Ladies and gentlemen, good afternoon. Welcome to Shimao Property Holdings Limited's 2016 annual results announcement. Before we begin, may I introduce to you our management, Chairman and Executive Director, Mr. Xu [Rongmao]. Vice President cum Executive Director, Mr. Xu Shitan. Executive Director, Ms. Tang Fei. Executive Director, Mr. Liao Lujiang. General Sales Manager of Sales, Mr. Shao Liang. CFO, Mr. Chu Junshan. Today's meeting will be divided into a few parts. First, results highlights, and then financial highlights, business review, future outlook, and conclusions. Now may I pass the floor to Ms. Tang?
Thank you very much for coming to Shimao Properties' 2016 annual results announcement. Now I would like to go through with you our 2016 results highlights. After that, I will briefly explain our financial highlights. First, please turn to page four. In 2016, turnover was CNY 59.29 billion, up 2.7% from 2015.
If we exclude revenue from cinema business and Beijing Fortune Times Property, revenue from hotels, rentals, and other revenues were CNY 3.09 billion, up 11% year-on-year. The Group adjusted and optimized our sales and product structure, so we did a lot on inventory de-stocking. GP margin declined from 28.5%- 27.6%, and GP was down by 0.6% to CNY 16.35 billion. Overall inventory structure has been greatly optimized with inventory risk significantly reduced. We strictly linked actual cost with performance ratio through overall budget management and dynamic tracking. Hence, cost efficiency has improved significantly. Total SG&A costs in 2016 was CNY 4.1 billion, down 16.3% year-on-year. SG&A costs for development properties was 4.2% as a percentage of contracted sales, a relatively low level in the industry. Core profit attributable to shareholders was CNY 6.25 billion, up 0.7% year-on-year. Core net profit margin attributable to shareholders declined from 13.1%- 12.8%.
The board proposed to pay a total dividend of HKD 0.76 p er share for 2016, up 8.6% year-on-year, including a final dividend of HKD 0.44 , interim dividend HKD 0.26 , and a special dividend of HKD [0.06] . Total dividend payments amounted to HKD 2.6 billion. The Group repurchased a total of 85.55 million of the company's shares in 2016, reflecting its confidence in the price of the company's shares. And we also treated this as a payback to shareholders' support. Page five. Contracted sales amounted to CNY 68.12 billion in 2016, with ASP from CNY 12,100 per square meter in 2015 to CNY 13,850 per square meter in 2016. Contracted sales area was 4.918 million square meters.
As of the end of 2016, the group's attributable land bank totaled 30.79 million square meters, with average land cost of CNY 3,547 per square meter. 90% of the new investments were placed in Tier 1, Tier 2 cities in the past two years in order to better optimize land reserve and structure. The quality land resources and relatively low land costs will continue to lay a sustainable foundation for the group to develop further. Turnover of Shanghai Shimao amounted to CNY 13.71 billion. Profit attributable to shareholders was CNY 2.12 billion, up 4.2% year-on-year. In May 2016, Shanghai Shimao sold all its equity interest in Beijing Fortune Times Property to Lujiazui Holdings at about CNY 2.97 billion in cash, realizing an after-tax profit attributable to shareholders of about CNY 630 million. This is a successful case of a listed company realizing capital gains through incubation of commercial properties.
Page seven. In 2016, while there was a division in the market and profit has narrowed, the overall financial position is still good for the group. We adhere to prudent financial policy, exercise control over financing scale, and optimize our capital structure. We have disposable capital amounting to CNY 44.2 billion , including cash on hand of CNY 22.2 billion and unutilized banking facilities of CNY 22 billion . As of the end of 2016, total balance of borrowings were CNY 66.9 billion , down by 4% from CNY 69.8 billion in 2015. Long-term borrowings amounted to CNY 49.2 billion, 73% of total borrowings. Short-term borrowings were CNY 17.7 billion, 27% of total borrowings. As of the end of 2016, net gearing ratio was 53.4%, down 4.7% from 58.1% at the end of 2015, meeting the management's target. Net gearing has been maintained below 60% for five consecutive years.
It enhanced the group's ability to respond to complicated economic conditions and changes in the financial market, and laid a solid foundation for our sustainable growth. Through continuous clearing of old receivables, increasing cash collection ratio of new receivables, implementing quarterly performance rewards and penalties, we boosted cash collection to make sure we have sufficient capital to support steady development. Cash collection in 2016 was about CNY 60 billion, with cash collection ratio at 88%, up 3% from 85% in 2015. With the opening up of China's capital markets, the group has actively developed different domestic RMB financing channels. It issued private corporate bonds before the window was shut down, and refinanced some existing high-interest loans, taking advantage of the low interest rate environment. In 2016, the weighted average cost of financing went down to 5.8% from 6.9% in 2015, which is in line with the management's target.
Further lowering financing costs has been one of the long-term goals of the management. Page eight. The group continued to pursue financial innovation. It issued and explored different types of ABS projects, launched the application of Panda medium-term notes, which was accepted by the China Interbank Association, developed cross-border RMB payments. The diverse financial innovations have enhanced the liquidity of the group's assets and opened new financing channels, giving the group greater flexibility in resources integration and industry innovation. With changes in the financial market, in order to balance FX risk starting from early 2016, we have proactively prepaid foreign currency loans. Proportion of foreign currency loans decreased significantly to 34% at the end of 2016, from 48% at the end of 2015. In February 2017, we redeemed $800 million of senior notes before maturity. Moreover, hedging is in place with financial derivatives.
Thus, foreign exchange risk is effectively under control. The group was well-recognized by international rating agencies for its sound operational and financial performances. In April 2016, Fitch upgraded its Long-Term credit and debit rating from BB+ to BBB-. Moody's Ba2 rating and Standard & Poor's BB+ rating were maintained. Besides, three major domestic credit rating agencies, CCXI, United Ratings, and Dagong Global Credit Rating, maintained the group's AAA rating in June 2016. Besides, the market valuation of the group's major investment properties and hotels was CNY 64.2 billion as of December 31st, 2016. In 2015, it's CNY 61.7 billion . The VAT reform was rolled out in full in May 2016. The group made the transition smoothly thanks to its early actions, such as studying the policies, establishing relevant systems, and upgrading existing systems.
As the group has a high proportion of developed projects of diverse type and modes of operation in its portfolio, the VAT reform is expected to have a positive impact on its overall performance. Page nine, financial summary. Major financial data. Revenue was CNY 59.286 billion. In 2015, it is CNY 57.733 billion, up 2.7%. Gross profit, CNY 16.349 billion. In 2015, it is CNY 16.448 billion, down 0.6%. GP margin, 27.6%. In 2015, it is 28.5%, so down 0.9 percentage points. Operating profit in 2015 is CNY 15.614 billion. It came down to CNY 14.82 billion in 2016.
This is mainly because of the gain from sale of cinema has decreased. Core profit attributable to shareholders, CNY 6.251 billion. In 2015, it is CNY 6.207 billion, up 0.7%. Core net profit margin, 12.8%. In 2015, it is 13.1%, down 0.3 percentage points. Core earnings per share, CNY 1.82 . In 2015, it is CNY 1.794 , up 1.4%.
In 2016, the board proposed to pay final dividend of HKD 0.76 . Interim dividend was HKD 0.32 . For 2016. In 2015, total dividend was HKD 0.70 , and the dividend payout ratio in 2016 was 36.4%. 2015, it is 32%, so up 4.4%. Next page, balance sheet summary. At the end of 2016, total assets was CNY 261.903 billion. In 2015, it is CNY 244.255 billion, up 7.2%. At the end of 2016, fixed assets was CNY 53.983 billion. In 2015, it is CNY 49.519 billion, up 9%. Total equity was up 18%, reaching CNY 88.217 billion.
Cash and cash equivalents at the end of 2015 is CNY 26.410 billion. It came down to CNY 22.235 billion in 2016. Because of better cash collection, we used some of the cash to repay debts. Total borrowings in 2015 was CNY 69.821 billion. It came down by 4.1% to CNY 66.944 billion in 2016.
Net gearing ratio, 53.4%. In 2015, it is 58.1%, down 4.7 percentage points. If we consider the adjusted increase in hotel valuation, it should be 46% down 45.6%. I will not go through historical financial performance. Please turn to page 12. In face of RMB exchange rate loss, we are actually decreasing foreign exchange risk exposure. We proactively manage FX risk. At the end of 2016, the proportion of borrowings in foreign currency came down from 48%- 34%, down 14%. Outstanding balance of borrowings in foreign currency came down to CNY 22.6 billion. In 2015, it is CNY 33.7 billion. Exchange loss reduced was around CNY 600 million. In February 2017, we redeemed $800 million senior notes originally due on January 14th, 2020. In this way, we lowered further foreign exchange risk. We also used appropriate financial derivatives. By forward contract, we successfully avoided FX risk. Next page.
We will continue to explore innovative financing channels for real estate industry and do more asset securitization. With changes in the Chinese capital market, we issued domestic private bonds. We are the first to issue private bonds on the Shanghai Stock Exchange. In first half 2016, we did the largest- scale of hotel securitization project. This established new industry benchmark. We are now proactively exploring the feasibility of interbank issuance of financial products related to investment properties. We are trying our best to get low-cost financing in order to realize our financial innovative capabilities. Page 14. We seized the market opportunities in 2016 to repay offshore borrowings, issue private bonds, use new borrowings to repay existing borrowings and negotiate for lower contracted interest rates to significantly lower finance cost.
Taking changes in market interest rates into consideration, we strictly controlled finance cost and selected the best option after comparing various options. Average finance cost was reduced to within 5.8% in 2016, from 6.9%. In 2017, target is within 5.5%. To lower interest rates and save financing cost is giving good support to our business. This is also a target of our financial management. Page 15. Annual financial summary of Shanghai Shimao. In 2016, revenue was CNY 13.708 billion. Profit attributable to shareholders was up 4.2%. We hold 58.92% shareholding in Shanghai Shimao. Concerning our results, highlights and financial performance, that is all in my presentation. Thank you very much for your support. Now I will defer to Mr. Liao to talk about our business review.
Thank you, Ms. Tang. My name is Liao Lujiang. I am so happy to meet you all again.
There are two parts in my presentation. First, business review. Second part, business outlook. Page 17. Revenue. I think you are quite clear of that. Revenue breakdown is the main content on this slide. Property sales, CNY 56.2 billion. Then we have 3.9% from other income, accounting for about 5.9%. Here you can see a pie chart. We are in 39 cities, basically the same as last year. The bigger part is in Nanjing, Beijing, Jinan, Shanghai. These are our main cities. Because our main center of investment are in Tier 1, 2 cities. In the future, concerning recognized sales by city, these cities will contribute more. Shenzhen, Fuzhou, Tianjin and so on, they will form, or they will be the main source of our revenue. Page 18. Income from hotel operation and investment properties breakdown. First, CNY 3.089 billion. That is the total revenue.
There is a slight decrease of 1.6% from 2015. Let me explain. In 2015, we had two types of transactions. Cinema, we sold that to Wanda Group already, and there is Beijing Fortune Times Property being sold already. Concerning our rental income, there is some impact because of these two sales. After excluding these two transactions, on a year-on-year basis, our revenue rose 11.1%. That is rental and income from other operations. For our hotel operations, there is increase of 12.6%. Hotel income accounted for 47%, rental income 23%, others 30%. That is the income breakdown from hotel operation and investment properties. The scale and income of our investment properties is one of the major strategies. At the end, I will go through with you our future plans and strategies. Page 19.
This is a detailed analysis of our hotel operations in 2016, there are two new projects, one in Wuhan and one in Xiamen, which will start operation in July and August. Total number of rooms will be 5,700, and then turnover up 12.6%, reaching CNY 1.466 billion. EBITDA CNY 0.45 billion, up 13.8% year- on- year. There is a MiniMax Hotel Shanghai Songjiang and MiniMax Premier Hotel Shanghai Hongqiao. These are our own brands, which are of premium grade. This attempt is also one of our key focuses in the future. Page 20. Investment properties, commercial and office premises. Income is CNY 710 million, slightly down from last year. The major reason is, first of all, our Beijing Fortune Times Property was sold to Lujiazui Holdings, our rental income was impacted. Besides, the Shanghai Shimao International Plaza is being renovated, and there are some leases that were not renewed.
So as a result, there is a small decline. The total amount of revenue was down 4%. These are about our investment properties. Page 21, our land reserve. We are in 43 cities, 132 projects in total. We have 30.79 million square meters equity attributable as of December 31st, 2016. Basically, the distribution is not much different from last year. In order to give you a clearer picture, on page 22, 23, we set out all the newly acquired sites in 2016. The amount of acquisition cost, GFA, and land cost. We have 25 sites invested mainly in strong Tier 3 cities, for example, Fuzhou, Wuhan, Hangzhou, Xiamen, Hefei, Jinan, and so on. Including Beijing and Shanghai, there is one in Beijing, one in Shanghai. We have CNY 30.252 billion land cost, and land cost is around CNY 10,994 per square meters.
This is as of the end of 2016. Next page. Distribution of newly acquired sites. You can see that in a few regions we have more land reserve, for example, Northern China, Fujian, Central China, and also the western area. 813. For 813, we have 4.04 million square meters in total. On the right-hand side, you can see the condition of the land. We have 1.4 million square meters + 2 million of investment properties, 3.65 million square meters in total. Properties under construction, 12.8 million square meters. Future developments, 17.99 million square meters. Altogether, 30.79 million square meters. Average land cost is CNY 3,547 per square meter. That is about land. Page 25. Here's a cost analysis. Last year, we said that in 2016, there are a few key tasks. One is to lower our cost and expenses.
After one year of hard work, we are now presenting our results. This year, for SG&A expenses, comparing with last year, there is a decline of CNY 800 million. We are at CNY 4.095 billion this year, and last year is CNY 4.893 billion, down 16.31%. Now, if you compare that with recognized revenue and sales, this is of a quite high percentage. To explain further, because we have quite a lot of investment properties, especially hotels, depreciation is bigger than, for example, if we look at total revenue, it's only 4%-5% of investment properties, but the cost, depreciation expenses and so on, they accounted for 28%. If we exclude this part, then you can see that SG&A account for 4.22% of recognized revenue. This is quite good level in the industry. In 2017, through different measures, we will further lower our cost and expenses.
There should be further decline in 2017 in this regard. This is my report on cost. Next, let's talk about our business. What is our future business outlook? Page 27. On the right-hand side, you can see our plan for 2016 and also the actual in 2016. We actually completed CNY 68.11 billion. The planned figure is CNY 67 billion. Cash collection, CNY 60 billion, an increase from the plan. Construction cost came down by CNY 5.4 billion. For the other expenses, more or less stable. Land investment is bigger than originally planned, CNY 28.5 billion was the actual. In 2016, apart from land investment, all the other areas are more or less the same as planned. In 2017, target of contracted sales is CNY 80 billion.
Later on, I will analyze our saleable resources for you so you can come to a judgment as to how big a chance we have to complete this target. Cash collection, 88%, CNY 17.4 billion. Land investment, we will maintain the same extent of investment. Payment of land premium will be CNY 32.2 billion. Construction cost, because there is an increase in GFA, CNY 24 billion, an increase. Other expenses, there is slight increase because price increases quite a lot, there is a big increase in tax. There is an increase in other expenses. All these are our operation targets for 2017. Page 28. In order to reach this target in 2017, here are the saleable resources. On the left, you can see a list of key projects over CNY 1.5 billion in various districts: Fujian, Northern China, Southern China, Central China, Nanjing, Shandong, Western China, Zhejiang, and Jiangsu.
There are a few projects in each of these regions. There is a total of 2.543 million square meters. Completed inventory, 1.45 million square meters There are also key projects available for sale in 2017 from previous year. Total saleable resource is 9.5 million square meters. That is the total saleable resources for 2017. 9.5 million square meters. You can see that they are in some key cities, for example, Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing, Wuhan, Xiamen, Fuzhou, Hefei. These are Tier 1 and strong Tier 2 cities, which are our key focuses. Besides, for prices, 14,000 per square meter is the price that we calculate at, and this is quite conservative. Based on this price, the total value would be CNY 133 billion. Every year, we target the sell-through rate at 60% or above. This is just a conservative estimate.
To complete the target of CNY 80 billion for 2017, we are confident based on the distribution of our saleable resources. Page 29, operation strategy. Last year, we strengthened our de-stocking efforts, and there is clear improvement in de-stocking after one year of hard work. Our inventory had significantly come down. Inventory includes everything that are available for sale in 2017. In 2017, it's 3.33 million square meters, down significantly from 2016. In 2016, 46%, it came down to 35%. In 2017, for new supply, it accounted for 65% of the total resources, mainly in Tier 1 and strong Tier 2 cities. We optimized our product mix. We believe that with our competitiveness, we are able to strengthen our sell-through rates. Next, ASP analysis. In 2015, it's CNY 12,076 per square meter. In 2016, CNY 13,800. In 2017, we estimate it at CNY 14,500. We are confident to achieve that.
There is increase every year by about 20%. In 2016, the price increase was around 15%. This part will be booked in 2017. With ASP increase after one to two years, in 2017, we will be moving into the realization stage. The gross profit level will reach a high level comparing to the competitors. That's about our inventory and price. Next page, investment properties. We are upgrading our scale and efficiency. We have a five-year plan for hotel operations and other investment properties. First, regarding our hotels, there are two types. One, full-service hotel and the other premier hotel. We hope that after the coming one to two years operation, in 2020, we will reach a total of CNY 4 billion for the two types of hotels. The increase is very fast.
In the coming five years, there will be at least 180% growth. For full-service hotels, we have 16 hotels operating already in 2017. There are four more hotels coming in 2018, three more in 2019, two more in Hong Kong. These hotels will gradually start operation in the coming years. They will give a very good assurance for our future operations. For boutique hotels, in 2015, 2016, we have two in Shanghai. We made attempts and accumulated experience. After that, we hope that in 2017 thereafter, we can rapidly expand and grow. In 2020, we hope to have 100 boutique hotels, including our self-branded hotels. We will export our management as well. This is our five-year plan for hotel operations. Page 31. Together with Starwood Capital, we cooperate with them and set up a JV, which specializes in promoting our hotels. That is our boutique hotels.
We complement each other. Shimao does the management. We own 51% shareholding, Starwood 49%. We set up a Shanghai Shimao MiniMax Hotel Management Company Limited. They will work on MiniMax and MiniMax Premier and also our Yu Hotel. We will complement each other. We hope that in the future, there will be rapid growth in our hotel business. That is our future plan for hotels, page 31. Oh, sorry, page 32. 32 and 33. These are our major hotels. Conrad Xiamen, this is already operating along the waterfront of Xiamen. It is opposite to Gulangyu. It is a landmark building. Then there is the [Sheshan] Hotel, InterContinental Shanghai Wonderland, which will start operation in 2018. There are two hotels in Hong Kong which will start operation in 2019. Then there are a few operating hotels, Le Royal Méridien Shanghai on Nanjing Road.
This is a very outstanding hotel. Occupancy rate is over 80%, and there is Hyatt on the Bund Shanghai. Then we have The Yuluxe Sheshan, Shanghai. At the end of 2016, we took over it, and it is operating well. The final one is the MiniMax Premier Hotel Shanghai Hongqiao. Customer satisfaction level is very high. All these are about hotel. Page 34, commercial operations and our future plan. Five-year plan. In terms of number, we hope that there will be over 30 projects, GFA over 2 million square meters . Total annual income will be over CNY 3 billion. We hope that there will be CNY 2 billion, and over 20 shopping malls and rental projects, GFA over 1.3 million square meters . For office project site, we hope to have over 10 projects, more than CNY 1 billion GFA, more than 700,000 sq m.
Page 35, commercial operations and main projects. First, the Shishi Shimao Skyscraper City in [Shishi], Fujian. They are operating. They are landmark buildings, operating very well. Then there is the Shimao International Plaza. It is now being renovated. In 2018, renovation will be completed. In Shanghai, it is going to be a landmark building. Jinan Shimao Plaza and Shaoxing Shimao Plaza are operating. Nanjing Shimao SGC (Commercial) will be launched in 2019. We are now in the planning stage. For office projects, you are familiar with Beijing Shimao Tower. In Shenzhen and Shanghai, the landmark projects are now being built. Shanghai Shimao Binjiang Building is right next to Binjiang, and the building is being built, near completion already. Nanjing Shimao International Center is in Hexi. It is a new landmark building. It is now being built for commercial properties. We have been exploring for a number of years.
We have accumulated a lot of experience. In the coming five years, it will be our strategic focus. We hope to achieve sustainable growth in terms of revenue and scale. We look forward to seeing a lot of achievements in this part. That's all in my presentation. I would now defer to Mr. Shao to talk about sales.
Thank you. Now I will report to you our sales. First, a review of 2016. Page 37. Contracted sales, CNY 68.1 billion. Cash collection, CNY 60 billion. After the past two years of adjustment, we have improved our quality of sales, mainly by improving GP margin. It's up 68%, reaching a GP margin of 15%, which is a very high level among peers. Concerning sell-through rates in 2016, we're up 4% in sell-through rates.
Sell-through rates of inventory carried over, comparing with 2015, there is increase of 2% for sell-through rates of inventory carried over and up 5% in sell-through rates of new supply. We reach 74% sell-through rates of new supply. Page 39, sell-through rates of inventory. In 2016, we benefit from the robust market. We performed well in de-stocking. We reached 46% of sell-through rates of inventory carried over. We did very well for inventory aged over two years. Comparing with 2015, we're at 167%, from CNY 2.1 billion to CNY 5.6 billion, so this is a healthy level.
Next page. Sell-through rates of new supply, up 5%, reaching 74%. Due to persistent pre-launch research on products, new supply becomes more competitive in the market. Some property projects were sold through over 90% on launch day, and price is notably higher than those of neighborhood projects. The price bargaining rate is over 10%.
Here you can see some projects in Beijing, Xiamen, Nanjing, Wuhan, Hefei. For these projects, our premium was over 10%, and the sell-through rates on the launch day exceeded 90%. Next page. Sales of high-quality products pushed up cash collection. In 2016, cash collection ratio for new supply and inventory was up from 2015. Overall cash collection ratio was up 3%, reaching 88%. This gives good assurance for our cash flow. Sales target and strategy for 2017. Sales target for 2017 was CNY 80 billion, 17% higher than in 2016. Our new supply is planned to be CNY 86.7 billion. Given that more land parcels were acquired at the end of 2016, new supply will be skewed towards second half 2017. In the first half of this year, we'll strengthen inventory clearance, and we will continue to improve our new supply sell-through rates.
In the first half, we hope to achieve CNY 40 billion, or 50% of annual sales target in the first half of 2017. New supply will jump in second half, so we hope to maintain a high sell-through rate, and we are confident in beating the annual sales target of CNY 80 billion. Page 43. We will focus on key cities. In 2017, sales of the first and strong second-Tier cities will account for more than 60% of total sales. Sales in major cities are expected to rise notably, ensuring both sales and profit to meet targets. Average selling price of the year is estimated at more than CNY 14,500 per square meter. For key cities, for example, Nanjing, over CNY 10 billion, Beijing, CNY 8 billion. For the other key cities, they will be more than CNY 2 billion. Key projects. There are 110 sellable projects.
We'll focus on 21 projects with annual sales target greater than CNY 1.5 billion. Total sales will reach CNY 41.5 billion, accounting for 50%+ of annual target. Net profit margin will exceed 15%. These are our key projects that we will focus on. On inventory, we will continue to clear stagnant inventories to make sure that our inventory level is healthy. On sales, on products, and on operation, we will try our best to make good use of resources. We aim at quick turnover in order to make sure that all these are on healthy condition. Next page, in terms of cash collection, we will continue to go for delicacy management in all dimensions to control cash collection cycle. Sales target was CNY 80 billion, so we aim at cash collection of CNY 70.4 billion. We can keep the same cash collection rate at 88%.
We believe that we can reach this target. All these are about sales. Finally, I will defer to our colleague to deliver conclusions.
Good afternoon. This conclusion may be longer than last year. We will share with you our strategy change and also our views on the outlook. in 2016, we achieved CNY 68.1 billion in sales and CNY 60 billion in cash collection, representing a cash collection ratio of 88%. Because we returned to first and second-Tier cities, our ASP increased to CNY 13,850 in 2016 from CNY 12,100, and further rose to CNY 15,311 in the first two months. In March, the sales results were at a historical high.
Besides, owing to price caps implemented by governments of certain cities, some investors said that last year we were up only 2%, but the market was up 30% odd, but we have CNY 10 billion of projects at high margin, which will be booked in 2017. If all CNY 10 billion can be sold in 2017, we are not sure, really, because the state is doing a lot of control, but the price is much better than last year. For example, in Shanghai, we have a project in Zhoupu last year, 43,000 sq m allowed by the government, but we hope to be at 60,000 sq m odd now. The price cap is one difficulty in Tier 1, Tier 2 cities. In 2016, there are some low margin products being realized, and we are clearing inventory. So GP margin came down to 27.6% from 28.5%.
In 2016, 2017, ASP rose quite a lot. We hope to achieve 30% GP margin. Core profit margin can rise further to 15% from 12.8%. This year, our profit realization will be higher than 2016, but there won't be a lot, because revenue will not go up significantly. Core profits will increase by 20%. This year, there is one disposal of asset and this will not happen every year, so on this part, there will be an impact of 10%. Over 10% profit growth is sustainable, and we believe that in 2018 will be higher. This year in 2017, there will be some growth in sales. Inventory clearance has proved effective. Completed inventory, plus those that were not sold from last year, 3.3 million square meters . This will account for 35% of sellable resources this year. Last year, 43%.
That is we were selling old inventory last year, but this year, 65% of sales will be new supply. That will be supplied in second half of the year. They are mainly in first and second Tier cities. We believe that good quality sellable resources will provide a solid foundation for better sales rates and ASP. Point four, we have stronger financial management. Net gearing ratio declines to 53.4%, a relatively low level. Average funding cost decreased from 6.9%- 5.8%. We hope it will fall below 5.5%. Proportion of foreign currency borrowings decreased from 48%- 34%. We redeemed $800 million senior notes before maturity. In Hong Kong, we have the Tung Chung Hotel. At first, we owned 80%, now we have increased shareholding to 100%. There is a luxury apartment project in Kowloon, which will be launched in 2018.
Total available resources will exceed 20 billion. Now, we believe that because the land price had already doubled. In 2020 and thereafter, they will be gradually booked. The Hong Kong profit is different from mainland. For luxury project in mainland, GP margin may be 40%, net profit may be 10% odd . For Hong Kong, both gross margin and net margin will be at around 10% odd because the taxation system here is better. We have more than 20 billion sales revenue, and every year there will be at least 700 million-800 million of revenue from hotels. So these can offset and hedge our foreign exchange risk. Now, we still have an FX loss, but it is not a core loss. Point five, land acquisition. Last year, we bought 3 million square meters of attributable quality land. The four attributable equity, it's a bigger number.
This year we plan to spend CNY 35 billion in land acquisition. The difference between this year and last year is that last year, 50%-60% was auctioned to the market. This year, we hope that 60% would be by means of cooperation on secondhand land. So we can acquire land in a strategic way. Land price is very high this year. In January this year in Shanghai, we acquired two sites at a very cheap price. In February, in Xiamen, we acquired a site which was also quite cheap sometime ago, it's CNY 30,000. This month, it's crazy. Yesterday in Shanghai, Xiaokunshan, the price was over CNY 30,000. It will be selling at least CNY 50,000. So Zhoupu, CNY 60,000, CNY 70,000. Today in Guangzhou Xiqu, the price is CNY 50,000 in the suburbs, CNY 20,000- odd . So land is getting more and more expensive. It seems that there is no peak.
This year, we hope to increase investment in land through strategic acquisition, secondhand cooperation in order to lower land costs. Point six, we said a lot about that on commercial and hotel properties. All the projects have been listed out for your reference. You can see the increase was very big. Rental income will increase 332%, hotel 180% increase. EBITDA margin of commercial segment will increase from 50%- 60%, for hotel, 30%- 35%. Total recurrent income will increase from CNY 3.09 billion in 2016 to CNY 7.1 billion in five years' time. Two days ago, with Starwood Capital, we signed a strategic cooperation agreement. Each of us will invest $100 million. In the coming five years, there'll be 100 light asset hotels in China. Most of them are in the form of brand export.
Starwood will work with us on hotels that we have invested in. This proves that our investment strategy is very correct, and we believe that the Starwood brand can help us do more promotion. Point number seven, I will spend more time on this point because you are most interested in it. That's about our sales. In the past two years, we were in the adjustment phase, there was no increase in our sales, but then the market increased a lot. It seems that we were weak in the past two years. This year, our sales target is CNY 80 billion, up 17% year-on-year. Sellable resources, 9.53 million square meters. At a price of CNY 14,000 per suare meter , value will be 133.3%. As such as now, in January to February, CNY 15,000 already. Now it's above CNY 15,600 in price.
The sellable resources would be CNY 150 billion at least. Increase will be quite fast. This 9.53 million square meters is not fixed. We believe that there'll be an increase in sellable resources because this year, based on our market judgment, transaction value will come down by 10%-15%. It will still be very high level. If you look at Tier 2 cities, there are some land kings, and recently there are a number of policies, purchase restriction or lending restriction. You have to be divorced for many years in order to be effective, and so on and so forth. Transaction in Tier 1, 2 cities will drop more from the average. If the average is 10, then the Tier 1, 2 cities will be like 20. There are more opportunities in t ier 3, [4] cities. Good Tier 3 , 4 cities.
What we are referring to will be quite close to Tier 2 cities, those good Tier 3, 4 cities with industrial foundations. In the past few years, we stopped new construction in Tier 3, 4 cities, and this number had not included a lot Tier 3, 4 cities. In Fujian, in Jinjiang, there is no stock to sell. This year, we will increase new supply. Yangtze River Delta, Wuxi, Changzhou, they have become good, so we may increase supply there. This number will increase further. This year, sales growth should exceed industry average. We hope to be within top 20. We hope to exceed the growth rate of the top 20. The most important point is, in the first half of the year, new supply is only 40%. 60% of new supply will happen in the second half of the year.
A lot of our land was bought in Q3, Q4 of last year, and they could only be sold in the second half of this year. But in the first half of the year, we hope to at least complete 50% of the sales target. If we can complete CNY 40 billion of sales target, that would be the best guarantee. And we can control risk in that way, because there will be more and more cities being incorporated into the state's regulation. The state said that in Tier 3, 4 cities, there should be continuous active stocking so that there'll be healthy development in real estate. These are positive moves. But then still there are purchase restriction, price cap, and also lending restriction in Tier 1, 2 cities.
In the first half of the year, if we can complete more of the target, then this will give a lot of confidence to investors. In March, we reached historic high level in sales. In Q1, we can complete 25% of the target. Now there are three to four peaks in supply. March, June, September, and November, and there will be more supply in the second half. If we can complete half of the target in the first half of the year, then we will be able to exceed target for the whole year. We really look forward to the growth this year. That is why we have spent more time in this part in our explanation. in 2015, 2016, we did proactive consolidation in our strategy, and this had been completed. Talking about sell-through of new supply, there is immense progress.
For new supply, 70% odd. Construction quality, customer satisfaction have reached good level in the industry. Net gearing ratio, cash collection ratio, and land bank quality have been improved. We are confident to sustain high growth in 2017 and 2018. Finally, I would like to share with you what we have done lately, which is a new move. Land is very expensive. Last year, if you look at a land chart, last year, we acquired a strategic site in Guling of Fuzhou. Land price was CNY 1,000- odd, which is very cheap. If you look at our selling price, well, there are three phases in this project. First phase, you can look at the pictures. First phase looks nice, and in the second phase is more modern. Phases I to II, they are design of three to four years ago. Here, this is phase III.
We made a big breakthrough. No matter on which level you are entering, that is the first level. You have a separate garden, and then you can write your name on the nameplate at the front entrance. Then, here you can see the architecture. You can see the interior decoration. There are a lot of details. This is the most important part. Phase I, we sold at CNY 10,000- odd. The land cost is CNY 1,000- odd. Profit is CNY 1,000- odd. In phase II, we increased price CNY 20,000. Profit margin 20%. For phase III, CNY 40,000. CNY 10,000 profit per square meter. I think this is a new breakthrough. We have spent a lot of time on that. If you have time, please take a look at our new projects. They are not only in Fujian. In different parts of China, there are these new projects. Thank you.
Thank you, Jason. It is time for Q&A now. You are welcome to ask questions. Please state your name and the organization you represent before you speak.
Good afternoon. I am from CIMB. Just now, Jason said that this year, GP margin would be around 30%. If you look towards the future in 2018, 2019, how much will be GP margin? Second question. This year, you have prepared CNY 35 billion for land acquisition, so the total will be CNY 50 billion. This year, you are still optimistic about the property market? Regarding government policies in large cities, they are still tightening. This year, when you acquire land, which cities will you focus on and what is the overall strategy? Now, in the first two months, transaction volume is very high in the property market. What will be the risk? Are people too optimistic, overly optimistic? Next question.
This year, you have just set up the hotel JV. Before 2020, there will be 100 hotels. When it comes to MiniMax hotels, about the investment in business, how much will that be? If you look at profit contribution up till 2021, there will be CNY 7 billion. How much will be profit contribution? Thank you.
First, GP margin projection. This year, GP margin will be at 30%. In 2018, 2019, more or less the same. We don't want to achieve too high a figure. For newly acquired land, GP margin will be lower. In order to maintain a high growth in sales, there will be pressure on GP margin. It won't become 32%, 35%, unless if the market is extremely good or we can continue to replenish inexpensive land. Of course, we will continue our work, but there will be a price cap from the government.
These are some difficulties. When it comes to land acquisition this year, we will acquire more land than last year, but this will be difficult. Last year, we bought CNY 40 million, and after attribution, CNY 30 billion, half of them would be from an auction this year. The attributable land interest, CNY 40 billion, we hope that it will be a 60%. It will be mainly from strategic cooperation or deliberation from government. It will be much more difficult. Can we really acquire so much land? If we get land from auction, we may not be able to get it. We took part in Shanghai, Guangzhou, but we could not get any land. Last year, we got some cheap land in Shanghai and Xiamen, but it was difficult.
There are some strategic sites in Nanjing and Shenzhen, and our strategy is that we will look at 15 cities and also the periphery. Shanghai, Kunshan are very expensive, but perhaps Taicang will be an opportunity. In big cities, we will have to look at the periphery. In Beijing and also the Pan-Beijing area, there may be chance. We got a land price of CNY 50,000, CNY 60,000 in Pan-Beijing. Last year, we acquired quite a lot of land there. We believe profit will be high in Shenzhen and Guangzhou in the periphery. There are some opportunities. Tier 3, 4 cities will be opportunities, like Fujian and Yangtze River Delta. One, two years ago, we controlled our supply, and this year, we will have to increase supply in some cities because inventory has fallen to a reasonable level. This is very different from the past.
If you look at Hangzhou, in the past two to three years, the government did not supply land. Price went up from CNY 6,000-CNY 10,000, and now there is no more land to develop. Finally, you talked about the JV. We cooperated with Starwood Capital. We will be operating light asset hotels, CNY 7 billion of revenue. There are two parts, hotel and commercial portions. Commercial means office buildings and shopping malls, CNY 3 billion. Hotels, CNY 4 billion. Most part of the hotels are the large hotels, like the one in Shanghai, CNY 1 billion, CNY 2 billion, and then there is one in 2018. In Hong Kong, there will be a big hotel with 1,000 odd rooms. We have many large hotels, making up a large part of the CNY 4 billion. For MiniMax, CNY 800 million.
The good point is you do not need to make much investment. For the 100 hotels, perhaps we only need to invest in 10 odd hotels, like CNY 20 million-CNY 30 million in each hotel. 100 odd rooms. In most of the business, we hope to export the brand. We do not need to invest because Starwood Capital and our teams are strong. That is our advantage. What about profit? Now concerning commercial, GP margin is 50% roughly. We hope to increase to 60%. Hotels, EBITDA margin 30%, we hope to reach 35% for MiniMax EBITDA. It is higher than the other hotels. It may reach 50% or above, but when we export brand, it will be even higher because we charge management fees.
Thank you, management. I am from UBS. I have three questions to ask.
First, in the past few years, as Jason said, sales was of a scale of around CNY 70 billion. This year, your sales target and your land acquisition plan would be such that in the coming years, you want to increase scale of sales. In the coming years, what are your thoughts about sales growth concerning your sales team and also land acquisition resources? What change do you see? You are confident in reaching this target. What are your considerations? Next question. If you look at the JV, there is around CNY 500 million, loss. For this subsidiary or associated company, over the years, there has been quite a big loss. To which projects are they related? This year, will you see a turnaround? Next question, about another figure. In your financial statement, there is a CNY 3 billion available for sales financial assets.
What is that? Thank you.
Okay. First question about our sales target. As such as now this year, our sales target is CNY 80 billion, an increase of 17%. We hope in the first half, we can exceed half of the target. In Q1, we will exceed 25%. For the whole year, we will exceed target because 60% of the supply will be in the second half. This year we hope to catch up in terms of pace, because in the past one to two years, we were slow. We have to make adjustment. In 2015, 2016, we did good adjustment. We did clear a lot of inventory in 2015, 2016. We bought some good sites in Tier 1, 2 cities. Our products are being upgraded. Our projects, our products are sold at a premium. Sell-through rate is quite good.
I still hope that we can exceed industry standard because in the past few years, we were lower than industry standard. Because of all the regulation and ups and downs, it is not good for the industry to grow 30%, but for us, only 2% growth. In 2017, 2018, we have to catch up with the industry standard. If we can continue to upgrade products and increase selling price, if our quality is better, can we exceed industry standard to offset the lagging behind in the past one to two years. For land acquisition this year, it will be difficult because land is very expensive. At the end of last year, early this year, we bought three sites in Shanghai. At the end of the year, because people lacked money, we just cooperated with those companies. Now there are 20, 30 odd companies.
I do not know how to cooperate with them. If we work with 15 companies, then each will be at around six point six, six point seven. Is that feasible? We have beefed up our team in land acquisition. We are more focused on 15 cities and also the periphery, and development efficiency will be higher. The management is taking part in the acquisition of land. We are trying to build some unique towns. For example, in Shenzhen, the tallest building will be developed by us, and we will also look at some tourism, entertainment-related themes. In Futian, we bought land at CNY 1,000- odd, and we are selling at CNY 44,000. We hope that this year, at least 60% will be in strategic land or secondhand arrangement with smaller risks. It will be difficult. There is uncertainty. We have to look at the market too.
If there is adjustment in the market, we can reduce or increase depending on the sales. With this type of land acquisition, risk should be small. Concerning the loss of the JV, there are some projects in Guangzhou, Tianjin, Jinan. Last year and this year, selling price rose a lot. In Olympic City, we are managing the launch. In the past, there were five developers, and later on fully withdrew, and then there are only four. In the past, selling price was CNY 11,000. There was big loss. Last year, we sold at CNY 20,000. This year, we should be selling at CNY 25,000. The original estimate for that project is that there are still saleable resources of CNY 70 billion. This project should be profitable. This year, there will not be big loss. Next year and the year after next year, there will be bigger profits.
It is in Tier 1 city, and so profit can only be booked two to three years later.
Ms. Tang?
You are talking about wealth management. Now we have some associated companies and JV. For example, Shimao Haixia in Nanjing. In the past, there are five shareholders. We need to use our funds in hand to repay loan. Starting from last year, we accumulated a lot of cash in our book. Because there are so many shareholders, it is difficult to move the funds. So we did some wealth management. We have quite adequate funding, especially for the JV. Ladies and gentlemen, I would like to share with you some points. In the past two years, perhaps you were a bit disappointed with Shimao. Our results had not improved. Recently, it was so good. Internally, we proactively made adjustment.
In the past two years, growth was too fast and our debt was too much. Inventory was also too much. Interest rate had gone up. We were not able to ensure construction quality in some places. So in the past one to two years, we made proactive adjustment. On many fronts, we did a lot of hard work. If you look at our customer satisfaction rate and also our quality enhancement, our gearing, our interest rate, and so on. Last year, we said that we want to introduce new products. Now, land price is very high. If we cannot offer innovative products, how can we attract more profits? Now, flower is more expensive than bread. In Fuzhou, the Gushan project, we bought land at CNY 2,000, we are selling at CNY 40,000. Now, there are 10,000 more of land available.
I can sell 40,000, so I am brave enough to buy it. It is most important to be competitive. We are asking ourselves whether we have core competitiveness. If so, well, you can sell at a higher price than others, then you can buy. There will be growth potential. In the past one to two years, we made proactive adjustment. If there is too much inventory, then we will have a very heavy pressure. Now, most of our old inventory was sold already. We do not have so much psychological pressure. Quality is now better, costs have come down. The room for profit is bigger. We made proactive adjustments to our strategy. We slowed down our pace. Last year, we grew 2%. Last year, for the CNY 10 billion, if we sold the CNY 10 billion better inventory, then we will not have 2% growth.
It should be 10% or 20%. Even though we would not be better than the peers, it would not be so weak. Now, in Shanghai, land price is CNY 40,000. We are selling at CNY 42,000. That is impossible. We need to wait. Now, we are selling at CNY 50,000- odd , but that may not be allowed by the government. We have to wait for more opportunities. We are not trying to work for the sake of setting targets. In the past, we set a target in terms of ranking, but now I am saying that we need healthy development, and we have to be innovative. We should not sacrifice other things for the sake of scale. We should not sacrifice effectiveness. It is important to be healthy and steady.
Now, concerning our gearing, well, of course, development is the hard rule, but the development must take place while risks are controllable. We do not know what will happen in the market in the future. If your gearing can come down, if you have more good products, then risk will be relatively smaller, and you will have more ability to tolerate risk. If you only fight with the others head-on, then that is not healthy. Of course, different companies have different understanding. Some people said that scale is the most important, but for us, efficiency comes first. Health comes first. Perhaps your expectation is different, but through our proactive adjustment in the past one to two years, I think we have improved our condition a lot. What we will see will be a brighter prospect. I have strong confidence. That is my thoughts. Let me supplement.
Just now, about the newer products in Fuzhou, it is not a residential land. It is commercial cum residential, so land price is lower, but we are able to sell at CNY 40,000 because there is a lease for 40 years. In terms of products, we did a lot. We hope that investors can have time to take a look at our new projects in different places in China.
I am from Morgan Stanley. There are three questions. Last year, at the end of last year, there is CNY 4.1 billion of perpetual bond. What is the cost? Second question, this time you spent a lot of time to go through your strategy for hotels, and last year, you have recruited Mr. Wu from China Resources. Concerning your commercial and hotel operations, what are your thoughts? My third question is about dividend policy. Dividend payouts increased to 36%.
In the future, how much will be payout ratio?
First question, about the perpetual bond. We have CNY 4 billion-odd perpetual bonds. You can take a look at our gearing ratio, 53 point something percent. Even including the perpetual, 58% is still very healthy. The perpetual is not to increase or change the gearing ratio. For some companies, they have big amounts of perpetual, their gearing ratio can be small. That's not what we mean. For perpetuals, the interest rate is 6% or below. It is mainly to reduce our interest expense. Below 6% interest rate, we can repay any time. We will not exceed this level. The scale will be CNY 3 billion-CNY 4 billion for perpetuals. This year, it will be on the same level. It is not a big issue. For commercial and hotel operations, yes, we have big plan.
We have been investing in commercial and hotels for a long time, but so far we have not presented any outstanding things. The hotels in Shanghai are doing well. I think, if you go to Xiamen, you can stay in Conrad Xiamen, which is a landmark opposite to Gulangyu and the [Shimao Quarry] Hotel, everybody looks forward to it. In 2019, there will be the biggest hotel in Hong Kong. With Starwood Capital, we will open 100 light asset hotels. The scale of our hotels is not small, CNY 1 billion-odd. In the coming five years, we hope that there will be 180% increase reaching CNY 4 billion. This is a big growth. For commercial, we are optimistic, but we have to be rather unique. On Nanjing Road, last year, rental came down because we sold, as a result, pressure was bigger.
For our Shimao International Plaza, we are actually demolishing it. There will be a big renovation and big overhaul. In October 2018, it will reopen. There will be a brand new commercial experience. There will be a Hello Kitty store and the biggest Nike flagship store with an investment of $300 million. There will be a lot of new things. World's biggest M&M's flagship store and so on. The revenue will be CNY 300 million-odd , more than double. We have operations in Tianhe and Shanghai, office projects and so on. GP margin should reach over 60% from less than 50%. We have big plans in hotel and commercial operations, and there are land available. I think there is value that is not discovered yet. I hope investors will discover this value, and this will not affect our growth.
As our Chairman said, this year, we should have quality growth. It is not a blind expansion. We will grow, but our profit price will go up, inventory will come down, selling price will be higher than the others. This is quality growth. Finally, dividend payments. We will adhere to our usual practice. We have been listed for 10 years, so it will be 30%-40% payout. This year, quite high, 36 point something percent, because there is a special sale of asset in Beijing. In the future, it will be between 30%-40%, depending on the actual results.
Thank you. I'm Eric. I have two questions. The first question is related to gearing ratio. In the past few years, there won't be more than 60% net gearing ratio, according to your communication. For 60%, will the perpetual bond be excluded?
If it is excluded, then now, basically you are close to this limit. Given these circumstances, last year, you started to do more in land acquisition than you will continue this year. Last year, there is a positive net cash outflow. This year, based on your cash flow forecast, there will be net outflow this year again. If there won't be a big exceedance of sales target this year, then what will happen in terms of cash flow, given that you will do more in land acquisition and its relationship with net gearing ratio? Second question. Now, sold but not realized supply, how much is it, and how much will be realized in 2017?
For your first question, gearing. We hope to be within 60%. We have considered the perpetual.
58%- 60%, the growth is not big, but it's not the case because number one, our equity will increase, our profit will be higher. Secondly, there are a lot of commercial projects and those that are being constructed. The valuation in 2016 is smaller, but in the future, the valuation will also go up with more commercial properties. So the equity will even be bigger. Gearing ratio will come down. Our cash collection, we hope it will increase further. Now we are seeing 88%, we hope it will be higher. For sales, we set CNY 80 billion. In the first half, if we can exceed 50%, then I hope we can be at greater than CNY 80 billion. So with all these factors, even though this year land expenses will be higher, it will be within 60%. How much will be booked?
After the meeting, I will give you more details.
I'm from Macquarie. I have a few questions. First question. Now, in the periphery of large cities, for example, Jinjiang, there are some projects, and there are some less good second-Tier cities like Dalian. In these cities, how well is the market recovering? Second question, about land acquisition. Just now, you said that your plan will be that you are going back to Tier 1 and strong Tier 2 cities. Last year, a lot of sites acquired were in Yinchuan. So, what is your plan? The number is quite big. Is it true that you have signed some agreements with the government? How much more will you acquire? Third question. Last year, there's CNY 10 billion inventory, which was moved to this year for sale, and price will increase a lot for the CNY 10 billion-odd inventory.
Based on today's price, how much is the total value? Final question, about SG&A. In the statement, there is a decrease. What is the reason?
Okay, you asked many questions. First, about cities. I said that we are more positive about Tier 3, 4 cities near big cities. They recover faster. For example, Shishi, Jinjiang, Fuzhou, Pingtan. So basically, we have already sold through. There is no more inventory for sale. We have to increase supply. Price will increase a lot. In the past, Tier 3, 4 cities, price could not go up. Now, there will be 10%-15% price increase. So this is because of the squeezing out. In the past, in Xiamen, in the suburbs, CNY 10,000- odd was the selling price. In city center, CNY 20,000-odd . You only need to travel for one hour.
We are talking about a big difference within just one hour of traveling distance. All these are results of speculation. The good point is that there is no purchase restriction, no lending restriction and so on to encourage de-stocking. There are still some industry activities there. For example, the selling of shoes and also Meitu was doing very well. There are some industries there, and there is outflow of population from Dalian that is bad. Shenyang, in Shenyang, there is still a slight increase. Other cities may have gone up by like 30%-40%, but in Dalian, there is still increase of 3%. There is big variance among different cities. This year in Tier 1, 2 cities, selling price will not rise a lot, but it will not come down. It cannot go up because the government will not allow that.
You can only do more with home decoration. There was a project which sold at CNY 5,800. Now we can sell at more than CNY 10,000 by more home decoration. It is not possible to sell a car park space at CNY 1 million now. For land acquisition, most will be in Tier 1, 2 cities. There will be less in Tier 3, 4 cities, not much in Yinchuan, because the average price is quite low. We have done one-off consolidation, so there is a few hundred million profit. There are eight to nine places which will be good. Overall speaking, that is not our strategy. Our strategy is the 15 cities, plus the small cities in the periphery of those 15 cities. For example, the Pan- Beijing area, Shenzhen, Shanghai, Guangzhou, Nanjing, Fuzhou, Xiamen. In the periphery of these cities, there is already big increase in price.
There is not much land available in Tier 1, 2 cities. For the CNY 10 billion, how much is it now? It is difficult to answer you because I do not know how much will be approved. In Shanghai, 2 odd billion inventory at first, it would be at CNY 1.4 billion. There will be a difference. In Xiamen, in the past, CNY 20,000 was approved. We hope to get CNY 40,000. We hope to get more approval.
Can we get so much approved? We do not know. But some may only as completed. The higher the better, of course. But it has gone up a lot. Some had already been sold. We hope to be able to sell more. SG&A, it has come down. On the statement, you may not feel that it has declined a lot because the commercial portion is big. Hotel, CNY 700 million- CNY 800 million.
After 10 years of depreciation for hotel will be zero. EBITDA will be very high and that is not reasonable. For commercial operations, there can be reevaluation. Car parks will lower sales. This year, if there is much sales growth, it cannot be booked immediately. It will be booked next year. If the increase in core profits next year, it is worth looking forward to because total gross profit for next year will increase. A lot of sales of this year will be booked next year. It is a.