assurance rests on the fact that the blue-chip mainland developer has generated total revenue from property sales of RMB22.04 billion that hasn't been recognized yet in its book last year, because of an accounting technicality.

In other words, the company could book all or part of that revenue this year, which implies another set of strong results for the developer as it booked only RMB16.6 billion in revenue in 2009.

The RMB22.04 billion revenue includes RMB19.11 billion generated in 2009 and RMB2.93 billion generated in the first three months of this year.

The prospect looks more encouragingly when one considers the fact that now we are only three months into 2010, meaning that the developer could generate much more sales in the remaining 9 months of the year, boosting recognizable revenue further.

"Sales in recent months indicate that we are faring quite well in terms of revenue generation," Chairman Wang Yin told a press briefing for the developer's final results Friday.

"Our property sales in the first three months this year were in pace with those in the same period of last year," he added.

Looking ahead, the developer said it will maintain its successful business model - a balanced mix of residential development, property investment and value-added services.

Against the backdrop of the central government's implementation of a series of measures to cool down the overheating property market on the mainland, the company said it is "confident" about the healthy development of the real estate sector.

However, "we will be a bit more cautious in acquiring land for development this year," Chairman Wang Yin told reporters.

"We will acquire land sites in a cautious manner as we did in the past, which conforms to some benchmarks in terms of return and risk," he added.

As of end-2009, the company had established its presence in 21 cities nationwide with a total land bank of 22.19 million square meters in gross floor area, Wang said.

This land bank will be sufficient for the company to develop in the coming years, he said.

Wang also said the parent of the company could inject a large project in Shenzhen city into the unit when conditions warrant.

(HK Edition 03/27/2010 page2)