Investors, good afternoon. Welcome to Shimao Property 2015 interim results announcement. Before we begin, I'd like to introduce to you members of the management. Chairman, Mr. Xu Rongmao. Vice Chairman, Mr. Xu Shitan. Executive Director, Madam Kong Xi. Executive Director, Mr. Liu Zhang. Finally, CFO, Mr. Liao Lujiang . Today's presentation will be divided into a few parts. We have results highlights, financial highlights, business review, future outlook, and conclusion. First of all, Mr. Shitan.
Welcome all of you to our interim results announcement. On behalf of the company, I would like to report to you our results highlights, and I will also go through some important financial figures. Please refer to page four . Our turnover increased by 23.3% to CNY 29.19 billion. Revenue from hotels, rentals, and other revenue increased 36.6% year-on-year to CNY 1.46 billion. Gross profit increased to CNY 8.96 billion, representing year-on-year growth of 11%.
Gross profit margin decreased from 32.5% in 2014 to 30.7% in the first half due to sell-through rate issues. It is still rather high in the industry. Operating profit rose by 9.6% to CNY 7.8 billion. Profit attributable to shareholders for the period decreased by 14.9% to CNY 3.56 billion, mainly due to several reasons. Additional losses of associated companies and joint ventures of about CNY 0.9 billion, no reversal of Land Appreciation Tax in the first half, and additional profit attributable to non-controlling interests. Excluding the major after-tax non-cash items and non-controlling interest of CNY 72 million, profit from core business attributable to shareholders for the period was CNY 3.49 billion, with only 3.9% decrease compared with the first half of last year. Net profit margin of core business decreased from 17.2% in 2014 to 15.2% in the first half, which is still rather high in the industry.
Basic earnings per share, CNY 102.84 cents. The board proposed an interim dividend of 30 cents HKD per share, which is the same as last year. Contracted sales amounted to CNY 31.5 billion in the first half, representing a year-on-year decline of 1.9%. The group ranked ninth among real estate enterprises in terms of contracted sales. Average selling price decreased from CNY 12,256 per square meter to CNY 12,011 per square meter. Contracted sales area was 2.627 million square meters. Our land bank reserves, about 33 million, and we have an increase of 39.4% and 29.9% concerning turnover and profit attributable to shareholders. We hold a 64% interest of Shanghai Shimao. Page six. As of June 30, our group's total disposable capital was CNY 44.3 billion, including cash in hand of approximately CNY 27.3 billion and unutilized banking facilities of CNY 17 billion.
Cash balance increased to CNY 27.3 billion from CNY 23.9 billion at the end of 2014. Total balance of our bank loans and other borrowings were CNY 67.1 billion, including long-term borrowings, CNY 49.5 billion, short-term borrowings of CNY 17.6 billion, representing 34% and 26% of total borrowings respectively. Cash ratio increased from 120% at the end of 2014 to 154%. Net gearing ratio was 57.5%, down from 58.6% by 1.1 percentage points, which is in line with management's goals. The group will actively explore property finance innovation and asset-backed securitization market, and strive to become the industry benchmark. We will make use of very supportive government policies. We are proactively pursuing alliance with financial institutions to explore the opportunity of providing property finance service along the industry chain. With the opening of the capital market in the P.R.C., the group's wholly-owned subsidiary, Shanghai Shimao Construction Co., Ltd., has been approved by the stock exchange.
It will be able to issue a seven-year CNY-denominated corporate bond, which would raise not more than CNY 7.4 billion. In July this year, the rating of the group was raised from BB to BB+ by S&P in light of sound operational and financial performance. In addition, China Chengxin International Credit Rating Co., Ltd., Dagong Global Credit Rating Co., Ltd., and China Lianhe Credit Rating Co., Ltd., three major domestic credit rating agencies, successively granted us the highest AA credit rating. This is going to lay a very solid foundation. Please turn to page seven for our financial summary. In the first half, revenue CNY 29.193 billion, up 23.3%. Gross profit, CNY 8.9862 billion, up 11.6%. Gross profit margin 30.7%, down 3.4 percentage points. Operating profit, up 9.6% to CNY 7.81 billion. Profit attributable to shareholders, CNY 3.559 billion, representing a decline of 14.9%. Core profit attributable to shareholders, CNY 3.487 billion, down 3.9%. Net profit margin of core business, 15.2%, down 2 percentage points.
Earnings per share, CNY 102.84 cents, down 14.9%. Because of sufficient cash and stable financial situation, we announced dividend of HKD 30 cents. Our balance sheet summary on page eight. It shows you that we have a very healthy debt structure. I won't go into the details. Page nine, historical financial performance. Things are very stable. I won't go into the details. Please turn to page 10, talking about our cash borrowings and net gearing ratio. We have more and more cash on hand. You can see the rising trend very clearly. By this year, more than CNY 17.6 billion, reflecting our good liquidity and lesser short-term debt repayment burden. You can also see the net gearing ratio moving from 57.4% to 58.4% in 2014, and then 58.6% in 2014 and 57.5% in 2015. You can see we have good liquidity and we have less long-term debt pressure.
We explore means of financial innovation to release value of our assets and optimize capital structure, especially asset-backed securitization and the CNY corporate bonds. In the second half, the government will continue austerity measures, and there will be more challenges in the PRC property market. We will adhere to cautious and healthy financial policies on investment while monitoring closely on financial activities and capital markets in and outside the country, aiming to release true value of our assets. We will further explore opportunity of asset-backed securitization for hotel investment properties, as well as other financial innovations for property products for steady operation, efficiency, and profitability. We strive to lower gearing and financial cost to better prepare for the ever-changing property market and, by all means, to achieve our strategic goal. The first half of 2015, this is the financial summary. That's all for the financial summary.
You can refer to all the details in the PPT. We hope to sustain long-term development and stable development. Mr. Liao is going to take you through the business review for the first half. Thank you.
Thank you. I am going to take you through the business review in the first half and our way forward. Page 13 provides our revenue breakdown. Property sales compared to CNY 22.6 billion in the first half of 2014. It's gone up by 22.7% to CNY 27.731 billion. You can see the contributions mainly come from Beijing, Nanjing, Wuhan, Xi'an, Fuzhou, Xiamen. That is on page 13. We also have hotel operation. You can look at page 14, breakdown of income from hotel operation and investment properties. Turnover increased by 36.6%, among which income from hotel operation and rental and others have been growing. Next page, hotel operations in greater details.
In 2015, first half, we've added Shimao Eco-City Extra Five-Star Hotel, Tianjin. It started operating in April. Total number of rooms, 4,598. Turnover, CNY 624 million compared to CNY 537 million the same period last year. EBITDA also improved from CNY 151 million to CNY 176 million. Shanghai Nanjing hotels in the past half year had different levels of enhancement of the revenue. Next page, investment properties. Commercial and office premises rental income in the first half grew by 30.2%, reaching CNY 371 million. They mainly come from our commercial premises. Others grew by 88.3%, mainly coming from movie theaters, property management, and department stores. That was our business review for the first half. Now, let's go through the future outlook. First of all, on page 18, you see nationwide quality land reserve. Mr. Tan already talked about 33.31 million square meters in our land reserve in 41 cities, 103 projects.
Compared to the previous years, we have added Shanghai Shimao and our joint venture, and also direct subordinates to 813. You see more joint ventures this year. You see this geographical allocation of our projects. In the first half, in terms of investments, we have been very cautious. There are only six newly added land parcels, and they have been listed on page 19. Yes, page 19. You can see all the details here. Land cost, net of interest, CNY 2.96 billion. Total planned GFA is 133,000 odd square meters, and land cost per square meter is about CNY 8,295. These are the six parcels we have added to our land reserve. Please turn to page 20. You can see more details about our land reserve. On the left-hand side, you see different land reserve situation for different districts.
Shanghai Shimao covers GFA of 6.6 odd million square meters. In joint venture, 1.3 million odd. In the pie chart, you can see the by-district breakdown for our land reserve. The biggest chunk goes to Shanghai Shimao and then also Southern Fujian District and Northeastern District. You can also see percentage of land cost to our ASP. If you have been following us for quite some time, you should remember that by the end of 2014, we had an inventory of 1.8 million odd square meters. In terms of reducing the inventory level, we've done a lot, and now you see very good results. We have reduced the number to no more than 1.2 million. GFA under construction, 12.48 million. Future developments, we have 28.83 million. GFA net of interest, 33 million odd, and average land cost is CNY 2,620 per square meter.
The percentage of land cost to our ASP is about 22%. Next page is about our sellable resources in the second half of the year. It is about our supply or inventory. On the left-hand side, you can see all the key projects. You can see quite a number of breakdown details here. By the end of June, sellable inventory, 1.85 million square meters. Newly added 3.88 million square meters, and 2.56 million are the key or leading projects. If you add everything together, total sellable resources, 7 million. Earlier this year, we talked about our target, and it was 10 million square meters. But according to the actual sales condition and also the sell-through rate and existing inventory types of products, we have suspended or we have put aside 550,000. You can see that sellable resources, the value is CNY 115.4 billion.
Sell-through rate need to stay at around 62%. You can see the product breakdown, the pie chart. So mainly we are talking about upgraded units, taking about 51%. We have very solid demand for such units, and we maintain our level of confidence. The next page, you can see our products measures and how we are going to enhance our efficiency. We want to clear our inventory, optimize the inventory structure. We are going to advance the payment collection exercise. Of course, the GP margin may be slightly affected. That is why we are seeing a downward trend for the first half. So in the second half, for newly added supply, 3.88 million sq m, covering 2.59 million that fall under the key projects. They have better margin on average. So hopefully, we will be able to stabilize our GP margin.
Clearing our inventory and also stabilizing our GP margin will be our major targets. Finally, we would like to integrate our resources to have stronger profits. So hopefully in the second half, we will establish asset management team, taking care of investment examination and disposal of certain properties, and therefore optimizing our asset structure. In terms of marketing, let us look at the first half performance, page 25. I have talked about a smaller supply in the pipeline. You can see that the orange bar is the target and the actual level is represented in blue. So in terms of supply, we are coming down from 24 point odd billion to 19.8 billion. We want to improve our sell-through rate. In terms of contracted sales, we are very close to our targets. In terms of cash collection, we are going to step up our efforts.
Receivables reduced by CNY 3.9 billion since the beginning of the year, exceeding our target even. So it ensured smooth cash flow. Page 25 is about sell-through rate. You can see that sell-through rate of new inventory, CNY 21.8 billion actual sold through CNY 11.1 billion. So sell-through rate was 51%. Then if you look at sell-through rate of sluggish inventory, our target was CNY 5.3 billion. Actual level, CNY 8.2 billion. So we exceeded our original target by a pretty good margin. For inventory to sales ratio, you can see that total sales was CNY 26.3 billion, and the ratio is 57.8%. Our ASP has been increasing in many of our projects. If you look at the table at the bottom, you can see some important projects in Beijing, Shenzhen, Nanjing, Wuhan. If you look at their figures, the ASP compared to 2014, you see obvious improvements.
For the second half of 2015, on page 26, you can see our marketing targets and strategies. Both first tier and second tier cities, the supply takes up about 46% in the first half. In the second half, the proportion will be increased to 54%. Third and fourth tier cities will be reduced from 25% to 18%. We are talking about Nanjing, Xiamen, and Hangzhou. For the second tier cities, they are represented by the green portion. The supply in total will be CNY 20 billion. So for the second half, in terms of sales and margins, this is a very good guarantee that they will be stabilized. Next page. Product design to fit our market demand. Some thinkings about improving our products and measures. We have done this product module. To realize ideal combination for different projects, and they can be flexibly adjusted according to different living requirements.
This can be quickly copied. In terms of standardization of the value-added features, we have launched different measures to promote faster sell-through. For example, in Nanjing, Wuhan, there will be many more projects. We also have educational platform and resources. All these will be very positive in terms of enhancing our project's competitiveness and pricing premium. Next page. Marketing target and strategy for 2015 second half. We will continue to improve sell-through rate of our inventory. Hopefully, CNY 7.3 billion sell-through can be achieved of inventory with a history of more than one year. We have come up with very different measures to encourage people to see that our products are better options than others in the market. This is how we're going to optimize our inventory structure.
With the implementation of our different measures, we understand that the challenges will remain in the industry, but we maintain a very high level of confidence. Thank you. Chairman, over to you for the conclusions.
Dear investors, this is the conclusion part. First of all, we will see market recovered in the first half of this year, but mainly in first and second-tier cities, particularly in major first-tier cities. For example, 20% growth in Shenzhen. That's what we predicted. Many investors did not believe us. At the end, it grew by 30%. We realized contracted sales of CNY 35.6 billion for the first seven months, reaching half of the annual target. Average selling price CNY 12,256 per square meter above. We have only offered discounts just to clear our long-term inventory. We have increased selling prices of more than 100 projects nationwide.
In the second half, we will increase the supply in first and second-tier cities, with their proportion increasing from 46% to 54%. Beijing, Guangzhou, Beijing, Shanghai, and also Xiamen, Wuhan, Nanjing, the increase will be more than 10%. Still, the market is looking very positive. For the supply for different tier cities, I have already introduced to you, there will be a slight shift. Our gross margin target at 30% or above is still the same. Our gross profit margin for the first half is 30.7%, and we would like to keep it at just over 30% for the whole year. A third of our existing completed inventory has been reduced by the end of June 2015. We want to clear half of the existing completed inventory, and reduce completed inventory by 10% or above. Of course, that is going to suppress our gross profit.
Cash transfer in the second half. The new projects will be sold and realized in 2016. We aim to realize positive cash flow and lower our gearing ratio, enhance operational safety in 2015. We adhere to the policy of balancing income and expenses. We had about CNY 8 billion in terms of sales in June, and cash collection will happen in July and August. Between September and November, we believe our sales situation will be very positive. We really look forward to that. For cash collection for the entire year, that will also be affected. Point number four, CapEx is well under control. Land expenses have been coming down by a pretty big margin. In the second half, we'll identify more opportunities. We will control our land expenses. We'll focus on Yangtze River Delta and then Beijing-Tianjin, and of course, also in Fujian region.
Growth in construction costs will be controlled within 5%. Point number five, we have outstanding cash collection, and we also need to clear our inventory and reduce debt level. We will focus on expansion and profit margin return on fixed assets and enhance customer satisfaction. Many investors ask about growth. Sometimes our profit remains the same even when our growth level is quite small. If you look at many other developers, they have something quite different. They have more debt, they have more inventory, and bigger teams, but at the end, they are not making more profit. We just want to control our expenses, improve our ASP, improve branding, so as to ensure high level of profits. I think perhaps that is a better choice in this market. Some years ago, some analysts said every year we purchase 2 million to 3 million square meters in terms of newly added parcels.
Then we used to sell about 1 million square meters per year. But now we are looking at a reversed trend. We are acquiring 2 million, selling 6 million. We also want to enhance customer satisfaction in this process. Number six, we want to achieve outstanding gearing ratio. We are able to keep it at 57.5%. Gross profit margin declined slightly to 30.7%, but still higher than the industry average. We aim at keeping gross margin at 30% or above with a positive cash flow and a lower net gearing ratio. Recently, people are quite concerned about the debt structure. Indeed, we have looked at the situation. Our debt level is actually quite similar compared to similar enterprises. Our offshore debt is about 45%. Most players between 30% to 40%, but for SOEs, it is normally much higher because of the interest rate concession for some large-scale developments.
Previously, CNY has been appreciating, so many people benefited. It is just that the trend has been reversed this year. There, of course, will be some impact, but it is not that substantial. It may affect slightly higher than 10% of our profit within two years. Domestic financing or inbound financing, the proportion will be increased from 55% to 70%, and lower interest cost to about 6% in two years. We already got the approval for the CNY 7.4 billion bond issuance. So there will not be any RMB loss. But of course, I understand that there are investors investing into shares and also securities. We will reduce the proportion of offshore foreign currency securities. Number seven, we see serious polarization in the real estate market. Demand for basic units and upgraded units are strong, mainly in first and second-tier cities, and also some cities with increasing population.
For example, there is a parcel in Nanjing. I remember it was CNY 700 million to CNY 800 million, and when it was auctioned off, it was over CNY 700 million. So what we prepared was really falling short at the time. So land premium is, of course, very high in the most popular cities. So competition in some markets is very severe. We will remain cautious in the investment markets, and we want to use collaboration models. Previously, they were not very successful. We want to now move on to smaller developers or even the subway company, the metro company. For example, we have done that in Shanghai. So we are able to obtain the resources at a very low cost when we choose the right partner. Some of these entities, the mother companies, are actually the biggest landlord in their own cities.
Sometimes I would just talk directly to their big boss and I will say, "If you sell this, you will get CNY 100,000. But if you allow me to sell it, I can get CNY 150,000." Through innovative collaborations, we are able to obtain low land premiums, ensuring our profit. We also increased supply in upgraded units from 46% to 51%. Point number eight , we generated strong growth of 36.6% to CNY 1.5 billion. In the second half, we want to accelerate asset disposals. Third and fourth-tier cities. Some assets do not have very good values. We used to provide hotel or a commercial mall attached to the premises. But now, we purchase large land parcels and then I can resell by dividing up the large parcels. In first-tier cities, we can combine our premises with large hotels. Of course, all such measures have to be supported by good ASPs.
We can reduce the level of debt, and we can fully reflect the value of our shares. There are some properties in Beijing. We are making very good profit. Even one project will bring in more than CNY 1 billion in terms of profit. Some people suggested that is not core profit. We are actually negotiating with different parties, and when we have good sales proceeds, we can repay bank loans, pay special dividends, or repurchase our shares. Our positioning will be on commercial properties and finance sectors. We will also identify collaborators to have joint investment. Our cash level is actually at its historical high. I think if you look at the entire industry, we are doing quite well in terms of GP margin. Yes, the stock market has been performing quite weakly.
As I said, a lot of the sales will be realized in September to November. It was quite hard to persuade people to purchase property at the beginning of this year. Everyone said, "Are you silly? You should invest in the stock market, and then you can spend the same amount of money to purchase three homes by the end of the year." Of course, that dream is now shattered. People are losing a lot in the stock market, and they probably lost their first homes as well. We have very good platform, and we will focus more on commercial and finance sectors. Some investors have been a bit concerned, but I can tell you, we have good outstanding investment and financing platform, and Shanghai Shimao Construction Co., Ltd. sees capital at the lowest interest rate. It could drop further to 4%.
Many bankers contacted me earlier, and they are quite disappointed. We will do our best to reduce our interest cost. We do not see clear advantage of offshore financing now. Of course, we believe additional issue of debt of CNY 1.5 billion will further lower our interest-bearing debt and also our interest cost. By the end of the year, we hope to complete this task. Further lowering our gearing ratio. Other players have much higher PEs. Finally, in this highly competitive environment, we need to continue to enhance our management capability, improve our project innovation and design. We need to better position our products. That is my conclusion. Thank you very much.
We now have Q&A session. We welcome questions from the floor. Please tell us who you are and who you represent. Yes, over here in the first row.
From GBS, I am Carol, three questions.
In the first half, sales compared to other developers is quite slow. Other than clearing inventory, are there any other reasons? Any difficulties in existing markets or losing sales personnel? What about an acquisition policy? Beijing, Shanghai, and Shenzhen collaborating in the first half. What were your considerations? What will be your future strategies? Third question, about the figures. I can see these JV losses of more than CNY 300 million. Can you explain why? Thank you.
I will take the first two questions. First half sales compared to 2014, a slight drop, about 1%. It is quite small, and I do not think it is going to impact on other things. We will have bigger supply in the second half, mainly in September to November. In the first half, we have reduced some unnecessary or no value-added supply.
For example, in third, fourth-tier cities, perhaps we should keep it in the inventory and wait for the prices to come up. Second reason is because supply is always big in the second half. Thirdly, towards the end of last year, we started reducing land acquisition. For companies having very good growth, well, actually, only two or three players in the market have acquired a lot of land parcels. I think it is time to be cautious. Land acquisition policies will return to first and second-tier cities. That is what everyone is saying. Then the profit may not be very high because the land premium is so high, because everyone is coming back to first and second-tier cities. We acquired 50% of the shares of this Beijing developer. Tongzhou is now a second center for Beijing. So we have made the right move.
For the small developer, they could get CNY 20,000 per square meter, but if we take over the project, we can get CNY 30,000 or CNY 33,000 or even CNY 35,000 in the near future. So the net profit is very high. So this is really a win-win situation. I have also talked about Shanghai collaborating with an SOE. If you do auction in the open market, perhaps CNY 100,000, but now we offer you CNY 50,000. The mother company is actually the biggest landlord in Shanghai for our partner. So when we collaborate with SOEs, we enjoy certain advantages. If we have 100% control and we charge management fees, our auditor said that could be calculated as our core profit. Also metro companies, they always have their network in major cities with very low land premium. So our strategies targeting first and second-tier cities is, of course, clearly the right direction.
Now Incheon is also inside our network. If you look at secondary developments, we collaborate with Hailiang Group. It is one of the top 50 developers. So for every hectare, we are making a higher GP margin compared to if they operate on their own. We also see Greenland Group. They are collaborating with many local governments to run some special projects. Anyway, we will be cautious when we enter third and fourth-tier cities because it is, of course, very difficult to obtain new parcels in first and second-tier cities. We may have to wait for two to three years for things to break even. JV losses, CNY 329 million, mainly in Wuxi, Nanchang, Changsha projects, because at the time, the unit cost was quite high, leading to the losses. Well, actually, you can contact us further if you would like to obtain further details about the losses.
The gentleman in the second row.
UBS, Eugene. Three questions. Dividend payout. Profit came down slightly, but you are remaining more or less the same level of dividend payout. What about whole year dividend payout? What do you think will happen? Are you going to maintain the same level of absolute value or a ratio? Are you going to use a ratio? The cash level will come up towards the end of the year. Is that going to affect the dividend level? Second question is about your cost. You started very early to exercise stronger cost control. I saw on your PPT. Every year, the cost will increase by no more than 5%. That is your target. I want to ask you, the cost, is it going to come down further per every square meter? Final question. You talked about new business, mini hotel, mini malls.
Can you tell us around what time there will be profit contribution coming from these new initiatives? Are you going to use other methods to realize new business value sooner?
Okay, dividend policy. It is the same. If you look at first-half core profit, a drop of 3.9%, very small margin. 30 HKD cents. It is not a random figure. It really takes up 30%-40% of our core profit. That is how we decide. Last year was 30 point and odd. I do not think this is the most important thing, because we have historical high level of cash level, and towards the end of the year, we will go beyond CNY 30 billion. With so much money, it is quite meaningless if we do not share it with our shareholders. Our policy is the same. What assets should be sold, that is not the focus.
For our cost, we have been suppressing our construction cost for many years. We are talking about a 5% year-on-year decrease. At the moment, construction cost is very close to China Overseas Land & Investment. I think we are definitely one of the lowest in this industry. Every year, we can sort of suppress it by one or two points, 1 or 2 percentage, because we can use crowdsourcing. Your last question is about new business, which is not taking up a very big portion of our business. Maybe CNY 500 million to CNY 1 billion investment in the hotel. You understand that if you open a new hotel, you will not normally make any profit in the first year. Towards the end, in Hongqiao, there will be one new hotel, but we do not own the land, we are just renting. In 2016, in Chengdu, we will open another one.
Investment is quite limited. We will continue to consider possible cooperation. There is this company in Shanghai, they want to manage the premises using our name. You see, our brand is so strong, it really creates values, and the same applies to mini malls. Because the investment is so small, the profit contribution is not going to be very substantial, naturally. But the level of return is quite good, 7%, 8%, or close to 10%, and I think that is quite satisfactory. We just want to continue to expand our business. I can give you one example. At the shimao.com website, every day I communicate on that platform. Some colleagues at the Shimao shares. One theater can be sold to Wanda Group. It has been sold to Wanda Group, so there is no staff discount. There is a license for the movie theater. We do not sell the license.
Well, actually, for movie theaters, none of them are making profits. Wanda is number one in terms of ranking. We sold to Wanda at CNY 1 billion. When we acquired the theaters, only CNY 200 million. That's a very good profit. Assets are diversified. Mini malls, mini hotels, if we do very well, we can find other investors or use our A-share platform to do further financing or sales of our assets. It really depends on the big market. I think we are quite healthy and very solid.
Oscar from Citi.
This year, we have gone through eight months already. Chairman, in the coming one to two years, in terms of sales targets or projections, do you have any targets? Because this year you're quite conservative. Second question, GP margin. You sound like you are very confident because we are comparing quite favorably with the competitors.
What do you think, Shimao, in terms of gross margin? You see very good improvement in one to two years. Why is that? Third question. You have some investments in Hong Kong. I would like to ask you, what are your strategies? Fourth question, in the next two years, RMB, that exposure will be increased from 55% to 70%. Do you have any actual plans or is that just some rough direction?
Sales situation this year. Between July and August, about CNY 4 billion. September to November should be much higher level. We cannot really give you a real figure at the moment. For the whole year, these three months will be very important. If the market is more or less like the market in the first half, we should be able to hit the target. Central rate was 60% and now 62%. Why?
Because we've reduced CNY 5 billion of supply in certain fourth-tier cities. It really depends on the market situation. If we have another round of financial tsunami and people simply don't want to buy, then yes, there will be a lot of pressure. When you lose so much money in the stock market, you may as well invest in the property sector instead. That could be the mentality for some investors now. We don't want to be pursuing blindly any targets. We need to be realistic. The most important thing is profit. Maybe you look at PE, performance of company. It's not about the sales figure, it is about the profit level at the end. It's always better to look at the profit instead of just the sales figures.
This is also why we have not blindly acquired land parcels all over the place that will only add to the risk level. We want to be growing in a stable manner, and we want to see the growth of profit in a stable manner. Some years ago, perhaps we had different targets. We wanted to increase the scale of the company and sales figures. Today it is time to focus more on quality instead of quantity. Second question is about gross margin. There is room for improvement. For first half, it was 30.7%. In the coming two years, around 30%. Of course, if the market is going the other way, everyone is going downwards, perhaps we cannot achieve that. We won't just acquire land parcels, but instead we will try to identify possible partners. We may identify SOE enterprises to have joint projects.
We want to further suppress our cost, and we have cleared a very large amount of inventory in the first half. Inventory pressure in the second half is less. The impact on our margin in the second half will also be further limited. But mainly, it really depends on the performance of the market. Third question about investment in Hong Kong. Yes, we are very cautious. Sounds like we have tried to buy many projects, but at the end, we have not acquired that much. Hotel return is not very high. When we bidded for the project in Hong Kong, the land premium was at its lowest at that time. Considering hotel design, it takes a lot of time. In the mainland, we have very large land parcels for hotels, but for Hong Kong hotels, they are much smaller in size.
Actually, the profit level in Hong Kong is actually double that in mainland China. I would not say that Hong Kong hotel projects are not worth investing. We have tried the same model in Nanjing and Foshan. We are not going to be frustrated because it is a very good way for us to diversify risk. We will continue to be slightly on the conservative side. You asked about RMB, and the stock prices have plunged, and many people become worried. You quoted our target of debt issuance. We have already got the approval for over CNY 7 billion debt issuance. The interest rate was about 4%, which is much lower than other players in the market. We can issue another CNY 7 billion next year. We have to face another issue when it comes to offshore debt. We have to do the math.
Many investors said, "Okay, the share price is so low, it is time to move into the market." Offshore debt issuance will be very limited in the future. Sometimes we may have to offer some sort of compensation according to the original terms and conditions. Well, actually, we have all the plans, all the details. In two years' time, maybe RMB will appreciate again, so you should not be too pessimistic. We expect that we are very well equipped. We have already taken steps to deal with the situation. You mentioned two points. I would like to add something. Land acquisition. I have been emphasizing on this point. We do not want to pursue expansion, but rather we want to be more professional. We want to be 100-year brand. We want to be a brand that is going to last for a very long time.
It is not just about buying here, buying there. If you expand too quickly, risk will multiply. That is not the path we want to take. I have been emphasizing this point to our colleagues. We need to expand our scale, but only if you have the right level of capability. We can only expand when that is the right move. Some of you asked, are things different because some people have left the company? No. Our major strategies have not been modified. We want to be a 100-year-old brand. We want to do streamlining. We want to enhance our product branding image. If one person leaves, it does not mean our strategies are now different. We also talked about our stock. Actually, I got this calculator. Our market cap, CNY 33 billion. Asia, CNY 20 billion.
International Plaza, someone has made an offer, and what they are offering is very good consideration. But if we sell everything, we won't have anything left. When the stock price is low, maybe it's because of your execution capability or the management is not too smart. There are reasons why stock prices are low. We have taken interested parties to come to look at our projects. You can come if you would like. We would like to invite you as well. Of course, there is always room for improvement, but we are very happy with our performance. Final question.
Thank you. I'm Eric. I have three questions. You've talked about repurchase. I want to follow up on this. Any more details you can offer concerning buyback of your shares? Vanke has very solid stock prices. What do you think? Second question.
In recent years, Shimao has reached your comfort level in terms of your cash, GP margin, sales performance, so on and so forth? Oscar. What about in 2016, 2017, in terms of scale expansion, net profit expansion, do you have any expectation or guidance? The third question is about your JVs. We have to consider a different mindset for the future. Are you going to use the traditional way of collaboration? Because there's always pressure on cost control. Are you going to adopt new methods?
I actually have to leave first. I'm sorry.
Well, I would like to respond to the buyback. The volume is not going to be very small. Because the share price is indeed quite cheap. We have issued interim dividends. We still have plenty of cash. I think, maybe we will have buyback.
Towards the end of the year, our gearing ratio will be further suppressed. Buyback initiatives, I think when the debt level comes down or when we sell important assets and have more profit, we will consider buyback. The cash level is very high, margin level is very high compared to our competitors. But actually, we want to control the growth path. Because if we want to expand our scale very quickly, we have to acquire a lot of land parcels. So this may not be a good thing. As we have said, in the next two to three years, we want to focus on the growth of profit. We want to improve the quality of our assets. So we have to consider the growth of our sales. If you look around in the market, you see 20% growth, 30% growth of sales.
You feel very happy, but the profit level may be shrinking. Maybe shrinking to a single digit. This may not be very smart. You need to look at your core profit. That is more important. It really depends on the market situation. Many people said the sales this year, you must reach target. We can go beyond target very easily. In the first half, we already sold CNY 4 billion. If you sell everything this year, and you need to replenish the supply next year, so you must control growth. You cannot grow in a blind manner, just sell off everything. All of a sudden, there is nothing left, and there will be a lot of pressure. For JV projects, we are quite experienced. Five to six years ago, we started collaborating. We have accumulated a lot of good experience. So we have seen many failures in the market.
If we collaborate in a way that will lead to a win-win situation, just like with China Overseas Land & Investment in Hangzhou, that is a very good example. In Beijing, China Overseas Land & Investment collaboration with SOE, we will deal with the sales, and we will deal with the management. We have achieved very positive results. Otherwise, collaboration would become meaningless. Let us see if you have any further questions.
Realized cash flow in first half. Any whole year guidance?
We never issued any concrete figures because every year towards the end of the year, you will see it on the PowerPoint. I can only tell you there is this net cash flow inflow for the first half. Because of high level of cash collection and due to inventory clearance, and also because we have not sold so many properties, because most of the sales figures will come in or take place between September and November.
If we are able to collaborate with some parties, compared to bidding on our own, sometimes we enjoy greater advantages. We want to control our risk level. Net cash flow will maintain very positive for the whole year, and the debt level will come down towards the end of the year. We must make sure sufficient supply between September and November. That is the key. That there is cash collection in November and December. We still have many ideas about ensuring sufficient supply between September and November. You have asked us, once things improve, we can think about buyback. Indeed, they are related. Without further questions, thank you very much for your attendance.