New World China Land Limited (“NWCL”; Hong Kong Stock Code: 00917) announced today that it has entered into formal agreements with Evergrande Real Estate Group Limited (“Evergrande”, Hong Kong Stock Code: 03333) in which Evergrande will purchase from NWCL with aggregate sum of RMB13.5 billion dollars the attributable interest held by the Group in Wuhan Changqing Garden (60%), Haikou New World Meilisha (100%) and Huiyang Palm Island Resort (100%), the transaction will be completed on 5 January 2016 upon which Evergrande will pay NWCL the first installment of RMB3.15 billion dollars, the remaining sums will be settled in four installments in the next two years. NWCL will gain an approximately RMB5.4 billion dollars one time profit from the transaction.
The transaction signifies NWCL’s strategy of optimizing its property development and investment portfolio has been firmly realized. The strategy calls for focusing resources in first and 1.5-tier cities and high-growth cities, while reducing investment in some projects with prolonged development cycle. NWCL believes the move match with the Group’s ongoing development strategy in choosing high-end high-quality projects with better gross profit margin, increasing assets churn, and developing more mid-sized property projects. The revenue from the transaction will provide NWCL with ample cash reserve for new round of investment in the near future, while improving the overall operating cash flow.
At present NWCL has a mature property development and investment portfolio and operating teams in first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen, and comprehensive property development portfolio in high-growth cities such as Shenyang, Wuhan, Chengdu, Foshan, Guiyang, Changsha and Ningbo. During the year the Group has cooperated with Chow Tai Fook Enterprise in managing the development of the 600 metre high Wuhan Chow Tai Fook Centre on the Yangzi River bank, exemplify the long term development strategy in these cities. The transaction could support the Group in penetrating the market in first and 1.5-tier cities and other high-growth cities in which the brand has already been well recognized and respected, strengthening its brand positioning, presenting a clearer portfolio strategy, and improving the average project gross profit margin and assets churn.