Kong Qingping

Kong Qingping was formerly chairman of the board of COLI (China Overseas Land & Investment Limited). According to an April 2010 report by the Economic Observer, as chairman of the board at the time, he spoke publicly on several occasions that year about the company’s operations, including average selling prices, capital expenditure, the scale of new construction starts and land reserve plans.

In terms of profitability, COLI has long been regarded in the industry as a benchmark for cost control and profit orientation. In 2009, COLI achieved net profit of HK$7.47 billion and operating revenue of HK$37.3 billion; over the same period Vanke’s operating revenue was 48.88 billion yuan and its net profit 5.33 billion yuan. In 2008, COLI’s net profit margin was 26.73%, compared with 9.8% for Vanke. Kong Qingping said that COLI’s average selling price in 2009 was around HK$10,000 per square metre, broadly on a par with Vanke. The report said that COLI’s combined marketing, administrative and other expenses had been below 5% of total revenue every year, whereas Vanke’s administrative and selling expenses in 2009 amounted to 6% of revenue.

Financial prudence is one of the lessons of COLI’s experience summarised by Kong Qingping. In 2009, COLI’s cash balance was HK$23.89 billion; together with unused bank facilities, its available funds reached HK$26.5 billion, and its net gearing ratio was only 22.4%; from 2005 to 2007 its debt-to-asset ratio was 42%, 45% and 52% respectively, and 46.8% in 2008. The report said that this style originated in the 1997 Asian financial crisis, and Kong Qingping summed up stability and balance as two lessons.

On investment and expansion, Kong Qingping said that COLI’s capital expenditure in 2010 would be 54.5 billion yuan, of which 14.1 billion yuan would be used to pay land prices, 11.6 billion yuan for new land purchases, and 28.5 billion yuan invested in the development of existing projects; for the full year, new construction starts were expected to total 9 million square metres, with construction scale reaching 16 million square metres, about 105 projects with a floor area of 6 million square metres would be completed and handed over, and the company would enter 3 to 4 new cities, with new land reserves expected to be no less than 6 million square metres. He explained that the floor-area land price of land added in 2009 was about 2,100 to 2,200 yuan per square metre, which, including the Shanghai Changfeng plot, was not high overall. The report also noted that after not acquiring any land for 10 consecutive months from October 2008, COLI resumed its push in August 2009, buying 12 plots of land in the second half of the year and adding 12.1 million square metres of project reserves; as of the end of 2009, its total reserve floor area in 20 mainland cities and Hong Kong and Macau had increased by 23% to 30.55 million square metres.

On financing and parent company support, the board of China State Construction Engineering Corporation Limited approved in August 2009 a capital injection of HK$5 billion into China Overseas Holdings; on March 17, 2010, COLI announced that it would set up a real estate fund of about US$250 million to US$500 million with ICBC International Investment Management to invest in China’s real estate market and projects. Before China State Construction Engineering’s listing, its chairman Sun Wenjie said at a roadshow presentation that after the listing it would give COLI ample decision-making power and provide it with financial support.

On commercial property, the report said that COLI had more than 2 million square metres of commercial property under development or awaiting development, most of which was expected to be completed by the end of 2012, and about 1 million square metres of which would be held for the long term as investment property; according to COLI, from 2015 onwards its entire investment property portfolio would generate stable rental income of at least HK$1.2 billion a year. The report also noted that because COLI kept such a low profile, its image in the public mind was not distinct enough, and that building a distinct brand and public image was something it needed to learn from Vanke.