Investors, ladies and gentlemen, good afternoon. Welcome to the 2013 interim results presentation of Shimao Group. Before I begin, I would like to introduce to you members of the management in attendance today. We have Chairman and Executive Director, Mr. Hui Wing Mau, Vice Chairman and Executive Director, Mr. Jason Hui, Executive Director, Ms. Tang Fei, Executive Director, Mr. Jack Liao, Vice President, Ms. Tai Sheung Mei, and Financial Controller, Mr. Ringo Yao. This meeting is divided into a few parts. First, we will walk you through our result highlights, and then financial highlights, followed by a business review, and then future outlook and conclusions. First, may I invite Ms. Tang to speak?
Thank you, investors, for attending the 2013 interim results presentation of Shimao Property. I would like to walk you through our results highlights, and then on important financial data, we will make an analysis. There are many figures.
I will try my best to go slower. Page four. In 2013, in the first half, our turnover was CNY 16.7 billion , up by 22% year-on-year. As of 15th of August, 2013, the accumulated unrecognized contracted sales exceeds CNY 50 billion . We have laid a strong foundation to reach the yearly targets. Gross profit was CNY 5.9 billion . Gross margin was 33.5%, up by 26% year-on-year. At the end of last year, it was 33.5%, and first half this year it was 35.5%. Profit attributable to shareholders was CNY 3.5 billion . Stripping out the major non-cash items and non-controlling interest, core profit attributable to shareholders was about CNY 3 billion , up by 60.7% year-on-year. In the first half, profit margin of core business increased from 16.4% of last year- end to 19.6% in first half of this year.
For Shanghai Shimao, turnover was CNY 4.2 billion , profit attributable to shareholders, CNY 704 million , up by 17% and 18% year-on-year. The group basic earnings per share was CNY 100.14 , representing a year-on-year growth of 11.5%. In the first half of this year, contracted sales was CNY 32.5 billion , representing a significant year-on-year growth of 45%. Contracted sales GFA amounted to 2.4958 million square meters. Average selling price increased from CNY 11,545 per square meter in first half 2012 to CNY 13,033 per square meter. As of 30th of June, 2013, the group's attributable land bank reserve was about 37.18 million square meter. In the first half 2013, with a reliable operation, stable operation, and financial performance, several international rating agencies raised our credit rating. Page six. In the first half of 2013, our financial performance was quite good.
As of 30th June, 2013, our total disposable capital amounted to CNY 38.9 billion , including cash in hand, CNY 18.9 billion with unutilized banking facility of about CNY 20 billion . As of 30th June, 2013, net gearing ratio was 60.8%. At the end of last year, it was 55.9%, up by 4.9%. In the first half of 2013, we made more arrangements of land acquisition. Our net gearing ratio target will be maintained below 60% for the whole year. As of 30th of June , the total balance of bank loans and other borrowings increased from CNY 41 billion at the end of 2012 to CNY 45.6 billion , representing an increase of 11%. Long-term and short-term borrowings represented 76% and 24% of total borrowings, respectively. Last year, this ratio was 30%, and last year, long-term borrowings represented 70% as of the end of last year.
Cash ratio increased from 146% at the end of 2012 to 175% as of 30th of June . Cash balance increased from CNY 18.1 billion at the end of 2012 to CNY 18.9 billion. We completed the issuance of $800 million senior notes maturing in 2020 on 14th January, 2013. We secured a four-year syndicated loan of $570 million in July 2013 and early redeemed $350 million bonds due in 2016. Newly acquired loans and bonds were used to repay parts of the high interest bearing short-term loans and bonds to lower the interest cost. We maintained good relationships with more than 20 domestic banks and over 10 offshore financial institutions, which provided long-term financings at lower costs. From the financial data, you can analyze that most of our financial indicators comparing with last year have improved to different degrees. Page 10. Our cash and our borrowings.
Cash on hand increased year after year, 2011, CNY 14 billion. 2012, CNY 18.1 billion. First half of 2013, CNY 18.9 billion. Net gearing ratio improved a lot. 2011, 81.7%. 2012, 55.9%. First half of 2013, 60.8%. Our debt structure is more reasonable. We have lowered mid- to long-term loans and reduced our pressure of short-term borrowing. Cash ratio increased to 175% in the first half of this year. At the end of last year, it was 146%. With more cash balance and better debt structure, we have now better liquidity. Net gearing ratio is 60.8% as of June 2013. Annual net gearing ratio will be within 60%. In face of the macro control measures and also at the end of June, there are some changes in the market. We have made use of some management measures to be able to better react to the market. We improved debt structure.
As of the end of June this year, long-term borrowings accounted for 76% of total borrowings. Cash ratio reached 175%. We will keep improving the debt structure to alleviate short-term repayment pressure. With bigger sales, we have also enhanced our cash collection efforts. So we have made more arrangement to collect cash in a quicker manner. We want to achieve cash collection rate target of 85%. At the same time, we also have put in place some targets on sell-through rates. Overall sell-through rates reached 54% in first half. In the second half, we will continue to make new sales and sell existing inventory. For newly developed sites, we want to maintain quality and volume, and we want to shorten pre-sale time after land acquisition from nine months to six months, so that we are able to accelerate turnover and we are able to better react to the market.
In order to increase safety and liquidity of our capital, we maintain good working relationship with various financial organizations. We continue to open up overseas financing channels. We issued $800 million of bonds offshore at a yield of 6.625%. We also redeemed $350 million of bonds at a rate of 8%. We were able to lower financing cost. For our cost of borrowing, it is below PBOC plus 10%, which is lower than other competitors. Our credit rating upgrades by international rating agencies like Standard & Poor's and Fitch in first half will facilitate us to secure overseas financing and withstand short-term adverse impact in the domestic market. All the above can lead to better confidence in our enterprise, and we are able to lay a very strong foundation for our future development. I will not repeat the data for Shanghai Shimao.
So that is all in my presentation about financial performance and our result highlights. Now, I will defer to my colleague to continue our presentation.
Thank you, Ms. Tang. Now, let us do an overview of our business in the first half of the year. Page 14, please. As said just now, in the first half, our revenue was CNY 16.7 billion. Our gross margin improved quite significantly. Here on this chart, you can see a revenue breakdown. If you look at sources of revenue, our property sales increased from CNY 12.6 billion to CNY 5.6 billion, reaching 94.1% in the first half of this year. Recognized sales by city is in 27 cities. There are a few important cities in Fujian, Xinjiang and Fuzhou. These are two important cities, and there are also Shanghai and Qingdao, adding together 49%, about half of our revenue. Their revenue composition is very reasonable.
They are making reasonable contribution to us. For completed GFA, it is. In the second half, when we are able to increase our completed GFA, our revenue is going to see significant increase. This is about our revenue breakdown or turnover breakdown. Page 15, investment properties and hotel operation. Hotels, CNY 460 million. Rental income, CNY 236 million. Others, CNY 291 million, down from last year by around 4.6%. Hotel income, the composition does not change. Rental income has changed to a certain extent. Here you can see our details about hotel operations. We have six hotels in operation. Three are in Shanghai, three in Nanjing, Mudanjiang, and Shaoxing. For these six hotels in 2013, the first half, total revenue was CNY 460 million.
Because of the three public expenditures limitation and also avian flu impact on tourism in Shanghai, comparing with the same period of last year, there is slight decline.
Because of that, in the second half, we are going to adopt various measures to ensure that we are able to achieve our yearly target. Now, even though our revenue came down a bit, our EBITDA increased to CNY 149 million, up by 3.5%. This is because our hotel in Nanjing has improved in profitability. For Wuhu, the DoubleTree by Hilton Wuhu is going to open in the second half of this year. Page 17, commercial and office premises. Our rental income was CNY 235 million, up by 4.4% year-on-year. This is mainly because of continuous growth of rental income from existing shopping malls. In Shanghai, Kunshan, Suzhou, there is slight decline, but in other places, there is improvements. These are about commercial and office premises. Page 18, land reserve. I think this is something investors are interested in.
For our land reserve, we have 37.18 million square meters. This is equity attributable figure. Here you can see our regional breakdown in 36 cities. Our focus is in Yangtze River Delta, including Shanghai, Zhejiang, Jiangsu. On the right, you can see a list with 47 projects. These projects are quite concentrated in Fujian. In Fujian, we have nine projects. That is our focus. There are altogether 91 projects in 36 cities. In the future, this is going to be our strong foundation for development. Page 19. In the first half of this year, as of June 30, 2013, these are sites that we have newly acquired. Altogether, 14 sites. For Shimao Property, 12 pieces. They are mainly in T1, T2 cities, Beijing and part of Zhejiang. T1, T2 cities are our major focal areas. Our land cost is CNY 14.3 billion. Average cost, CNY 3,961.
Quick turnover is our significant strategy, and we are able to launch in the same year of land acquisition. For many projects, we are able to achieve launch within six months after acquisition. For some other projects, cash flow can become positive within the same year to offset our land cost payments. This is one very important requirement. Before we acquire a site, our project team or regional team must be able to live up to their promises. This is important. With a series of measures, we are able to make sure that sites acquired can achieve sales and also make contribution in the same year. For these newly added sites, they can support our results in the second half of this year and first half of next year. Page 20. An analysis of our land reserve.
If you look at the regional breakdown, in each district, we have good land reserve. Most of our land reserve, Shanghai Shimao accounts for quite a lot, and then we have some major point, tourism property, 17%; Shanghai and Jiangsu, 18%; Hangzhou, Ningbo belong to Zhejiang. These two districts are in Zhejiang. They account for 10%. Shanghai Shimao, 19%. These together account for 45%. If you look at the pace of development, 2 million of our land reserve is existing properties and investment properties. 14.4 million is under construction. For second half of this year and next year, this will provide us with support of supply. All together, 37.18 million square meters of GFA, average land cost CNY 2,160 per square meter. This accounts for a lower percentage of our ASP. Last year it was 18%, this year 17%.
This is because our ASP increased, and many of our land sites are in T1, T2 cities, but their share came down. This is an overview of last year's results. I have also made some points about future outlook. Let us take a closer look at our operations in the second half of this year and next year. Page 22, salable resources in second half of this year. If you look at salable area and the distribution in eight major districts, we have Shanghai Shimao's projects as well, projects over CNY 1 billion. All together, 2.47 million square meters and completed inventory 800,000 square meters. Projects below CNY 1 billion available for sale in second half, 1.3 million square meters. Projects available for sale as of June 2013, 1.2 million square meters. Total, 5.8 million square meters.
This can give us a very strong foundation for second half of the year. We have analyzed our type of salable resources. For example, small units under 90 sq m and upgraded units are 90 sq m to 140 sq m. They together accounted for 75% of total resources in mainland China. For basic small units and upgraded units, demand is very good. To adapt to market changes, 75% of our products are small units. We are able to increase our sell-through rate. In the first half of 2013, actual sell-through rate was 54%, higher than the planned target of 42%. In terms of our supply rhythm in the second half, we will concentrate on September, October, November. In these months, we will see the peak of our supply in these three months. We hope that we are able to achieve our yearly target earlier.
September, October, and November are time points that we look forward to. We do have a lot of expectations on our salable resources. Next page, SAP informationalized management. We would like to achieve sustainable growth. For our internal management, we have put in place some strategies. The most important point is about our IT system. We are the first to make use of SAP in our industry, and we hope that all the systems in different districts can be integrated from project commencement, quality control, sales, financial management. Everything will be integrated in the same system so that there will be dynamic tracking. In August 2012, we started, and now there are 10 modules that are already online. Our headquarters, procurement, sales, and five other districts are already online, and three other districts will be online in October and January next year, including our Hong Kong headquarters.
In January 2014, basically, the system can cover all residential and hotel business segments. For our overall operation, dynamic tracking and cost control, expenses control, we will put in some alert points. For example, there will be alert for us at 60%, another alert at 80%. Let's say if your budget is being reached at 100%, you won't be able to use it any longer. We make use of the system to control. Our cost and sale and cash collection, ASP are all in the system. They can be calculated automatically. Then we can look at impacts of changes in cost and selling price. In January 2014, our management can make use of mobile devices to follow up and track our operations anytime. On front-end business, there will be some certification of management.
For this development, we started in August 2012, and it took about 16 months to be able to achieve full online in 2014. We have got over 2.7 million project data records and over 2.66 million records regarding the headquarters, procurement companies, sales, marketing companies, and so on. There is a total of 1,831 online users. We think that this is going to be a very good support in terms of system. Page 24. Some other internal management initiatives. This is about our talents development and our management structure. The executive committee has quarterly management meeting, and we have laid down very clear strategic direction and strategies. On this platform, we discussed our management and enhanced management quality. Mid-level management, basic management, frontline employees. We try to nurture our talents on all these levels.
For frontline employees, every year, we recruit many fresh graduates, and they are known as new generation in design, engineering, cost, and so on. This year, there will be an additional 100. Altogether, 188 new intelligence or sales representatives. At the end of this year, there will be a total of 285. They are our core members of our sales team. Through internal and external training, and with systematic training, we hope that some outstanding employees can become project heads and persons in charge of different functions. There will be good talent support. Then we have leadership training camp. The first phase has been completed. Second phase will take place soon. We want to make sure that there will be enough talents to head different projects and functions.
So in the second half, in next year, and the year after next year, this is going to be a continuous process to upgrade our talent quality, and this is our important strategy. All these are about our business and operations. Next, Ms. Tai is going to brief you on future outlook sales.
Good afternoon, ladies and gentlemen. Now, I am going to present to you our sales. First of all, growth of Shimao, and secondly, in the first half of the year, there are planned and realized indicators. I will give you my analysis. Then in the third part, in the second half of the year, we have some core sales plans, targets, and actions. Now please turn to page 26 first. in 2010, we started to enter a stable growth stage. At that time, we were number 13, and in 2012, number 10.
In the first half of this year, we are number nine. So we are growing very steadily. Here you can see the supply and sales ratio. We felt more pressure in the first half of 2013 because at the end of last year, we sold CNY 20 -odd billion of our inventory. This year, new supply happened at the end of last year and Q1 of this year. As Mr. Liao said, we achieved such increase mainly in September and October. We faced the biggest pressure in the first half of this year. Talking about CNY 22 billion saleable resources, every month, we achieved on average CNY 4 billion sell-through. If you still remember, at the end of 2012, together with Greenland and so on, we still had a gap of around CNY 5 billion-CNY 6 billion.
But in the first half of the year, with effective supply and strong sales, we achieved business growth. At the same time, we shortened the gap with competitors. Every developer has his strengths, and our sales is one of our strengths for sure. Page 27. In 2013, in the first half, what are our planned and realized indicators? We hope that you can see that we are able to live up to our promise. In the first half, we achieved 59% of our yearly plan target. Here you can see from January to June. We achieved quite a lot of sales in July and August. We entered a correction stage in supply. New supply was limited. So in July and August, monthly sales comparing with June declined. The major reason is that there is no saleable resources.
After September, all major new supply would happen in September, October, and November. So we will see the increase in sales results. At the same time, at the beginning of the year, we said that in the end of October, we will complete the sales target of CNY 55 billion. This plan won't be changed. Besides, we will make use of Q3 to continue to complete sales target of CNY 16 billion for Q3. At the same time, we will enhance cash collection to make sure that at the end of the year, we are able to alleviate pressure about cash collection. Page 28, ASP, planned and actual ASP. At the beginning of the year or in March this year, we told investors that our ASP was CNY 12,300. In the first half of this year, we reached CNY 13,000 in ASP.
On a year-on-year comparison, you can see a clear increase in ASP.
Our profit margin improved. That is the main reason. In the second half, concerning ASP, first of all, the government's price restriction. In August, in mainland markets, ASP still rose. We believe that in the second half, the government will not relax price restriction. Secondly, in Q3, we still hope that when there is not enough supply or a new supply, we will enhance our efforts to sell through inventory over one year. In September to December for new projects, they are in core areas or good locations, so ASP will see stable growth. After considering all these factors, we believe that in the second half of the year, the ASP will be more or less the same as in the first half. Page 29, sell-through. In the first half, our planned supply is CNY 49 billion, but the actual was CNY 20- odd billion.
New supply was actually CNY 44 billion. When supply came down by CNY 500 million, sales increased by CNY 400- odd million. This does not include A23. Just now, Mr. Liao said 54%. This is about the whole group. For A23, I am talking about sell-through of A23. For new inventory, sell-through 56%. In old inventory, existing inventory 55%. You may ask why the sell-through rates are so close. In first half of 2013, new supply happened mainly at the end of June. So there is only a very short time window. We cannot really achieve a very quick sell-through. If we look at the end of July, sell-through rate of new inventory was 60%. For the whole year, we hope to maintain sell-through rate at 70%. This is our established target. You may be concerned about development in the coming four months.
In Q3, according to the original plan of CNY 16.5 billion, we will try to complete the target. This is quite secure because we do not have too much effective new supply in Q4. We only put down CNY 6 billion, adding up CNY 16.5 billion. We are not saying that we only sell CNY 6 billion. It is just that we only need to sell CNY 6 billion to achieve the target. How much more can we sell in Q4? I have already listed out the major items of sales to achieve the target. This does not include other products. Then we are able to achieve the target of CNY 16.5 billion. This is our sales plan for the remaining four months of this year. Page 31. In the remaining four months, what kind of risks and pressure will we face and what will be our solutions?
The first biggest risk is supply momentum.
Our major supply will happen in September to December. The sell-through cycle or the sales cycle will be rather tight and Risk 2. Another point about Risk 1, some supply may be postponed to next year. Our solution is we will continue to maintain very strong sales or saleability. In the remaining four months, we will try our best to make sure that supply can be released at all important critical points. We want to lower our risk in this regard as much as we can. Starting from 2012, you have been following up our company, and I think you do have an understanding of our saleability. As long as there is good supply, we are confident that we are able to sell through. So the biggest pressure is to make sure that for the second half, there will be effective supply.
Because of a possible delay in supply, there is another pressure in cash collection. When new supply is postponed, bank lendings and cash collections will see pressure. We will make use of Q3. Because main supply will happen in Q4, we will try to achieve good sell-through in Q4. In Q3, we will already try to enhance cash collection so that we can recover our accounts receivables as much as we can to ensure a safe cash flow. In Q4, we can alleviate our burden so that we can concentrate on making sales. Of course, there will be uncertainties in the market. That's about Risk 3, and there will still be home purchase restriction and price restriction. Liquidity in the market may be tightened. The most important thing is that we have to change our sales rhythm.
For ordinary projects, it takes at least three to four months. This is already very fast. We hope that we are able to shorten our sales cycle and improve our rhythm. In the second half of the year, for projects that should be sold in Q4, they are listed out for your reference already. For launching of projects, at that point, we should be able to achieve our yearly sales target already. We have to be able to achieve 80% sell-through at the point of launch. With strong saleability, we hope to withstand any potential changes in the market. Page 32. At the beginning of this year, we presented these three major segments. Tourism property. Annual sales of four projects to reach CNY 7 billion, and the major supply will be in the second half in Xinzhou and Xintian.
For the project in Shanghai, within three months, we're able to achieve number one in sales of villas. We have achieved CNY 2.2 billion of sales and in Dalian Dragon Bay. Last year, for the whole year, it was CNY 1.5 billion in the first half with only one quarter sales cycle. Because we can only start to sell in April, and we achieved CNY 1 billion of sales. In the second half, we have to achieve another CNY 1 billion of sales. Hainan Wenchang, that's another project. We are working according to original schedule of tourism property. For Fujian, for the three projects in the first half, they have exceeded CNY 2 billion of sales. Zhengzhou, Fuzhou, Xiamen, we are top three. Number one, two, three respectively. In the second half, there are another 10 projects. We can achieve CNY 12 billion. We have leading position in Fujian.
In the coming months, we can maintain this leading position. A major source of pressure is that at the beginning of the year, we said that our supply mainly will happen in the second half of this year. Last year, in four best-selling regions, Suzhou, Zhongnan, Hangzhou, Ningbo, sell-through rate was very high, inventory was low, and new supply will only happen in September. They are annual projects. The land was acquired in Q1. They can only be launched in Q4. The first half, in all four major districts, we have achieved 37% of the yearly target. In the second half, in the remaining four months, Suzhou, Ninghang, we won't achieve less than CNY 10 billion of sell-through. For the other projects, CNY 2 billion-CNY 2.5 billion on average.
We will place all our efforts and resources in the major regions, the four key regions, to make sure that we can complete our targets. Jason will deliver our final conclusions.
Good afternoon, ladies and gentlemen, investors. Page 34. This is a brief summary. For sales, it rose by 45% to CNY 32.5 billion as of the end of July. We achieved CNY 36.5 billion, 67% of yearly target. in October, we are confident that we can meet our annual target. There are two months for us to exceed target. This is worth our anticipation. For cash collection, as we promised at the beginning of the year, it rose from 80% to 85%. Cash collection was CNY 28 billion, up by 55% year-on-year. Cash grew to CNY 18.9 billion. Short-term debt declined to CNY 10.8 billion. Cash ratio is at historical high at 175%.
When there was tightening in financial policy, how can we enhance our operational safety? I think through three things. One, to accelerate turnover rate. For many projects, we hope to launch within six months, and then we want to increase cash collection rate from 80% to 85%, and we want to adjust debt structure. 76% is long-term debt, and only CNY 10 billion is short-term debt. Sell-through rate. Our planned rate is 42%. In the first half of this year, we achieved 54%. For the whole year, we will be able to exceed 70%. Last year, we exceeded 70%. Point four, gross margin. For other property companies, their gross margin, as announced, came down. Our gross margin rose by 2%, comparing with the end of 2012. This growth in 2% is because of two reasons. First, our selling price increased, and our cost control was done well.
You may be concerned about the sustainability of these. If you look at the first half of this year, recognized amount was CNY 11,000. Last year, in the same period, CNY 10,200- odd. Last year, in July and August, the price was lowest at CNY 10,000. In September, it was CNY 11,000-CNY 12,000. This year, CNY 13,000. For CNY 12,000-CNY 13,000, when are they booked? Some will be booked in second half of this year, some next year. The recognized price is going to be even higher than now. Why is it that other developers are not showing this situation? Because last year, we were the earlier to adjust price. Starting from first quarter, in difficult projects, we started to reduce price earlier, and some were booked last year already. In the coming two years, we have projects with higher ASP.
That is why our gross margin can be kept at a higher level. For cost control, we have done a lot. We have optimized our products. For example, steel bars and cement, we have optimized our products. For procurement, we have put in place certain procurement measures. In our appendix, there is also our SAP system, which helped us effectively control costs. We are very confident that our gross margin can be maintained at 35%-36%. You may be asking the gross margin of the existing selling projects even higher, perhaps. As Ms. Tai said, in Q3, we will have to clear some inventory. We have 800,000 sq m of inventory, and more or less the same as previous years. Some inventory has been outstanding for quite some time.
For inventory over one year, we hope that in Q3, Q4 this year, we can clear CNY 2 billion to CNY 3 billion . The inventory has lower gross margin. Gross margin may be pulled down, but on average, it should be 35% to 36%. Next, core net profit margin increased from 16.4% to 19.6%. Comparing with the same period of last year, it was 12%, 13%. Core profit margin also increased by 60.7%, from CNY 1.9 billion to CNY 3 billion. You may say that the increase should be 20% to 40%, so our 60% result exceeded expectation a lot. Our gross profit only increased by 10- odd percent, but here, core profit margin improved by 60%. Last year, our estimate was CNY 1- odd billion. If this year it is the same assessment, then our profit also will grow by over 50%.
For investment properties, it is lower because last year we reduced investment in investment properties, including hotel and commercial properties. In the past, for investment properties, we allocated a bigger share, so that is why our gearing was higher. Now, residential properties achieved a faster growth. Last year we invested less in investment properties, so assessment was also reduced significantly. We have excluded impact of RMB appreciation. Core net profit margin was still about 17.9%. Our core net profit margin will still be over 50%. This year, not only sales, but for completion and commencement, we will still exceed 50%. It will be strange to see if our profit margin does not grow over 50%. For core profit margin, if growth margin is 35%, 36%, then growth profit margin should be at 17% to 18%. Number six, net gearing ratio.
It rose to 60.8%, but this is a relatively low level. Why increase so much? In the first half, we acquired land of CNY 14 billion, even bigger than the whole of last year. Last year, we only bought CNY 5 billion to CNY 6 billion. This year, we acquired so much land, so GFA commencement will also increase, and saleable resources for this year will also increase. As Mr. Liao said, from commencement to sale, this can be shortened to six months. At the end of the year, gearing ratio should be within 60%. For land acquisition in the first half, our saleable resources can reach CNY 100 billion. For our sell-through rate, it is 17%. That is the target. For the second half, for saleable resources, it is 5.8 million square meters. The total available resources will exceed CNY 65 billion in the first half.
In the second half, for the total it will be CNY 100 billion. As Ms. Tai said, in 2013, in Q4, major projects will reach CNY 16.5 billion. In Q4, we may be selling CNY 6 billion. Sales in Q4 should be highest among all four quarters. Land acquisition strategy in the future, we will concentrate in Yangtze River Delta and Fujian because we enjoy good brand advantage. Many customers of us are in Yangtze River Delta and Fujian. This year, if you talk about Yangtze River Delta and Fujian, our sales, especially in Fujian, may reach CNY 17 billion to CNY 18 billion. We are number one. For number two, they may not be able to reach even CNY 10 billion next year. I can tell you how much they have achieved. We surpass them a lot.
Our team is very strong, not only in Fujian, but also in Yangtze River Delta, also in Zhengzhou, Ninghang. As Ms. Tai said, for these districts, saleable resources are in Q4. The strongest districts will get the most bullets in Q4, so we will be able to fight a nice battle. For the whole year, land acquisition will exceed CNY 30 billion. We are not spending this amount of money, that is resources for land acquisition, because a payment can be made in phases, so we will not be spending or paying out actually CNY 30 billion. Point number nine, sales, constructed areas and completed areas will increase by over 50%. For this year, our sales and revenue recognition and profit will exceed this growth rate year-on-year. Among other mainland property companies, we should be fastest in our growth. Our valuation is still very low.
Some investors said that our stock price has risen a lot. Are we going to do rights issue? No, we will not do that. Our chairman has recently bought many shares. He took advantage of market correction, and there is already strong guarantee for our results in 2014. You may ask why our results are so good this year. Because last year, our sales growth was over 50%. I think mainland property companies are transparent. Every month, we tell you how much sales we did. On the fifth of a month, an investor asked me, How much can you sell this month? I said, You are too anxious. I think we have many data about land acquisition, monthly sale, and registration. This year, most of the sales will be reflected in next year's results. Last year's sales are reflected in this year's results.
Contracted sales, constructed areas, and completed areas will increase by over 50%. I am sure our profitability will be growing by over 50%. As regards next year, it depends on Q4. We will see whether we have to reduce price to sell or whether we can sell a lot. If we sell a lot at CNY 10,000, then it is not good. Very soon, we will know what we will be doing in Q4 or how we are doing in Q4. At the end of this year, especially in November and December, you are most welcome to take a look at our projects in Q4. Many of them are Q3 residential units in Q4 or generation four display zones or third generation residential projects. We continue to upgrade our design, and we have effectively controlled costs and upgraded product quality. Our product quality surpassed our competitors in many areas.
Our saleability is also leading in the industry. This year and next year, we are confident in our results. Thank you very much.
Thank you, management. Now it is time for our Q&A. If you have any questions, please feel free to raise your hands.
Thank you. Your results are excellent. I want to ask, do we have some very unique information? You said you are of the view that stock valuation has been undervalued, and you are confident in this year and next year. Can you give us some more information about two-year, three-year plan in terms of sales or costs or expenses? That is the most important. Another question, cash collection rates, 85%. On page 27, there is comparison between cash collection and contracted sales. Now, it seems that the ratio in some months is less than 70%.
I want to know whether this is because of a difference in method of calculation. Number three, just now Jason said that you want to focus in Fujian and Yangtze River Delta, and this is related to my first question. If you continue to focus on these two districts, then in the long run, will there be bottleneck in your growth?
Okay, let me take your questions. We have five-year plan already, but this is quite long, I'm not going to give all the details. If I talk about too long a term, then it's difficult to forecast. But if you look at these two years, you can already see the trend. This year, our yearly result. Last year our sale exceeded 50%. Contract completion commencement exceeded 50%. Next year, basically, a lot has been recognized.
Of course, we have to look at whether we can achieve our result in Q4. Saleable resources, CNY 100 billion. Based on CNY 100 billion, you know how much we need to do. The pressure is quite big for Q4. I think we will exceed market expectation. Sales should exceed market expectation, and profit growth will exceed market expectation. Our profitability, gross profit, net profit exceeds market expectation, and these are sustainable. Last year and first half of this year, ASP is bigger than the recognized amount, so there won't be problem. But of course, we need to clear inventory. We have to reduce price. The second question, just now we talked about some expenses in the first half of last year, where there's a lot of information in our slide for the whole year.
There are a lot of expense analysis details and some more financial data analysis, cash flow analysis. At that time, you will have a clearer view. It's difficult to calculate on a half-yearly basis. For cash collection, we collected some payments for last year, and this includes A23 as well. Just now, Ms. Tai said that it only included A23, but not other companies. For the whole group, there will be more details towards the end of the year. Please look forward to our PowerPoint presentation at the end of the year. There'll be much more information for you. Your last question is about Yangtze River Delta and Fujian. In these regions, I think our growth won't be limited because Yangtze River Delta and Fujian are regions with good potential. In Yangtze River Delta, we are in many cities, but we are not concentrated enough.
In the past, in Hangzhou, we have only one project and now there are four projects. In Hangzhou, we can actually do seven or eight projects, so there is still a long way to go. In Suzhou and Nanjing, in the past, we only had one project, selling CNY 1- odd billion. Now we are selling CNY 3 billion to CNY 4 billion, and there is the potential to reach CNY 7 billion to CNY 8 billion. There is still a long way in Yangtze River Delta and Fujian. We concentrated in Fuzhou, Xiamen, and Quanzhou, so we can explore more cities. Even in these three cities, we can go deeper. Besides, we will continue to develop in Bohai region, Central and Western China, and so on. It doesn't mean that we will only work in these two regions.
It's just that we will invest more resources there because our team is strongest.
Our branding is best there, and our reputation is also very good, so we will invest more in these two regions. Thank you.
If sales is CNY 100 billion, 70% saleable resources, CNY 70 billion, 65%-70% growth year- on- year, and this year you grew so rapidly. In 2014 to 2016, will there be a decline? Can you explain more? Your company does not have the plan to do placements. Jason, last time, you said that in 18 to 24 months, you did not have that plan. Now, is it true that share price was at almost CNY 20 billion a few days ago? What do you think about share placement? My last question is about land.
In the first half, you sold CNY 14 billion of land. For the whole year, CNY 30 billion. Does it include Qianhai? In Qianhai, I think you have made a bid, and is Qianhai in your plan? For the bidding in Qianhai, from a strategic point of view, what is your view? Thank you.
In the coming few years, if you consider our sales, it depends on our overall operation enhancements. Now, our operational efficiency has improved, and this year we have acquired more land. Next year, we will maintain land acquisition at a high level. If it is CNY 100 billion sellable resources and at 70%, we can do CNY 70 billion, and our initial plan is based on existing land. There should be CNY 120 billion to CNY 130 billion of sellable resources.
At the end of this year or first half next year, if we buy more land, then sellable resources may reach CNY 140 billion to CNY 150 billion. Then you can calculate to see what will happen. Internally, we have set our target for 2014, and the target contains a breakdown by region and by profit margin. Of course, I cannot give all these details. Please understand. About share placement, perhaps I will see whether I can supplement. From the management's point of view, we do not see the need to do that. Our gearing ratio is quite low, and at the end of this year, it will come down to below 60%. Quite a lot lower than 60%, so we do not have the need. Secondly, our liquidity is high. We only have debts of CNY 10 billion, but we have CNY 18 billion of cash. Number three, for our share price, it is still very low.
Our growth is high. About our land, this year, land acquisition will reach CNY 30 billion. If we include Qianhai, it will exceed CNY 30 billion because in Qianhai, there will be CNY 10 billion. We make an offer of CNY 9.1 billion. This is a reasonable price because in Qianhai, half of the land cannot be sold, and we have to build a five-star hotel with a lot of investment. Still, even if we can sell, the resources it cannot be done next year. In Shenzhen, there are a lot of challenges. We have to wait till 2015, and then let us say if we sell CNY 70,000 or CNY 80,000, then there are still a lot of investments yet to be made. So this project is a strategic investment. Shenzhen is going to be closely connected to Hong Kong, and Qianhai is the CBD with good potential.
But we won't acquire the so-called king of land, and we have been quite cautious in making offer. For the whole year, I think CNY 30 billion will be the land acquisition amount. We have approached CNY 20 billion already, and this is the land acquisition amount. For payment, it will be much lower. Usually, we first pay 50%, and then the remainder will be paid within the same year. So, there is CNY 5 billion-CNY 6 billion that will be paid this year. So for land acquisition cash flow, at the end of this year, it should be around CNY 20 billion. So we'll see whether there is any supplement from our chairman.
Ladies and gentlemen, good afternoon. Let me talk about Qianhai first. We have been paying quite a lot of attention to Qianhai. We have worked on a number of proposals. Why do we want Qianhai?
That's about the value of Qianhai. For that site, there are a lot of restrictions. 50% cannot be sold. Commercial properties cannot be sold. Now, we are not a state-owned enterprise, and we are positioned as a privately run company. We need cash flow. We need cash turnover. So after a lot of analysis, for example, construction costs and land costs, but if I have to spend a few billion, then, I really feel painful. If I spend a few billion on residential property, I think I can achieve a faster turnover. So, the bid that we offer is not conservative. Land premium is at around 35%, but some use 62%, and so we dare not compete. Some asked, if some other people said 109, are you willing to bid at CNY 10 billion? Different companies have different situation and risk appetite.
So I think we will be more prudent. Recently, when it comes to land acquisition, we have acquired quite a lot. This afternoon, I only returned at 3:30 P.M. Yesterday, I was in Qingdao. The day before yesterday, I was in Jinan. I looked at a lot of good sites in Yangtze River Delta and Fujian. These are our focal areas. In Bohai Rim, Central and Western China, there are also some good projects. This year, we tightened our strategies. For places with slower economic developments, we allocated less to these places. Those with quicker turnover, we allocate more and vice versa. So Fujian and Yangtze River Delta are our focus areas. In Fujian, recently, there are a few more sites in which deliberations may be completed soon. Last Friday, we acquired another site. We are working very hard. Our development will be fast.
But the money for development relies on money from sales to support our land acquisition. It won't be like in the past. In the past, we would take out bank loans to buy good sites, but now this is not our view. This year, we will look at how much target is there, and do we have the money to buy land? If we don't, then we will find a cooperation partner. If there isn't a good partner, then we won't buy the site. We will wait till the next good site to appear. So, we attach most importance to safety and security. This year, our gearing ratio increased by 4- odd percent. That is already thicker than our target, because in the first half we bought quite a lot of sites. So we hope that in the second half, the situation will change.
You may be concerned whether we are going to do share placement, but we don't have this plan yet. We haven't thought of that. We just want to focus more on selling our properties. We will upgrade our operational capability. We want to improve our brand so as to get your trust and support. Share placement and other short-term financing moves won't be considered for the time being. We'll give pressure to Ms. Tai to sell the property as soon as possible and to recover cash. Thank you.
I'm Carol of BBS. I have a few questions. First, just now, Mr. Liao talked about Fujian and Bohai Rim and Central Western region, and you said that you're focused on Fujian and Yangtze River Delta in land acquisition. Are these two different concepts? Secondly, if you look at land price of Shimao and ASP, every year they increased slowly.
In the first half of this year, it's 17%. In the future, will it be kept at more or less this level, or is it possible to see an increase in 2010? In your portfolio, average land cost is CNY 1,500. Now it's CNY 2,160. In the future, what will be the trend? My third question is, in the past two years in residential, your sales development was very fast, and in commercial properties, your development slowed down. If you look at sales scale, with now an established scale, will you make some effort in commercial properties? I have a question for Ms. Tai. Now, supply will mainly happen in Q4 or second half. Next year, will it be more balanced?
Mr. Liao just talked about Yangtze River Delta and Fujian. They are our focus areas. He also talked about Central Western China and Bohai Rim.
We will also increase investment there, but most resources will be allocated to Yangtze River Delta and Fujian. These are our principal areas, Fujian and Yangtze River Delta, but we have other resources this year. We bought a site in Beijing. Its value increased a lot. In recent auction, it's CNY 30- odd thousand, the price. We are only at CNY 6,000-CNY 7,000 in Fujian. Last Friday, we acquired a site, a strategic site, and in Yangtze River Delta in Shanghai and Hangzhou, Ningbo, we bought quite a lot of land. In Suzhou, Nanjing, these are places with good development. In Central Western China and Bohai Rim, there will be some more opportunities, but they won't be our heavy investment areas. Land cost and ASP rose year after year in the past 2012, 2013, 2014, now 2017, 2018.
I think in the future, now the land that we are buying are in Tier 1, Tier 2 cities. Price is higher, but we won't buy king of land. I think it won't be excessively expensive. We will only buy those potential sites. Commercial properties and hotels have slowed down in development. The major reason is last year, we tried to reduce debt from 80- odds percent to 50- odds percent, and this year we want to keep it at within the 60%, then we can invest more in commercial and hotel. Next year, there will be four to five hotels to start operation. There will be commercial properties. We hope that 80% of our investment will be in residential with quick turnover, and 20% will be invested in commercial. Now, with bigger and bigger sales, 20% will mean much bigger. In the past CNY 30 odd billion, 20% will mean small.
Now, if it is CNY 70 billion, then 20% will be much bigger. We will increase our investment in hotels and commercial properties. That's why we want to acquire land in Qianhai. Ms. Tai will tell you how we can guarantee sales in Q4.
Just now, concerning commercial properties, I want to add a point. For commercial property sale, in the future, in the coming few years, there will be major changes. There are a lot of new selling channels, for example, e-commerce. There will be a lot of changes cost. Are we going to concentrate on large shopping mall? Will the original model help us achieve good growth? There will be a lot of uncertainties, but for Shimao, concerning future commercial sale and operations, we have our own views. Our business model and our selling model in the future will be differentiated. We will take another channel.
On this point, we will focus our efforts on residential, and we will consider the future development and product positioning of commercial, sales positioning, and so on. In the future, for commercial, the business model will see a lot of changes. Larger shopping malls will see a lot of changes or risks in operation and sales. Before we have got a firm judgment, we won't get into large-scale development and sale of commercial properties. We will be very cautious in product design and planning for commercial properties. This is a point that I would like to add. I would like to thank your question about sales in Q4. You understand that we have a lot of pressure in sales for Q4 because that's the last quarter already. But as I said just now, Shimao has to undergo such a painful process.
In 2012, when we presented our interim results, many people realized that our gross margin came down. At that time, we know that that was something we have to do at that time. Otherwise, we won't show today's results. We won't be able to show today's results. Last year, we very quickly completed our sales and changes. First, our products have to change. We have to clear our inventory, and for our new operation rhythm, it also needs to change. Okay, you give me the supply, I can sell them, but there is an objective cycle in building or in construction. Tier 2 cities account for quite a lot of percentage in our planning, and for commencement or presale conditions, the government attaches a lot of stringent conditions, especially in Yangtze River Delta.
At a certain stage, for example, in July and August, we experienced a lot of difficulty and pain. In the past two months, there are a lot of opportunities, so we had to run forward. But the supply rhythm will experience objective order or discipline. We must go through a short period of pain. But from September onwards, according to our plan, in the next quarter all the way to 2014, we will make sure that we will optimize our sale and supply time points. Sometimes our supply rhythm cannot catch up with our sale rhythm, and sometimes there is a period where there is no supply, and we then experience a lot of pressure. We will experience a short period of pain, and in 2014, I believe that there will be a virtuous sale and supply rhythm stage.
Last year, we adopted some measures about clearance in July and August. You may be asking why our sales were so poor. Of course, if we are given supply, we can sell them. Now, I hope that investors will give us or allow us a window. Every month we have only CNY 20- odd billion, so we only have CNY 20- odd billion sellable resources. We have to sell more than other people, so this means huge pressure. With strong saleability, we hope that we are able to improve our operation so that there will be steady growth. In the next quarter, our focus will be on product supply and operation rhythm. That's our core strategy. In the next quarter and next year, we will see a very good cycle, a virtuous cycle.
David?
Thank you. Three questions.
Just now Jason commented already, next year there will be CNY 114 billion of sellable resources. The sales scale will be CNY 100 billion. For top 10 companies, over CNY 100 billion in Southern China, they have quite a good layout. In the past few years, all along, you concentrated on Fujian and Yangtze River Delta and northeastern China. All along, you have not looked at Southern China. When you expand, you cannot really avoid Southern China or Guangdong. You cannot avoid acquiring land there. When will that happen? Now, Ms. Tai said that there is a cash collection team. You want to increase or raise cash collection rates. At the end of last year, a lot of payments were not recovered. What was the reason? Is it because a lot of sales are made on payment by installment?
Number three, in terms of land acquisition, at the beginning of the year, it was said that when land was acquired at the beginning, at the end of the year, cash will have to be recovered. What is this requirement? Are we talking about within 12 months cash, or there must be cash break even, or you want break even at the end of 2014? Thank you.
Just now I talked about CNY 140 billion-CNY 150 billion. This includes land acquisition for the second half of this year and first half of next year. Next year, when we prepare the PowerPoint, I'm sure we still cannot reach that figure. But we are confident if the second half of this year or first half of next year, if we continue to acquire land, we can reach this figure.
We are not big in Southern China, but we have set up an eastern China company with an office. In the second half of this year, there will be projects in Southern China. There are already some projects which are going to be completed in deliberation. Announcement will be made soon. For Southern China, it takes more time to do all the planning. Concerning cash collection, Mr. Tang will elaborate on some good methods.
About land acquisition, yes, within six months, we want to start sale, and within one year, we hope to see positive cash flow. We're talking about project within CNY 1 billion. If we're talking about CNY 2 billion-CNY 3 billion, then, of course, this cannot be done in 12 months. If it is Tier 1 city, then 12 months cannot be possible. We're talking about Tier 2, Tier 3, 4 cities.
Pre-sale requirements are lower. That is mainly about the time when pre-sale can start. If that can start earlier, then 12 months is possible. We cannot say that this can happen in all places. There are some preconditions. Ms. Tang, can you elaborate on cash collection?
At the beginning of this year, we made a promise. We said 85% of sales had to achieve the cash collection indicator. In fact, this work is divided into a few parts. First, internally, there is cooperation among departments. Our finance, Ms. Tai, sales, and service. There is cooperation among these different departments. Our accounts receivables will be analyzed in detail. Now there are a few types of accounts receivables, one time off, bank mortgage, and clearance of inventory. There is payment by installment arrangement. There are also some special policies by local governments.
After building top is done, then we can start to recover cash. We will analyze our accounts receivables, and there are also performance appraisal targets. Ms. Tai has got some other targets to work on for colleagues to achieve. There are targets for individuals. For the second half of this year, we are very confident. The best is yet to come for Shimao. Our main business results and sales will happen in Q4. Starting from Q3, Q4, we have made arrangements about cash collection initiatives. The head office of various major banks will work with us on mortgage amounts. In Q3, Q4 of this year, all these moves will be in line with our sales. There is a cash collection team. Again, this is organized together with our sales department. For sales representatives, there are commissions and other incentives or rewards.
There will be one-on-one monitoring, especially in districts with large sales. In the first half, mainly Fujian. Now, in Fujian, our customers are very clever. There are quite a lot of default cases. For these very clever customers in Fujian, we adopt this measure of one-on-one cash collection. The results are quite good. We are confident that at the end of this year, we will achieve 85% cash collection rates. Let me supplement about cash collection. There are three major points. First, the amounts. We have many projects in Tier 3, Tier 4 cities, and the bank mortgage amounts are being restricted. In Jinjiang, that is one focal city. It is a Tier 4 city, and bank mortgage amount is restricted. That is one guarantee, and next, we use benefit or reward to incentivize. Now, customers have to make down payments, and sometimes they make one-off payment.
We use reasonable and effective incentive to attract customers who will be willing to give us some money. Number three, penalty on the sales team. Each sales representative has his own sales and cash collection target. Within reasonable period, he must complete all the mortgage information and payment point of his customer. Otherwise, his commission will be affected. He will be penalized. Originally, we attach more importance to sales, and now we attach more importance to cash collection. Our performance appraisal focuses on both sales and cash collection. For the sales representative, he knows that he must complete the cash collection target in order for his work to be completed. Bank mortgage amounts, the incentive and reward, and also penalty on salespeople. With these three moves, we will be able to achieve our cash collection target or expectation.
Thank you. I have three questions. First, can the CFO briefly explain cash flow for the first half? If you look at the balance sheet and P&L in the first half, CapEx is CNY 25 billion plus CNY 4 billion of tax, and another CNY 1 billion. All together, CNY 30 billion outflow. Jason just said that our cash collection is CNY 28 billion plus CNY 5 billion of mortgage, and there is a CNY 33 billion cash increase, only CNY 1 billion. I do not know whether my calculation is wrong or what. Can you explain more about cash flow? Next question, for Jason. Just now, we said that for new commencement GFA and completion, there will be quite big increase. You want to achieve good sale. At the same time you want to expedite construction. You have to build fast and good.
Are there any changes in your team in this regard? Ms. Tai, about sales. On page 29, it is stated that there is CNY 5 billion of inventory, a slight decline. What are the reasons? Finally, about selling expenses. In the first half, CNY 500 million, there is CNY 33 billion of contract sales, so only 1.6%- 1.7%. How come you can spend so little to achieve such a big sales? Thank you.
First of all, let me supplement. For our cash flow, if you are interested, we have some finance people who can go through the details with you. This year, we have not worked out a cash flow table for the whole group. We have figures for A23. Some figures include both A23 and the JV company. At the end of the year, there will be a slide on cash flow, A23, A13, and JV being separated.
Everything is mixed, so if you are interested, we can ask our colleagues to go through the data with you in detail. I think our participants start to be hungry. We have a lot of ways to ensure quality of our construction. We have got a quality control center. Every month, they will inspect all our projects, and they will score the projects. If the score is below 60, then there will be first a warning of the engineers, and then a warning for the project manager, and then next, the warning will be given to the region person in charge, and then if the warnings are not effective, these people will be changed. Besides for the group, we have got a quality center, and the sales and all relevant departments will inspect the quality.
There will be a score, and there will be reward if people can exceed the target score. There can be a reward of as high as a few million. For project with the worst quality, we will publicize the name. Everybody can see which is the worst. Even our Chairman can see. We have all these ways, from the beginning, all the way to the interim management and also final delivery. There is stringent quality control. You can see that we are better than other developers, and we have also improved a lot from our past in terms of quality. Perhaps, Ms. Tai later can elaborate on the supply and low expenses.
Okay. There are three reasons. First, as I said just now, in many cities, there are more and more stringent requirements by the government.
At the beginning of the year, we only needed to achieve certain engineering conditions to get presale approval, but now the government is very stringent and demanding, so we have to make sure that engineering progress can reach government requirements. In the past, we only needed to do good PR work with the government, but now the government is stringent, so we have to really meet the specific requirements in engineering. Number two, there is the price restriction. The government doesn't allow us to exceed a certain price, and we don't want to give way. We want to strive harder, to see whether we can wait for a while, then I can have a higher price. Now, the price restriction is very tight.
We don't want to lose out certain yield, so we just want to defer the schedule to see whether we can communicate more with the government, or when there is more room in the market, then we can get a better price. That's one reason. Another reason is our operation control or management ability will be enhanced further. By enhancing our operation control and management capability, we will be able to achieve our supply schedule or targets. You just talked about selling expenses. Two things. One, for A13. You just gave figures for the whole group for A13. It's less than 1.5%, and the expenses include all the team members, promotion, agent commission, and so on. All these are included. And we have a very stringent boss, SAP control. In the whole management process, we control each and every expense item very stringently.
Every day, every month, the expenses. For example, turnover, every parameters have to be monitored. When there is any irregularity, we will try to find out the reason and adjust our expense plan. We strongly control the effectiveness of each and every expense item. Secondly, our saleability is really very strong. We are stronger than others anyway.
Any other questions, please? Okay. Then, we will adjourn here. Thank you very much.