At this moment, 57.38% of the listed Overseas Chinese Town (Asia) (3366) is held by Overseas Chinese Town (HK) while the remaining 42.62% is held by the public. Overseas Chinese Town CO. and Overseas Chinese Town Group are respectively the parent and ultimate controlling shareholder of Overseas Chinese Town (Asia). Overseas Chinese Town Group is wholly-owned by State-owned Assets Supervision and Administration Commission. Wang Xiaowen, chairman of the board of Overseas Chinese Town (Asia), said when she was interviewed by AAStocks that integrated business development should be in the limelight within the Mainland property sector in the next 20 years after 20 years of rapid urbanization in China. Overseas Chinese Town Group, the ultimate shareholder, has undertaken integrated business development as well as business development of cultural tourism of a unique nature for more than 20 years, she said. Therefore, Overseas Chinese Town (Asia), with a background of professional business development experience, can take the advantage to engage in relevant business with a view to tasting the fruit of success, according to Wang.
Hong Kong investors obtained knowledge of integrated business development in Mainland China long ago, emphasized Wang, who said as a result Overseas Chinese Town (Asia) was able to secure the full support from local investors. She hopes the group can become a medium to large-scale listed enterprise within the next few years. Furthermore, she feels Hong Kong, as a financial platform, provides a precious opportunity for the group to raise capital. Nonetheless, investors may be wary of Mainland property developers as real estate market in China is facing higher and higher downside risk, noted Wang, who pointed out Overseas Chinese Town (Asia), whose projects are not typical and are more than property projects, cannot be taken as a traditional Mainland property developer. The group focuses on integrated development business based on commerce instead of undertaking the traditional residential property development business although it came across economic headwind when it entered the market, she said. Wang deems the most crucial thing is that the senior management are able to provide good answers to the following two questions: 1. Does the group have a stable capital chain and good channels for financing? 2. Does the group conduct researches on which cities and what projects should it invest in ?
Wang said answers of the management of the group for the above two questions are affirmative. Besides engaging in integrated business development, the group is involved in high-end paper packaging and printing business, a focus of its wholly-owned subsidiary, Huali, whose development towards which Wang holds an upbeat attitude. In recent ten years, paper packaging and printing industry in Mainland China has been developing rapidly with the market size only second to the United States. The four major plants of Huali are found in southern China (like Shenzhen) and central China (like Anhui), where high demand and large production capacity combined generates a stable flow of revenue to the group. The paper packaging and printing industry belongs to one that offers stability over a long period of time and has the same growth pace with China’s gross domestic product (GDP). Integrated business development, which possesses extremely strong explosive power, and paper packaging and printing business together form an investment duet well balanced between stability and aggressiveness.
From 2011 results, high-end paper packaging and printing business contributed 19% to the group’s profit while integrated business development contributed 81%, revealing the increasing importance of the latter. Market value of the group currently stands at around HK$1.4 billion and the management aims to forge Overseas Chinese Town (Asia) as an enterprise that is worth more than HK$10 billion in the long term. Wang stressed she would not diversify the group’s business deliberately, nor would she invest in projects without careful consideration only to expand the group. High-end paper packaging and printing business, a pillar of the group, is now benefited by national policy as Guangdong government has made creative paper products one of the foci within the cultural industry during the twelve five-year period. As such, Overseas Chinese Town (Asia) can put efforts in integrated business development without needing to worry about the other pillar. As of 31 December 2011, the group’s revenue leaped 34.3% year-on-year to RMB2.659 billion and the profit attributable to shareholders even soared 138% year-on-year to RMB159 million, painting a bright picture of business performance. It should be noted that the 2011 gross profit margin equaled 30.2%, far higher than 2010’s 13.6% and pushing up gross profit to RMB773 million.
As to the attractions of Overseas Chinese Town (Asia) as a stock, Wang said, with a smile, the group announced to increase holdings in Overseas Chinese Town (Shanghai) Land on 1 May 2012, making the stock an even more compelling one to invest in and offering a clear investment theme to investors. Through the tier of city, choice of land(s), and the sophisticated project structure, the mentioned investment project presents itself as a jewel of the group. In fact, the investment in Overseas Chinese Town (Shanghai) Land is a development driver as well a milestone for Overseas Chinese Town (Asia), greatly enhancing the attractiveness of the group to investors.
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