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Sandy Li

Shui On Construction and Materials aims to double its after-tax profit to HK$1.8 billion by 2014 as it reinvents itself as a mainland property developer.
It plans to do this by investing in 'special situation' projects, such as distressed assets, and building 'integrated knowledge' communities on the mainland.
And it will soon have a new name to reflect its new direction.
At yesterday's special general meeting, the company won shareholders' approval to change its name to Socam Development to mark its transformation.
'The name change sends a clear signal to the market that Socam has a form and clear focus for its strategic development,' chairman Vincent Lo Hong-sui  said.
 The firm recorded a net profit of HK$903 million last year. 
'We foresee some small to medium-sized developers will encounter problems due to the credit crunch environment. It will create more [acquisition] opportunities over the next two years,' chief executive Philip Wong Kun-to said.
In one of its latest acquisitions, the company bought the hotel and serviced apartment portion of the 21st Century Tower in Pudong's Lujiazui financial district for 1.6 billion yuan (HK$1.95 billion) in December last year. It included the 26th to 49th floors with a gross floor area of 51,000 square metres and car parking spaces.
 Wong said the project was put on the market because of 'cultural differences' among shareholders, as well as a dramatic change in market sentiment after the outbreak of the global financial crisis in 2008.
 The 21st Century Tower, due to be completed next year, includes a 180-room hotel and 70 serviced apartments.
 Lo  said the group had a strong track record of being the preferred partner of sellers, buyers, local governments and financial investors for 'special situation' projects. Currently, it has nine such projects at various stages of development - in Beijing, Shanghai, Chongqing, Chengdu, Guangzhou, Guizhou and Shenyang.
 With a cash reserve of 3.5 billion yuan, the firm planned to enlarge its land bank to 10 million sqmetres from 5 million sqmetres.
 To double its earnings by 2014, Lo said the firm would increase its annual sales area to 1 million sqmetres, from the present 300,000 sqmetres.
 The change in the company's strategy comes after  the profit contribution from cement and construction has gradually been replaced by property since 2009. Property accounted for 68 per cent of profit in 2009, rising to 85 per cent last year.
 The firm is looking for an investment return of more than 20 per cent for projects put up for sale in special situations since they involve a higher risk. 
It expects a return of 15 to 20 per cent for the 'knowledge community development' projects, which the company says integrate a combination of 'live-work-play-learn' features in  master planned projects.
 In January, the firm entered into an agreement with Tsinghua Science Park to form a joint venture for the development of integrated knowledge communities in Nanjing. The project is a technology park featuring commercial premises, offices and serviced apartments.   
A company spokeswoman said the name change was expected to come later this month as the registration process could take a while.
 Shares in the company rose 0.56 per cent to close at HK$9 yesterday.
68%
The proportion of profit that property contributed to company profits in 2009
- Property contributed 85 per cent in 2010



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