Good evening, ladies and gentlemen. Welcome to Shui On Land's 2021 Annual Results Analyst Briefing. Thank you very much for joining us online this evening. Today, we are pleased to have five members of the senior management team with us. Mr. Vincent Lo, our Chairman, Ms. Stephanie Lo, Executive Director of Shui On Land and Vice Chairman of Shui On Xintiandi, Mr. Douglas Sung, Chief Financial Officer and Chief Investment Officer of Shui On Land, Ms. Jessica Wang, Chief Executive Officer of Shui On Land, and Mr. Allan Zhang, Chief Executive Officer of Shui On Xintiandi. We will start with the presentation by the management, followed by Q&A. During the course of the webcast, you may submit your questions via the webcast portal, and they will be conveyed to our management during the Q&A session. Without further ado, may I invite Mr. Lo to start with some opening remarks, please.
Mr. Lo, please.
Okay. Well, thank you everybody for joining our press briefing. Not press briefing, sorry, analyst briefing. I will be very brief because I believe my colleagues will be able to explain in greater detail to you all. We have seen a very strong rebound on our results last year compared to the year before. Our property sales also jumped 8.4 x. Our commercial portfolio have a very strong performance. Our balance sheet continued to be very strong at 30% gearing, and we have over CNY 17 billion cash in the banks. We have declared a dividend and also a share repurchase plan. I will stop there because actually, I feel in the past two years almost, I have not been able to go back to Shanghai and the mainland.
Our management team has really done a fantastic job, and we have recently appointed Jessica Wang and also Allan Zhang as CEOs of Shui On Land and Shui On Xintiandi. So they will be doing a lot more explanation to you later. I will just stop there first.
Hello, everyone. This is Stephanie. Thank you for attending our analyst briefing. Let me walk you through some of the highlights from 2021. The company achieved a really strong rebound in both revenue and profitability versus the prior year, which resulted from both a focused business strategy and a very strong balance sheet that has been maintained over the past several years. Together, this has helped put Shui On Land in a very good position to capture new market opportunities and continue to drive sustainable growth. In terms of the revenue of the group, it was CNY 17.5 billion, representing a 282% increase compared to the last year. This was mainly due to a significant increase in property sales and a strong recovery in the commercial portfolio. The group recorded a profit of CNY 2.2 billion and a profit attributable to shareholders, which totaled CNY 1.6 billion.
This is a significant improvement versus the net loss recorded in 2020, which was due to the COVID-19 outbreak in China. Our property sales jumped 8.4 x year-on-year. Our sales revenue from our property sales was CNY 13.6 billion, largely due to contributions from three major projects, Shanghai Taipingqiao, Lakeville phase V, Wuhan Tiandi La Riva phase II, and Shanghai Panlong Tiandi. In terms of our commercial portfolio, we maintained a very strong growth momentum. Our total rental income was CNY 2.9 billion, representing a robust growth of 29% year-on-year. Our occupancy rates on average of both retail and office across our portfolio were above 90% average.
We have a very solid balance sheet, and this is reflecting a very prudent approach to managing our balance sheet with our net gearing ratio further lowered to a very healthy level of 30% in comparison to 45% at the end of 2020. Our cash and bank deposits totaled CNY 17 billion. In light of the company's strong financials, the board has recommended a final dividend for the year of HKD 0.084 per share. In addition, the board has approved a share repurchase plan of up to HKD 500 million with a view to enhance the EPS and the overall shareholder's return. Here are some key achievements in 2021 and some key milestones. In February, we acquired Nanjing IFC, which is a very city center project in Nanjing, together with Grosvenor on a 50/50 basis.
In June, we issued our first $400 million sustainability-linked bond, and we're the first China-based developer to successfully do so. We also in June, formed a JV with Yongye on a 50/50 basis to acquire the last residential development site next to our Taipingqiao project, right next to Xintiandi. This is the last site within our overall master plan, facing the lake. In September, we had the soft opening of Rui Hong Xin Cheng Hall of the Sun. It's our largest shopping mall to date, 180,000 sq m, and we are seeing very strong sales and foot traffic since our opening. In December, we also established a 50/50 JV with Wuhan Urban Construction Group, Wuhan Chengjian Jituan , and won the bid for a large-scale mixed-use development site right in the city center of Wuhan. This is about 70% residential and sellable resources.
On the next page, just sharing a little bit more about our sustainability achievements in 2021. We were the first China-based developer in the real estate sector to commit to the Science-Based Targets. Since 2011 to 2021, we have reduced our carbon emissions by 53.5% in the 10 years. Over 90% of our properties have now received LEED, WELL, or China Green Building certifications. We have a number of other strong sustainability initiatives in line with our 5C Strategy. If we have time, I can share more a little bit later. On the next page, you will see some of our ratings and credentials. We are very happy to share that our ratings have been improving over time each year. We maintain a rating AA - for Hong Kong Quality Assurance Agency, and MSCI has upgraded us to a rating of A.
Also, it is the first time that we have qualified for the Bloomberg Gender-Equality Index in 2022, and we are only one of three Chinese companies to have joined the index, and one of 28 global real estate firms to have joined this index. On the next page, we would like to share a little bit more about how we see the market and some of the happenings in 2021. While China's GDP continued to expand to 8.1% year-on-year growth, exceeding the government official target of about 6%, we do definitely see strong headwinds for the growth this year. Following the introduction of the Three Red Lines and a string of defaults in the property market, we definitely see that 2022 will be a challenging year, mainly driven by a major restructuring and dislocation in the property market in China.
In terms of the residential sector, though, we do feel that the market will undergo an orderly adjustment and a soft landing rather than achieving a major hard landing. In terms of the retail sector, China's retail sales had an increase of 12.5% in 2021. A lot of this is supported by the reshoring of spending onshore through luxury goods and a number of new store openings. In terms of trends, we are continuing to see the growth of the affluent and upper middle class in China, leading the shift in consumption from necessity to more lifestyle-based, discretionary, and experiential retail. The office sector, while China's office market stages strong recovery, especially in first-tier cities in 2021, we do still see some headwinds this year, especially given the COVID-19 situation right now that you see in Shanghai, as well as a big supply, essentially, in the market.
We do see rental growth rates moderating in the office sector this year. Just to share a little bit more about our competitive strengths, because, as some of you might recall, since 2016, we have very deliberately started deleveraging our company. We are now in a very strong financial position, and we feel that it is the right time for us to start looking for good opportunities for acquisition in the market, and we do think that our competitive strength will allow us to better capture new opportunities. Firstly, we have a very strong presence in Shanghai with a leading commercial portfolio. We have an iconic Xintiandi brand that is quite well-known across the country.
Our strength in urban regeneration and in building large-scale communities is actually a strong advantage in land acquisition right now, given that a lot of the new sites coming online are city center locations, especially in first-tier and strong second-tier cities. We have a very strong balance sheet with prudent, yet active capital management strategy, and we have a well-defined and well-developed track record in sustainability with very clear 10-year targets set. Lastly, I would like to share a little bit more about our future business strategy. As mentioned, we are feeling that we are well positioned to capture new market opportunities for growth. We have recently signed two MoUs with Shanghai Pudong Development Bank, as well as Bank of Shanghai to partner with them to make new acquisitions in this current market climate, and also invest further in ESG-related projects.
Our strategic focus will be also in restructuring our business. As some of you might know, we also put in an A1 filing last year to spin off Shui On Xintiandi, which is our commercial IP portfolio, and those plans are still in place. We are still very confident about the future of SXTD. However, we do definitely need to find the right market window to capture the best value for our shareholders, and therefore, we remain cautiously optimistic that this could happen in the second half of this year. In terms of investment priorities, we will definitely continue to look at Shanghai primarily, where we have a very strong brand recognition and foundation. We will look at other first-tier cities in the Greater Bay Area and other strategic strong second-tier cities in the Yangtze River Delta and the Greater Bay.
With that, I will hand over to Douglas for him to share more about our financial highlights.
Thank you, Stephanie. Let me just quickly go through the financial part. This page is just a highlight of some of the key financial parameters. Stephanie already mentioned a few of them, so I will just leave it for you as a reference. Let's go to the next page. This is the property sales for 2021. Our sales revenue, you can see the major contribution coming from the three projects, first in Taipingqiao, and then Panlong Tiandi, and then in Wuhan, our residential projects. If we include the contribution from joint ventures, which is not consolidated as revenue, the total sales revenue would have been about CNY 22 billion. Quite a strong year for us. On the next page, equally you can see rental income from our commercial portfolio also performed very well. The total rental income on a consolidated basis is about CNY 2.25 billion.
If we include the JV contribution, it is over CNY 2.9 billion. That is a 29% year-on-year increase compared to 2020. On the right-hand side, you can see the overall valuation of our commercial property portfolio. This is basically, on 100% basis, the entire commercial portfolio in the Shui On Land group, excluding joint venture and associates. I will give you the detail later on a separate page. It is roughly about CNY 50.9 billion on 100% basis excluding JV. On the next page, you can see the income statement. I will just highlight a few numbers. We talked about the revenue already. It is about CNY 17.5 billion, up about 3x from 2020, and you can see the breakdown between sales and rental income and other income. Net of cost of sales, gross profit is about CNY 7.2 billion, up almost 3x from the year before.
You can see gross profit margin at 41%, down slightly from 2020. It is mainly because of the composition of revenue. In 2020, rental income accounts for a high percentage of total revenue, and typically, rental income has a much higher margin compared to property sales. In 2021, a majority of the revenue came from property sales. If we just look at property sales margin, it is about 35% in 2021. That is a very healthy level, which is consistent to what the group has achieved in the past. Other income generally are just the interest income, and then we have a CNY 35 million increase in the valuation of our IP. I will go through the figures with you later on. Other gains and losses include, for example, expenses on our hedging for our FX loans, and also some other miscellaneous expenses and losses.
Overall, you can see the finance cost of about CNY 895 million, including a CNY 255 million gain in FX exchange translation. The profit before tax is CNY 5.6 billion, and then on the next page, after tax is CNY 2.2 billion, and excluding minority interest, it is CNY 1.63 billion, equivalent to CNY 0.203 per share. As mentioned by the chairman and Stephanie, the board approved HKD 0.084 per share for final dividend, same as year 2019. The board also approved a share repurchase plan up to HKD 500 million. On the next page, just some figures for you on our financial position and balance sheet. Again, I will leave it for you as reference. I will not go through them.
On the next page, you can see the company's total assets in the last five years have been very, very stable and consistent. It is roughly about CNY 110 billion of total assets, of which about 55% comprise of IPs and commercial properties. On the next page is the revaluation of our IP portfolio, which I mentioned earlier. We have broken it down into the SXTD portfolio, which we expect will be pulled into the new company when it is separately listed, and then the other investment properties remaining in the Shui On Land. You can see the SXTD portfolio, the total valuation, including JVs and associate, is about CNY 52.8 billion on 100% basis, and the group's share is about CNY 42.3 billion. If we include the other investment properties, the total grand total value of this portfolio on 100% basis is almost CNY 96 billion.
So it is a very significant commercial portfolio. If we exclude JV and associate, it is CNY 50.9 billion, which is the figure I mentioned to you earlier. You can see that the valuation has been basically stable from the year before 2020. The overall change is only 0.1%. The next page is our debt position. As mentioned, we continue to strengthen our balance sheet despite a very, very challenging capital market in the past year. Our net gearing is down to 30%, and you can see also we have quite substantially reduced our overall net debt as well. Next page I think is something that investment analysts would be obviously quite interested in this current environment, our debt profile and maturity profile. So in the coming year, 2022, we have roughly about CNY 6.4 billion of bank financing up for maturity.
It is broken down roughly about 50/50 between first half and second half. Out of the CNY 3 billion in the first half, as of last week, we have already secured about CNY 2.4 billion of refinancing approved by the banks. So we have pretty much completed all the maturity refinancing or renewal in the first half, and we will be working on the second half, CNY 3.4 billion figure. The second piece is the $600 million perpetual note which we can call in June, and we will intend to call. As noted, we have about CNY 17 billion of cash on hand at the end of last year, so we are very confident that the redemption can be met with our internal resources. Next page is for your reference, the maturity profile of our US dollar notes.
Then the last page, I would just touch a point is, the group has been working on innovative financial arrangements or financial packages in the past year, including the first sustainability-linked bond issued by a China developer, in 2021. We did $400 million. Also in the first quarter this year, we signed MoU with Shanghai Pudong Development Bank and Bank of Shanghai on M&A and ESG financing cooperation. We do expect to see a lot of opportunities in M&A in China, due to a lot of the distress in the industry. We are very delighted that these two major banks have supported us in this effort, and we hope to be able to work with them on the new investment opportunities, both in development and also in terms of completed commercial property opportunities.
With that, I will pass over to Jessica to talk about the Shui On Land development business.
Okay. Thank you, Douglas. Next I will show you for the property sales and development. Next. As mentioned, we had very strong residential sales in 2021. Our contracted sales increased by 43% year-on-year basis to CNY 30.27 billion. I would like to highlight, by the end of 2021, the total subscribed sales of CNY 5.5 billion were recorded. These sales will be converted to contract sales in the coming months. Next. To further extend our business and build a strong pipeline to drive future growth, we have been active refreshing our land bank by acquiring high quality assets in first tier cities in China, particularly in Shanghai. In June, we signed an agreement with the Yongye Group to develop Lot 122 of the Taipingqiao project on a 50/50 basis. The land will be developed as a mixed-use development comprising residential, commercial and public facilities.
This investment enable us to further expand our development footprint in Shanghai's Xintiandi area. The project expected completion date is in 2026. Next. The other very significant new investment we would like to highlight is the Wuhan Shipyard project. As Stephanie mentioned, we won the bidding for this project with Wuhan Chengjian Group in December, also on a 50/50 basis. The land is located in the ancient City of Wuhan, facing the Yangtze River Delta, Yangtze River in the west, and the Second Ring Road in the south, and is only 1.5 km away from the famous Yellow Crane Pavilion. It is the original site of the Wuhan Shipyard, and it is a representation of Wuhan's industrial cultural heritage. The project is a large scale master planned district that includes the development of residential, office, commercial buildings, schools, and other public facilities.
The estimated GFA is 1.15 million sq m , and it is estimated to complete by 2031. Next. Looking ahead, we have a strong pipeline of 346,900 sq m of residential GFA available for sale in 2022, of which about 68% are from projects in Shanghai, and a big portion is coming from Shanghai Rui Hong Xin Cheng and Panlong Tiandi. Next. For Rui Hong Xin Cheng , I think most of you are very familiar with this project. Lot 7 was launched in January 2022. All units was subscribed on the launch day. And the Lot 167A is the last residential project of Rui Hong Xin Cheng . The estimated above ground GFA is around 89,000 sq m . The project has 609 units in total and has received overwhelming interest to purchase. We started to accept subscription from early March with 1,904 subscription already received so far. Next.
The other project, Panlong Tiandi, the phase I and II of Panlong Tiandi generate very successfully response from buyers in the last two years. We plan to launch total 571 units in June this year. Up to now, over 3,000 customers have shown purchase intention. We are very confident that good sales momentum will continue. Next. In short, we have strong residential development sellable resources in the future. The total sellable amount is CNY 94 billion as of December 31st, 2021, with attributable value at CNY 51.5 billion. CNY 43.6 billion sellable resources are in Shanghai, and the rest are in Wuhan and Chongqing. Next. For the commercial development, we also have a strong portfolio in Shanghai and other high-growth cities. It will drive for further rental growth and capital recycling in future. This slide shows the list of commercial properties already under development and in the pipeline.
The total size of our commercial property portfolio will be 2,924,000 sq m, of which 55% were for office and 45% for retail. Next. In the future, SOL will ride on our strong track record in master plan and the city landmark development, our holistic capabilities in urban regeneration and cultural heritage preservation and revitalization, as well as our reputation, brand name, and our strengths for future growth. We will aim to create urban solution through developing premier sustainable urban communities for future growth and business expansion. These are all for my presentation, and I will hand over to Allan, please.
Thank you, Jessica, and good evening everyone. In this section, I will quickly walk you through the performance results of Shui On Xintiandi in the year 2021. Firstly, I would like to highlight that due to the focus in Shanghai, we actually have now a total owned and managed GFA of 1.72 million sq m, which actually ranked first among all of the listed companies in Shanghai. We believe that this scale give us a very strong position as the leading player in the Shanghai commercial real estate market, which is also very difficult for the competitor to catch up in the near future. The next slide is actually some pictures about our portfolio in Shanghai. I will skip the details about this. Basically, for example, in the lower right part, we have the pictures for the Shanghai Xintiandi.
This community actually has been growing from originally only 60,000 sq m to today, we have more than 500,000 sq m. And the community will continue to grow. We believe that in the long run, our portfolio in Shanghai will further grow at a very stable speed. The next slide is a bit more introduction about our major business under the Shui On Xintiandi platform. As mentioned before, property investment is apparently one of our core business and so far the PI industry basically contributed more than 78% of our revenue. To leverage on our brand and our competitive advantage in asset management, starting from 2018, we have been strategically grow our real estate asset management business. So far, we are very happy to see that in year 2021, the asset management business contribute around 5% among our revenue.
Property management is also one of the very core value creation procedure among all of the asset management business. In the long run, we will keep growing the three segments of the Shui On Xintiandi business in the long run. The next slide, a bit more introduction about our financial results in 2021. I believe Douglas already mentioned about how we grow the revenue by more than 22% to CNY 2.8 billion last year. And here are some other profit numbers. I will skip the details. One last thing to mention about this slide, it is actually although our revenue and profit grow up by more than 20% and also the assets grow by 10%. On the other hand, our net gearing ratio actually dropped by 7% to only 15%. Next slide, I will go a bit more into the detail about the breakdown of our revenue.
As you can see from the left-hand chart, we have been successfully grow the revenue by 21% in the property investment business, mainly due to the rebound after the COVID-19 impact through the very active management and also our repositioning and also our AEI to achieve the organic and inorganic growth in this sector. I would like to mention a bit more about the asset management business. As you can see, we have been successfully grow the revenue from only CNY 67 million last year in 2020 to CNY 93 million in 2021. The growth rate is actually 39%, which is a quite high digit. We believe that in the long run, we have the confidence to maintain the growth rate in this business sector. Next slide, it's a bit more about the asset type.
As you can see in the lower left-hand chart, our office grow by 9% and our retail grow by 30% in terms of the revenue. In the past 20 years, we have been strategically maintain a very balanced portfolio within all of our projects. We believe that it is very important for us to achieve the synergy among different types of assets. In terms of the geographic distribution, as you can see from the right-hand chart, we have more than 74% of our revenue comes from our Shanghai portfolio. We believe that in the long run, which is very helpful for us to capture the high growth potential of the city of Shanghai. Next slide is a bit more detail about the performance of our projects. I believe Douglas already mentioned about the total scale under the SXTD management portfolio.
We have now 1.3 million sq m . Last year, the total rental income already achieved CNY 1.6 billion, and the growth rate is actually 25%. For the occupancy rate, as you can see, most of our property in Shanghai and other cities are very mature. The average occupancy rate are above 93%. We have only two projects which has a relatively lower occupancy rate. The first one is the Shanghai Xintiandi. Right now, we have an ongoing AEI in this project, and so the occupancy rate is only 79%. The other one is in Nanjing IFC, which is also under AEI process. We believe that after AEI, the occupancy rate of these two projects will be very mature and very high occupancy rate. Next slide is a bit more about the retail portfolio. The total contribution of the rental is 61.
As mentioned before, the occupancy rate is quite high. Starting from five years ago, we have been strategically shift our positioning to focus more on the young and premium clientele, and adopting a lot of unique content, especially from the lifestyle and the other new business concept into our project. By leveraging on this market demand, we have been successfully completed the repositioning for our Wuhan Xintiandi, and also complete the AEI for Shanghai Xintiandi. The performance are improved significantly after the enhancement initiatives. The other thing is in last year, we successfully opened a mega retail complex, which is 180,000 sq m in Hongkou District, the Hall of the Sun. We successfully opened this project, and in this project, we have more than 30% tenants are first-in-Shanghai brand. At the same time, we have more than 70% of our tenants are first-in-Hongkou District brand.
This unique offering in terms of the trade mix helps us a lot to attract the traffic flow, and also maintain a quite stable and healthy operation in the past two quarters. Next slide is a bit more about the office part. I think Stephanie already mentioned about how we leverage our brand and also our capability to provide a very holistic and flexible office solution to all of our tenants in the past three years. Through this very strategic initiative, we have been successfully maintained a very high occupancy rate, which is also 93%. If you look at the Shanghai portfolio, our occupancy rate is 98%. The average vacancy rate in Shanghai CBD area is 6%, so we are performing way above the average level of the CBD. We have been strategically changing the structure of our tenant base.
Right now we have the first category of our tenants who are from the new economy sector. We have more than 50% of our tenants are from the tech background and the other new economy industry, including Dell, Agora, AECOM, SUNMI, and so on and so forth. We believe that focusing on the strategic location and creating value for the tenants will be very helpful for us to maintain a quite stable and healthy performance for our office sector. Next slide is a bit more introduction about how we grow the real estate asset management business, which I mentioned a bit before. So far, we have totally five mega projects, and the total GFA is more than 679,000 sq m, and total valuation of the portfolio is CNY 26 billion. The growth rate, as mentioned before, is 37% comparing to 2020.
Through these types of partnership with the financial partners, we have established a very healthy relationship with both international and domestic financial investors, including Manulife, Grosvenor, China Life, CPIC, and Yongye, who is a state-owned company. We believe that in the long run, we will continue to leverage on this healthy relationship with the partners to grow the asset management business. Next slide, please. In the long run, we believe that we will keep focus on creating and operating sustainable premium urban communities, and also adopt the social engines to bring in more and more unique content into our community. Through which we believe that we can help our customer to transform their urban lifestyle. As we all know that there is ongoing deep self-correction in the real estate business. We believe that this will pose us a lot of opportunity.
Some of the opportunity are from the market trend side, and the other opportunity are from the customer side. By focusing on the unmet need of our customers and adopt a customer-centric culture into our business, we believe that in the long run, we will keep leveraging on our capability in asset management and also our unique and iconic brand, leverage on our relationship with the partners. In the long run, we believe that all of these initiatives and strategy will help us to further strengthen the leading owner and investor and managers of quality assets in first-tier cities and other high-growth cities. This is all of my introduction about the Shui On Xintiandi side. I will hand over to Luna.
Thank you, Allan, and thank you, Chairman and other management, for the presentation. We will now take some questions from the audience. The first question is from John Lam from UBS. The question is about the tightening on the pre-sales escrow account. What is the restricted cash and unrestricted cash ratio? How will that, or will that affect your expansion plan? May I invite Douglas to answer this question?
Yeah, sure. Thanks, John. We do not normally give out the breakdown on cash between restricted and unrestricted. But I can say that out of the CNY 17 billion of cash balance we have at the end of last year, majority of that is free cash. We have, I think, a relatively minor proportion of restricted cash. Certainly, we do not feel constrained in terms of using the cash either for investment or for refinancing on some of our financing maturity. As I mentioned that we have a $600 million perpetual note coming up available for us to call in June. Our intention is to use the cash to redeem it. I hope that answer your question.
Thank you, Douglas. The next question is also on financing. There is a question from Jupiter on the guarantee. Do you guarantee, or do you provide guarantees to your JV debts as of 2021?
Simple answer is no. We do not guarantee any of the loans on our JV projects. Majority of those are development loans, which the land title has already been pledged to the bank. Typically, we do not guarantee on the JV projects.
Thanks, Douglas. More popular questions on the capital as well, on capital management. What is the consolidated net operating cash flow for 2021, and what is the expectation for 2022? For that then, is the tightening of the ratio, will that affect how you manage the capital going forward?
Okay. The net operating cash flow, I think you will find in the financial statement is roughly about CNY 10 billion as of 2021, financial year 2021. The cash flow from property sales, I think it is about 1.3. Yeah, CNY 13 billion. Sorry, it is roughly about, yeah, CNY 10 billion, of which about the CNY 13 billion is residential sales. About CNY 2.2 billion rental income cash flow. Then, of course, we have outflow on the operating level on construction costs, tax payment, and other SG&A. The net is roughly about CNY 10 billion.
Thanks.
I think that is the first question, right? There is a second part? Sorry.
I just wanted us to share a bit more on the strategy on capital management.
Oh, okay. We have been, as you know, adopt a fairly prudent approach to our capital management in the past few years, as the Chairman has highlighted and also Stephanie highlighted. We adopted an asset-light strategy since 2016, I think precisely to avoid a lot of the problems that some of our peer groups, companies have encountered in the past year. We expect to be continue to be prudent in managing our balance sheet, but at the same time, as you heard from Stephanie and Jessica and Allan, we do expect to see more and more investment opportunities because of the distress in the industry. We will both be prudent, but I think when we see the right opportunity, we certainly will also be actively looking to invest.
Hopefully, we will be able to strike a balance between being reasonably conservative, but at the same time, continue to grow our business.
Thank you, Douglas. Next question is from Deutsche Bank on the investment opportunities that you are looking for. Will you be acquiring projects or companies? Can you share a bit more on the investment criteria or the investment priorities in terms of geographical locations? Which cities in GBA, for example, outside of Foshan, that you might be interested? May I invite Stephanie to answer that question?
Yeah. Thanks for the question. In terms of acquisition and investment opportunities, we are very focused on first-tier cities in China right now. They have historically been much more competitive in terms of market environment. From the investment opportunity side, we do think now perhaps during the downturn, is an opportunity for us to be able to find a different portfolio of assets. Right now, we are looking at both residential and commercial, and typically where we are the strongest is when it is mixed use, so it is live, work, play, learn. These are projects that we are actively looking at a pipeline for, and we will also continue to look at Guangzhou and Shenzhen in the Greater Bay Area. Part of that question is this a risk or is this a huge opportunity since many of the GBA headquarter developers are distressed?
And so, the simple answer to that is that we see this as an opportunity. Historically, Guangzhou and Shenzhen have been very competitive markets, and therefore we haven't found the right opportunity for Shui On to go in. But now we are maintaining a very active approach, and looking at different pipelines there.
Oh, thank you, Stephanie. More questions on the contracted sales target. So can you share a bit more with us on the contracted sales target for 2022? Maybe invite Jessica.
Okay. So the group's sales target in 2022 is CNY 25 billion. As you can see, I just shared with you, we have about 346,900 sq m of residential property available for sales and for sale in 2022. So, we are very confident for the sales target in this year.
Oh, thank you. So, one question is on the buyback. So, can you share a bit more on the thinking behind buyback strategy? Maybe can I invite Douglas, please?
I think it is as both the Chairman and Stephanie mentioned, it is really just trying to create value for our shareholders, because Shui On Land current share price has been trading at obviously a very substantial discount to the book value. Our book value at the end of 2021 is about CNY 4.95 per share, so that is equivalent to about HKD 6.10 per share. We are trading at a massive discount to our book value. We do believe that any share buyback will be able to be accretive, both from an EPS perspective and from a book value perspective. That is really the rationale behind why the board has recommended for the share repurchase program.
Okay. Thank you. Just one more question on the June PERP. It is good to know that you call the PERP in June. Are there any options on funding the operations and acquisitions, and can you share a bit more on what cost will it be at?
I think I mentioned earlier that because we have quite a lot of cash on hand right now, and because the capital market, obviously the environment is still very challenging, our base case assumption is that we will utilize our internal resources to call the PERP. That is basically what we plan to do. We have already put in place the cash and also the arrangement, the mechanism, to redeem the PERP. It is our intention to call the PERP in June.
Thank you, Douglas. In view of time, maybe the last two questions. This question will be on the I think a lot of investors are quite interested on the IPO progress. Can you share a bit more on how our thinking behind this and is there any update that you can share with us?
Sorry, is that for me, Luna?
Yeah. Douglas, please. Sorry.
Okay. Yeah, sure. I think, as many of you know, we applied to the Hong Kong Stock Exchange, A1 filing in September 13th, last year. Typically, A1 filing has a six months valid period. So the valid period expires earlier this month, March 15th. I think I do not need to highlight the turmoil and the volatility in the global capital stock markets in the past six months. Management feel that the current environment is not really the best time to put forward the IPO. I think similarly, not only for Shui On Xintiandi, but I would imagine many companies looking to be IPO-ed in Hong Kong in the past few months have delayed their plan because of the volatility in the market. I do not think it is unique to our company or to the real estate industry.
It is really just that the market sentiment has been affected by many surprises in the past six months. We are still very confident about the SXTD business. As you heard from Allan and Stephanie, we have seen very, very good growth in the past year. Continued strong growth in all the business segments in SXTD. We will certainly continue to work towards a spin-off of the company at the right time. There is no firm timing. I think nobody really knows when the capital market will start to stabilize. Hopefully soon. We will certainly keep monitoring the market environment, and as soon as we see the window, we will certainly expect to push forward with the IPO.
Thank you, Douglas. Last question from the floor. It is on the market outlook. It is very encouraging to see very strong rebound in the group's results. Can maybe invite the chairman to share a bit more on the market outlook, please.
A big question. I believe the mainland property market is undergoing a major transformation, basically. Because with the international, very sensitive with the Ukraine war, the Sino-U.S. relations, U.S. wanting to contain China's growth, then with the market correction that is going on now, the downturn in the market turnover, then of course, started with the Evergrande debt defaults. Then, of course, the Three Red Lines is also imposing restrictions on the property developers. With all these happening, I do not believe the government is going to bail out the companies in trouble, as long as there is no systemic risk. I believe the government will be asking the SOEs and the asset management companies to maybe take over some of the defaulted projects, or to complete the project so that the purchasers will not be hurt.
But unfortunately, I think shareholders and bondholders might be second in line. With all this going on, I believe the high turnover, high leverage, high debt game is over. Going forward, the market will be looking for quality, service, location. The brand and reputation of developers will be a key consideration, especially when the market is looking for more upgrading rather than first-time buyers. This restructuring and deep reorganization, I think will offer a lot of opportunities in the next 12-18 months. I believe Shui On is very well prepared for this. We have been looking for this opportunity in the past few years. That is why we have lowered our gearing and built up our cash. I believe this will be a major opportunity for companies like ourselves to have good buys, attractive opportunities in the market that we can pick up going forward.
Maybe I will just stop there. Thank you.
Thank you, Chairman, for the remarks. Thank you for all the management to answer all the questions. This concludes our analyst briefing today. Thank you everyone for joining this evening. Should you have any further questions, please feel free to reach out to our IR team. Please stay safe and stay healthy. Have a great evening.