In 2016, China experienced important economic reforms and transformation by launching a fully-fledged supply-side reform. The Chinese economy saw a slower but stable, positively biased performance. Economic activities moved forward within a reasonable range with quality and efficiency both improving.
As a listing and operation platform of CDBC in urbanization, China New Town Development Company Limited (hereinafter referred to as the “Company”) always maintains in-depth insight and acute perception about industrial development under the changing economic conditions. With industry experience and resource strengths of our controlling shareholders, the Company was committed to conducting reforms at the beginning of 2016 after detailed preliminary research. To become an industry leader that represents an integrated brand operator of the CDB system with long-term and reasonable profits derived from the urbanization development, the Company expressly set the development of integrated downstream urbanization products as the business orientation.
Vigorously aim to serve and promote community development under national policies
New-type urbanization is constantly emphasized as a significant driver to boost economic development. At the beginning of 2016, Mr. Xi Jinping, as the President of China, pinpointed urbanization as a necessary part of modernization. The government has made steady efforts to promote urbanization in various aspects, such as peasant workers’ integration into the town, development and cultivation of small to medium cities and featured towns, promotion of city’s functions, new rural constructions driven by urbanization and speed up in reform of core areas. These efforts have been specified into 20 detailed aspects in order to proceed. All these activities have provided opportunities for investments in urbanization and related areas such as medical, education, tourism, etc.
CDB has always been vigorously supporting urbanization as its important business. In 2015, CDB granted loans of RMB750.9 billion with shantytown transformation, and such type of loans increased to RMB972.5 billion by 2016. More importantly, CDBC vigorously develops new-type urbanization projects as one of its five business segments, and considers improving the lifestyle quality of residents as an important objective for its business development. By firmly pivoting on the historical phases and epochal features of national economic and social development, CDBC proactively serves the supply-side structural reform, while vigorously forging ahead under national strategic policies.
Strive to build a listed platform of urbanization in CDBC
Upon the acquisition of China New Town Development Company Limited, CDBC has been committed to transform the Company into the only listed platform of professional urbanization construction and operation. For more than three years, the Company completed devising new business strategies, optimizing and restructuring assets, and expanding new financing channels, thus resulting in improvements in our financial conditions. By the end of 2016, the Company accumulated RMB2,067 million of fixed income investment portfolio with respect to urbanization projects with annual pre-tax investment return of more than RMB260 million. In 2016, the operating income of the Group’s continuing operations was RMB303 million, and total profit attributable to the equity holders of the parent was RMB323 million.
While striving for successful business operations, CDBC and the Company begin to stress greater importance to capital market and offer returns to the support of our shareholders in 2016. Following the management’s due consideration, the Company announced a voluntary delisting from the Official List of Singapore Stock Exchange Securities Trading Limited on 18 October 2016 while maintaining the listing status in The Stock Exchange of Hong Kong Limited (the “HKEx”), heralding our initiative to build our listed platform. The main purpose of delisting is that dual listing no longer satisfies further business development of the Company. Besides, Hong Kong market suits the China-based business structure of the Company, as circulation and trading of shares becomes increasingly linked to the Mainland China market, which is also conducive to identifying investment institutions. Meanwhile, this will generate better liquidity, help reduce operating costs and allocate management resources in a more reasonable manner.
The Company’s voluntary delisting proceeded by way of general offer at an offer price of S$0.07, representing a premium of approximately 18.6% of the trading price quoted in the market on the Last Undisturbed Trading Day. The market performance responded positively to the announcement of our voluntary delisting, as our stock price in Hong Kong and Singapore rose near to the offer price upon resumption and basically remained slightly higher than the offer price afterwards. Such active trading also proved the market acceptance of our deal.
The resolution of delisting was approved at the extraordinary general meeting of the Company (the “EGM”) with 98.2% of the voting shares at the EGM voted for the resolution on 17 January 2017. In the end, approximately 120 million shares were tendered for cancellation, representing approximately 5.0% of the applicable shares. This also demonstrated that the public shareholders hold confidence in seeking common development with the Company by holding the shares of the Company on a long-term basis. Official delisting of Singaporean shares took effect on 17 February 2017, and trading of shares on the HKEx commenced on 6 March 2017.
This is the first market operation that we initiate after the acquisition, which demonstrates to the market the CDB system’s resolution to forge a powerful listed platform with systematical advantage in resources. To transform the Company into a premier, powerful, and large enterprise with the ability to generate sustainable investment returns for our shareholders and investment institutions, CDBC will provide long-term support for the sustainable development of the Company by enhancing collaboration with the Company on resources and business segments.
Successfully transform business model with outstanding performance under clear strategy and ambitious reform
In 2016, the Company made important achievements by accelerating its development, actively transforming its business structure, and improving its performance. In accordance with the development strategy of “primary land development + downstream operation development” and the asset allocation planning, the Company strengthened its strategic expansion of premier downstream businesses amid its continued fixed income investments. Leveraging the CDB system’s nationwide network, brand, and advantages of resources, our pipeline extended to education, tourism, business parks, and other sectors in economically developed regions, including the Yangtze River Delta region, South China, and Central China. Therefore, these moves laid a solid foundation for continued development of subsequent projects. Particularly during the second half year of 2016, the Company achieved major breakthroughs in establishing its premier asset portfolio and integrated consumption business in core cities, which is reflected in our collaboration with Beijing Vanke on the Beijing Junzhuang Town Project as part of our integrated tourism and consumption projects in the premier regions in Beijing.
Build a listing company brand of CDB system based on Hong Kong market by removing historical burdens
In 2016, the Company made major progress in asset disposal and restructuring, lightening our burdens and paving the way for further advancement. By the end of the year, the Company basically completed settlement of disposal assets, fully exiting from the non-core projects. Considerable cash recovered were applied to new investments, further optimizing the Group’s asset structure.
Despite our positive performance and progress in 2016, we will embrace challenges and opportunities in 2017. We will stick to our strategy of integrating investments and operations, and CDBC will utilize its own resources, networks, and funding advantages to strengthen collaboration with the Company on business development. In this way, CDBC will assist the Company in expanding projects and brands in the downstream businesses, including education, tourism, business parks, and healthcare.
In 2017, the Company will focus on developing the platform on the HKEx upon completion of delisting in Singapore, continue our direction and goal of achieving the propositions of our shareholders with the Board and the management team, and reward our shareholders by constantly delivering our improved performance and stable distribution of dividends.
Finally, on behalf of the Board, I would like to thank our shareholders, investors, financial institutions and business partners for their continuing support to the Company in the past year, and to extend my sincere gratitude for the hard work of all directors, management and employees. We will, as always, continue to strive to create long-term benefits and value for our respected shareholders.