Dear investors, welcome to Shimao Property Holdings Limited interim results announcement. Before we begin, I would like to introduce members of the management to you. Mr. Xu Shitan, our Vice Chairman. Mr. Xu Shitan, Executive Director, Mr. Liao Lujiang, Executive Director, Madam Tang Fei. Mr. Shao Liang and Mr. Yau Kwan Shan, our CFO. We will first talk about results highlights, financial performance, business review, future outlook, and conclusions. Ms. Tang, please.
Thank you very much for coming to our interim results announcement for 2017. I will take you through the results highlights, and then share some important financial figures. Our turnover increased significantly by 19.3% to CNY 35.822 billion. Revenue from hotels, rentals, and other revenue increased by 16% to CNY 1.66 billion. Gross profit margin increased from 28.2% in the first half last year to 29.6% in first half this year. Gross profit increased substantially by 25.1% year-on-year to CNY 10.59 billion.
The group strictly controlled our budget. SG&A cost as a percentage of contracted sales was reduced from 5.9% in the first half in 2016 to 5% in the first half this year. SG&A cost for development properties was 3.3% as a percentage of contracted sales in the first half this year. Relatively low level. Core profit attributable to shareholders rose by 4.5%, from CNY 3.5 billion to CNY 3.66 billion. Core net profit margin attributable to shareholders was 13.4%, representing an increase of 0.5% from 12.9% in first half of 2016. Excluding the net impact of CNY 630 million profit from disposal of Beijing Fortune Times, core profit attributable to shareholders should be 27.6% higher than that of the previous year. The board proposed an interim dividend of HKD 0.40 per share, up by 25%. Total dividend payout: CNY 1.35 billion.
The group was included in the Hang Seng High Dividend Yield Index and Hang Seng Stock Connect High Dividend Low Volatility Index, reflecting our solid performance and dividend policy. Contracted sales surged by 30.9% to CNY 45.12 billion, with average selling price up to CNY 16,656 per square meter, from CNY 14,192 in the first half of last year. Contracted sales area was 2.709 million square meter. By the end of June this year, our attributable land bank totaled 34.13 million square meter with an average land cost of CNY 4,268 per square meter. The quality land resources and relatively low land cost will continue to support the group's development in key markets in China. In the first half of this year, our group's contracted sales amounted to CNY 10 billion, an increase of 35%. Turnover of Shanghai Shimao climbed by 54.1% to CNY 10.09 billion.
Profit attributable to shareholders amounted to CNY 1.4 billion, representing year-on-year growth of 0.5%. Please turn to page six. As at June 30th this year, we had abundant capital with cash on hand amounting to CNY 22 billion. In addition, the group was approved of quota of CNY 8 billion for issuing panda medium-term notes. CNY 6.5 billion for public placement of real estate asset-backed notes, and CNY 2.5 billion for commercial mortgage-backed securities. It has also utilized banking facilities of CNY 20 billion. This abundant capital has provided strong support for the group's stable development going forward.
The group adheres to prudent financial policy, exercises control over financing scale and optimizes capital structure. By the end of June 30th, total balance of borrowing were CNY 68.5 billion, up 2.3%. Long-term borrowings amounted to CNY 50.9 billion. Short-term borrowings, CNY 17.6 billion, accounting for 74% and 26% of total borrowings.
Net gearing ratio 52.5%, down by 0.9 percentage points from 53.4% at the end of 2016. Net gearing has been maintained below 60% for five consecutive years. This enhanced the group's ability to respond to the complicated economic conditions and changes in the financial market and laid a solid foundation for sustainable growth. Tightening measures targeting the real estate market became stricter in the first half. Through continuous financial innovation, we were able to obtain the approval from the National Association of Financial Market Institutional Investors, China Securities Institutional Overseas Markets, to issue first-of-its-kind products.
We included them on the first batch of products in the sector. This achievement demonstrated our strong competitiveness in the market. The weighted average cost of financing went down to 5.6% from 5.8%. Our sound operational financial performance has gained positive ratings. S&P Global Ratings maintained BB+ for Shimao Group, and revised the outlook from negative to stable.
Ratings for Shimao Jianshe and Shanghai Shimao, our subsidiaries, have also been upgraded to AAA. Please turn to page seven. These are our key performance figures. In the first half, revenue was CNY 35.822 billion, up 19.3%. Gross profit, CNY 10.591 billion, up 25.1%. Gross profit margin 29.6%, up by 1.4 percentage points. Operating profit, CNY 8.76 billion, up 6.2%. Profit attributable to shareholders improved from CNY 3.028 billion to CNY 3.879 billion, up 28.1%. Core profit attributable to shareholders improved by 4.5%, from CNY 3.502 billion to CNY 3.661 billion.
Excluding that disposal gain from Beijing Fortune Times, the core profit attributable to shareholders should improve by 27.6%, from CNY 2.868 billion to CNY 3.661 billion. Core net profit margin 13.4%, up by 0.5 percentage points. Basic earnings per share: CNY 114.95 cents, up 31.3%. We declared interim dividend of HKD 0.40, which is 25% higher compared to HKD 0.32 .
Please turn to page eight. This is our balance sheet summary. By the end of June 2017, total asset CNY 271.912 billion, up by 3.8%. Fixed assets: CNY 55.243 billion. About CNY 65.3 billion for property and equipment, plus investment properties and land use rights. Total equity up by 5.5% to CNY 93.1 billion. Cash and cash equivalents: CNY 22 billion, a drop of 1%. Total borrowings up 2.3%, from CNY 66.9 billion to CNY 68.4 billion. Net gearing ratio, 52.5%, down by 0.9 percentage points. If we consider the appreciation of hotels, adjusted net gearing ratio is 45.1%, down by 0.5 percentage points. These are our historical performance. Let's turn to page 10. We continue to lead financial innovation in the real estate industry. All these means we'll provide sufficient funds to our operations. We have completed these five projects in the first half.
In April, we got the approval to issue panda medium-term notes, and we are the first real estate company to be approved by the NAFMII to issue such MTNs. Our registered amount was CNY 8 billion. In the same month, we got ABN for public placement and a registered amount of CNY 6.5 billion. We also issued senior notes of $600 million, average interest rate at 4.72%. Our Hong Kong project was approved by China Securities Institution, registered amount of HKD 5 billion. We also secured a five-year syndicated loan of HKD 10 billion with HIBOR+ 1.35% for the Tai Wo Ping residential project in Hong Kong. These are very important in expanding our financial channels and achieving sustainable growth. Please turn to page 11. Our credit ratings assigned to listed company and subsidiaries upgraded.
For Shimao Property in July, S&P Global Ratings maintained BB+ rating for Shimao Property and revised the outlook from negative to stable. In June, for Shanghai Shimao Jianshe it got its rating adjusted by Dagong Global Credit Rating from A+ to AAA. Shanghai Shimao, in May, got rating adjusted from A+ to AAA. We have very healthy financial channels. Please turn to the back. In the first half, we have maintained very healthy growth and a solid financial position. Page 12. Please turn to page 12. We continue to lower financing costs. With tightening measures targeting the real estate market becoming stricter, with frequent role of many austerity directives by the government.
In response to the complicated financial environment and market changes, the group actively tackled with multi-pronged strategies to persistently lower financing costs. We strengthen assessment on financing costs and announce monthly financing cost rankings of different regions.
We control the state of our financing costs based on a change in market rate, conduct merit-based assessments of various solutions with the same standard. We replace existing financing facilities with new lines and expand our multi-financing channels. Page 13, financial summary for the first half. Revenue up 54%. Operating profit improved by 38.4%. Profit attributable to shareholders, up by 0.5%. Total assets up by 0.5%. Shareholders' equity up by 7.2%. I will not repeat the rest. Thank you very much. Mr. Liao is going to talk about the business review.
Thank you. I will report to you the business review of the company. Later on, we will talk about the outlook. Please turn to page 15. Tang Fei already talked about revenue. If you look at the structure, 95% is sellable resources. In terms of by city breakdown, we are focused in Nanjing, Beijing, Xiamen and Wuhan.
33 cities, taking up almost half. Next page, breakdown of income from hotel operations and investment properties. Total, CNY 1.655 billion, up 16%. From hotels, up by 21.6%. Others, 35.4%. Rental income dropped slightly, mainly because Beijing Fortune Times was sold to Leshi Holdings, and Shimao International Plaza has been under renovation. If we take these factors out of the picture, in fact, we have a growth of 22.7%. If you look at the different segments, operation of hotels takes up about 49% of turnover, which is about half. Page 17, you can see a further breakdown of our hotel operations. By the end of June, we have 18 hotels. Almost 6,000 hotel rooms. Revenue improved by 21.6%. EBITDA improved by 35.3%, even more obvious, from 28.5% last year to 31.7% this year.
In March this year, Shimao Group and Starwood Capital Group signed a strategic partnership agreement to explore the boutique hotel market in China. Right now, we have four MiniMax hotels in operation. In the future, for the hotel segment, there will grow very fast . That is because we have innovation in our operations. Page 18: commercial office premises and operations. As I have said, the Shimao International Plaza has been under renovation, so the turnover dropped by 54.4%. Because of Beijing Fortune Times was sold, the return was a negative figure. But for the rest of them, you see very good growth. Now, let us have a look at the future outlook, including our land reserve. Page 20 and 21, you can see what we have done in the first half of 2017. 27 land parcels were acquired, mainly located in Beijing, Xiamen, Fuzhou, and other first-tier cities.
The land cost, net of interest, is CNY 24.7 billion. Total planned GFA, 4.527 million square meters. Per square meter land cost is CNY 1,023. About half of them are joint projects. By the end of this year, and also in the first half of 2018, they will come on to stream as new supply. Towards the end of this year and the beginning of next year, there will be very good performance. You can also see on the next page 22, the nationwide quality land reserve layout. We have land reserves in 45 cities, 150 projects. An area of 34.13 million square meters. Next page is the breakdown of our land reserve. Total GFA, 45.6 million odd, and attributable GFA, 34.13 million square meters. We also have some completed inventory of more than 1 million and more than 2 million under construction.
For future development, 19.9 million square meters. Everything attributable GFA, with everything added together, is 34.13 million square meters. Average land cost per square meter: CNY 4,000- odd. Next page, our sellable resources for the second half of this year. I believe you are more concerned about these figures. We have provided a breakdown here. The current situation is we have realized a current selling price of CNY 16,656. We have achieved contracted sales of CNY 45.1 billion in the first half, contracted sales area, 2.71 million square meters. Our prices are improving continuously. Other than the 2.71 million already sold, the total figure is expected to reach 6.78 million for the whole year. If you do the math for the total value, CNY 150 billion-odd will be the total figure. We have already completed a very good portion, and the sell-through rate is very strong.
We believe the sell-through rate should be between 60%-65%. We expect to exceed our original annual sales target, especially first and second- tier cities take about 60% of the supply of new properties. This is very helpful to our operations in the second half. Page 25, our operation strategies are spelt out here, so you better understand our strategies and methodologies. We want to achieve improvements in efficiency and quality growth. We would like to have consistent, rapid, and quality growth. We will focus on joint development. We will focus on innovation in relation to our commercial properties and hotels. At the same time, we have quality products. We will continue to upgrade them so that we are providing the right products in the market. This is reflected in our sell-through rate.
For the first half, the average is more than 80%, and for the whole year, the sell-through rate will also be very strong. Should be higher than what I just mentioned as 60%-65%. We will continue to optimize our inventory to make sure it is very healthy. In terms of profit and scale, we will go hand in hand. We believe we can achieve better results even in the second half. Hopefully, these strategies will sustain very strong growth and ensure that there will be continuous and healthy growth in future years. Mr. Shao is going to talk about the next part, the sales portion.
Some business highlights. Please turn to page 27. We entered into a year of quality growth. Contracted sales and cash collection improved by 31%, 22%, respectively, in this first half. Next page. Sell-through rate.
We have focused on targeting the exact demand in the market. We have launched innovative products during the first half. Overall sell-through rate improved by 14%- 60%. For new supply, the sell-through rate was more than 80%. ASP we have been improving continuously, now standing at CNY 16,000 . Contracted sales profit margin improved by 6%. Next page. Cash collection. In 2017, there were further restrictions on online contract selling. Overall cash collection ratio was slightly lower than the first half of last year and reached 80%. We have promoted the sales and also cash collection in target cities. Our cash flow was also getting more healthier because of good cash collection rate. Optimization and supply structure. First and second tier cities are expected to account for about 63%. Residential products will account for more than 60% of total supply in the second half.
Our supply structure will be further optimized. The group will exert timely control on the sales of quality products in the first- tier and strong second- tier cities, and speed up the sales in second-, third-, and fourth- tier cities during a suitable window period, with an aim to beat the annual sales target and increasing profit. Next page. Our core strategies. We are focusing on optimizing our products, improving efficiency, and pursuing innovation. Next page. Optimizing our products. We will innovate from the perspectives of the city and customers, and facilitate iterative product development and optimization in order to create products with higher market competitiveness.
To standardize this product offering under two main categories of apartments and villas, laying a solid foundation for the tremendous future growth of the group. Next page. In terms of improving our efficiency, we will increase our premium, expedite cash collection, and reduce costs and improve efficiency.
We will seize market opportunities to enhance sales capability, maximize profitability, and boost sales. Cash collection ratio is targeted at 80% or more, and down payment ratio increase to more than 40% and break through the mortgage collection restriction. Next page. In terms of innovation, we innovate in the aspects of education, sports, and culture through cross-disciplinary resources, enhance branding value, empower community, and create product premium. We have built a Shimao Photosynthetic Education Community, which is a self-nurturing surface system, and we have launched the eminence and sportsmanship strategy to make Shimao Group a respected international brand. Our Chairman will draw the conclusion.
Dear investors, I think my colleagues have already spelt out the details of our performance in the first half. I think overall speaking, multiple indicators have improved. Gross profit up by 25% to CNY 10.5 billion.
Attributable profit improved by 28%, but last year, there was this asset sales, and by deducting that, we still have a 5- percentage- point improvement and a 25% improvement to our dividend payout. Maybe some investors are concerned a little bit about continuity of the market. I think there are more and more refined control measures, especially in first- tier cities and strong second- tier cities. There are different types of restrictions, so total transaction volume is dropping. But I remember over six months ago, I talked about this mild drop. But actually, third- tier cities perform much better, so the ultimate picture is a mild improvement.
We knew quantity will improve, but we didn't know that the pricing would also come up so substantially. So we are going to reach about CNY 12 trillion in terms of total transaction volume for the year, mainly supported by the surprising third- tier cities.
But of course, third- tier cities may not be able to sustain such rapid development for the longer term. In the first half, our sales improved by 31%, and our pricing improved from CNY 12,000 to more than CNY 16,000 now. We believe that will continue to improve. Sellable resources also increasing. CNY 16,000 is rather conservative. The final figure will definitely be higher. If we use 60% as a sell-through rate, we will definitely go beyond our target. So we are readjusting our target by 10%, and you can consider these figures. So 60% sell-through rate, and we have already completed more than CNY 45 billion in the first half, and we will have better performance even in the second half. After the readjustment, CNY 88 billion for July sales figures has already been announced, and August will do better than July.
By the end of August, we have completed more than 2/3 of the readjusted target. So as long as the following months will perform at the same level, not worse, we can achieve much better results. I don't think anything will happen to drag the business down in the second half. Many people are asking, what about sales in 2018? What is the figure? Well, actually, we don't have a figure in mind, but the speed of growth will be faster. So it is going to be better performance compared to 2017, with very strong supply. Gross profit improved by 29.6%, and for the whole year, definitely higher than 30%. It grew by 25% to CNY 10.5 billion. If we take aside the effect coming from Fortune Times, we are talking about a better figure. So can we continue on in 2018 and 2019? Of course.
Because our pricing is improving, our products are improving, and we will talk about half of our land sold. They were strategic parcels or joint operations, joint projects. Some, of course, also auctioned off. So the average figure should be about 30%. We do have a lot of inventory, more than 10 million square meters, more than 30%. That means we are well supported with our confidence. Cash collection rate a bit low. It was 85%; this year, 80%. For the whole year, we believe we won't be able to go beyond 80% because, in first- and second- tier cities, other than price restrictions, the government has launched other measures. If you sell at a level that is higher than the average selling price of the city, then documents cannot be filed. If we offer 10% off the market average, that is our baseline.
If we have to go beyond a 10% discount, we just sit and wait and see what happens later on. Perhaps we can save them for next year or even two years from now. So we are conducting some active communication. For some cities, there are mean figures that we can refer to, and in some other cities, they're getting very strict. That does create some sort of impact, but we have improved or expanded the supply from 30 cities, so there's no need to worry. Cash collection: yes, there will be some impact because everything is being tightened, and we have acquired many parcels. Last year, in the first half, we did not acquire many parcels. We are standing at almost CNY 25 billion. We have acquired from auctions, and I think the total figure for the whole year will be a lot bigger.
Perhaps in Q4, in Bohai area and the Yangtze River Delta, there are many acquisition opportunities. Concerning our land reserve, up to now, we have more than 35 billion. It was 25 billion by June. This is because we have incorporated Beijing premium land parcels in the central rings, and our land reserve by the end of this year will reach about 36 million sq m, so more than 600 billion in sellable resources. But of course, some of them will be incorporated into the books later on. We are going to promote our sales activities and speed up the cash collection processes. HKD 0.40 dividend represents a 25% improvement. But last year, there was a special dividend. If we take that aside, we are talking about an improvement of 53.8%, and it reflects that the company is ready to share our fruits with you.
22.7% improvement of the revenue from hotel operations. There will be many quality commercial properties and hotels coming onto stream. June next year, there will be a new hotel opening up in Shanghai. It is going to be big news. And the biggest hotel in Hong Kong was acquired at a rather low consideration years ago. In Shanghai, some offices and landmark buildings, they will open in 2019. Lujiazui offices, Shanghai Shimao Plaza, also coming onto stream in the next one to two years or five years. Things will improve substantially. Many investors felt $20 billion consideration for a hotel project was very cheap. Our EBITDA for less than 20 hotels; it is actually even a better deal. So perhaps you can also pay some attention to our hotels. So 2015, 2016, well, we have reached the target in 2016. And we have gone beyond our target slightly.
2018 and 2019 will be the period of rapid growth with good quality. It is not just about growth in sales and profit, but also the level of satisfaction by our customers. In the second half, five innovative products will be launched, and that is some comment from an independent third party, not by me. We will also focus on the improvement of profit. So for 2017 to 2019, we must sustain quality growth. Thank you.
We will now proceed to Q&A. Please tell us your name and who you represent.
I am from Citi. Congratulations for the good performance. I just have one question. Can you tell us more about the cash flow situation in the first half and the guideline for the second half? Towards the end, we have a detailed cash flow projection.
For the first half, the figure doesn't really reflect the whole year's performance, but we have a lot of land expenses because our sales volume will also expand. If you consider every factor, then the cash position will be negative one. But sales is speeding up, and cash recollection, well, because of certain government restrictions, the collection rate will drop by 85% to 80%. We will try our best to improve the rate for down payment so that we can better control our cash flow. Because of the growth in sales and also GFA under construction, the cash flow expenses would be higher compared to the previous period. But at the same time, we are progressing very well with our construction, and next year, cash flow will be much better. Last year, 8 billion. Our whole year: 30 billion.
In the second half of last year, a big chunk was sold. In the first half of this year, we have acquired many parcels. First half of next year, you will see a very high completion rate and cash collection rate, hopefully. Hopefully, we can resolve the cash position better.
I remember a few years ago, Shimao Group, we were not talking about CNY 100 million as a target. Then something happened, and the sales target was not met. After two years of internal adjustments and inventory handling, you have a new target of CNY 88 billion. What about 2019, 2020? Any long-term targets? We are talking about other players with targets of CNY 500 billion. What do you think about your long-term target and also your market share? Second question, about profit. Gross profit, 30%. Is it more or less the same for the next two years? If you have more sales, should we expect a very obvious improvement for profit?
I want to talk about sales. Yes, CNY 88 billion is the target, but we definitely will go beyond that. In the first half, we already achieved CNY 45 billion. Times two, that is CNY 90 billion. If we do better in the second half, that is more than CNY 90 billion total. Definitely very good growth. You can do the math yourself, and you should know the final figure is very positive. A lot of people are talking about CNY 300 billion, CNY 500 billion, or in a few years, CNY 1,000 billion. Level of concentration is increasing, but the whole pie is not expanding that much. This year, CNY 12 trillion, not much growth. You have to consider, is it attributable or non-attributable?
Now we have more joint projects, and ownership is about 60% of the newly acquired parcels. When they give you a figure, you have to do the discount. You have to do the real math. It is really not that much. You have to consider what is attributable. If everybody makes CNY 1 trillion, then only a few players will take up the entire market. Or 25% of the pie is already taken up by the top 10. Really, that cannot be. The level of concentration is increasing, and gross profit more than 30% for sure for the whole year, and more than 30% for next year.
Profit will improve when gross profit is improving. The book- to- revenue for this year may not be so obvious. If sales picked up by more than 30% this year, then the booked figures for next year should be very optimistic. Please do not feel that there is no growth for this company.
I am Eugene from UBS. I have two questions. You are going back to growth path. What about your land reserve or acquisition? What are your plans? You first need to acquire quality parcels. What is the growth and profit? How do you balance the two? You have a lot of newly added supply driving up the sell-through rate. Second question. Land acquisition, JV, and also total consideration for the year.
Land is, of course, an area of your concern. We have 34 million square meters in our reserve, and the first half we have acquired CNY 25 billion, which is a very big figure. 45%, almost half, are joint projects. Or we have been talking to the government to set a lower threshold. The gross profit for these should be more than 30%.
But there are auctioned parcels and the profit is or gross profit less than 20%, and the net profit is almost zero. As I have said just now, for the smaller part, 30% or more, and then 50%, 55%. Perhaps when we even out the two types, we can still achieve a target of 30% for the whole year. But we have to increase the reserve of strategic land in Yangtze River Delta and also the Greater Bay Area. Well, of course, cities in these places are premium cities. They will perform very well. Perhaps we need longer term communication to obtain premium land parcels. We need a lot of communication, and we also have to think about acquisition opportunities. We have to consider the quality of land parcels attached to those companies that we consider acquiring.
If we acquire 100% of the assets, it is a lot of pressure, so sometimes we will acquire the company up to a certain proportion. We can also sell some of the properties, because our construction cost is rather low compared to our competitors, so at the end, we are still earning money from the market. These two months we have gone to land auctions, and there are more opportunities for collaboration. Maybe five to six players for one project, and of course, then the equity interest will diminish. For the budget of the year, more than CNY 30 billion, maybe CNY 35 billion.
We already achieved CNY 35 billion today. So we will perform much better compared to last year. The original target was CNY 80 billion for the whole year. We already achieved CNY 88 billion as the adjusted target. Once our strategic land parcels come on stream, the performance will be even better. So ensure that the sales improvement for 2018 will definitely go beyond 30%. We want to sell more in the first half of next year to reduce the asset-related pressure.
I am from JP Morgan. I am Ryan. Two questions. First, I remember in the past year, land premium is increasing constantly. You have already spent a lot of energy on M&A. Last year, perhaps, you have not completed all the acquisitions, and you have been moving rather quickly in the first half of this year. What about 2018? Is it going to be more or less the same picture of acquisition of land parcels, or are you going to acquire more or less? That leads me to the second question. If you look at Shimao Group, CNY 90 billion- CNY 100 billion sales volume.
I remember in the past, in Nanjing, Hangzhou, your market share was rather high, but today, some developers in Hangzhou, Nanjing, single- city sales already exceeded CNY 10 billion. So in every city, only a few hundred millions left. So in the coming two, three years, what is your strategy? Are you going to improve or increase the focus on strong second-tier cities? For example, CNY 10 billion supply per city, or are you going to scatter your efforts around?
For the Bohai area, there are still many land parcels without concrete planning. 2018, as we have mentioned, the sales growth will be faster than 2017. So cash collection will be higher than 2017 as well. Land acquisition will also be more than 2017 because that depends on the cash collection and sales. If things are not so strong for these two areas, we cannot acquire so many land parcels.
In 2018, the level will be more than 30%. If there are more strict measures or controls or tightening, then the pie is much smaller, then we can only acquire less land parcels. Otherwise, we will be in a lot of trouble. It really depends on sales and cash collection. These are the major considerations. Assuming the market is the same, 2018 acquisition level will be higher than 2017. We already have some rough plans. We have monitoring on a monthly basis. Sales figures for August, better than July already. Cash collection, also better. Last year, land acquisition for the whole year is lopsided towards the second half. We would like to achieve a better balance between the two halves.
We also have some strategic parcels, and in terms of our breakdown according to cities, we are very concentrated in our core 15 cities. Today, we are also going beyond the core cities. For example, Shanghai, it is very difficult to get new land. We have moved into Kunshan and also in the periphery of Beijing and Fujian, near Fuzhou, Xiamen. Nanjing, our sales was CNY 10 billion, number one, but some developers may tell you CNY 200 billion or CNY 20 billion. They are including some peripheral areas of Nanjing, not Nanjing itself. Perhaps some places in Anhui, because Anhui is very cheap.
The seventh ring in Beijing is no longer Beijing. We have purchased premium parcels within the three rings in the center, so they are really very different. We will also invest in cheaper land in the periphery of major cities, and the cash turnaround period is shorter.
Land premium has gone up quite substantially, and there is still risk. For example, in Xiamen rural area, we are talking about CNY 300,000. The land premium is more than CNY 20,000. Xiamen, perhaps in the past, CNY 7,000, CNY 8,000. Today, CNY 20,000. Land premium, over CNY 10,000. At that consideration, I will not consider buying the parcel if it is so distant from the center of the city. We will assess the risk, and where the risk is low, we may acquire the cheaper land. We are not that totally concentrated in major or core cities, but we are also moving into peripheral areas of major cities. Some land parcels may not be very well supported, and there will be pressure in the next few years.
Good afternoon. I am Wilson from Corey. I have two questions. First of all, you talked about Shimao Group going through a two-year adjustment period to achieve quality growth.
Can you tell us more? What has been done in the two years? You have a very rich history. You have gone through cycles. Do you have any deepening measures during the adjustment? How are they different? Second question. What about staff incentive schemes? Any improvements other than stock options? Anything else?
In fact, for 2012/2013, we have gone through rapid growth, and every year we grew by more than 50%. At that time, our stock price was much higher. But at that time, after high growth, we realized that quality was getting poor. Our products were standardized, nothing special. In these two years of adjustment, we focused on improving quality and improving the satisfaction rate of our customers. In 2017, our satisfaction rate has become the benchmark for the entire industry. Quality really improved, and our products were improved a lot.
Sales through rate for new supply, more than 80% average. Well, because of inventory, but we are no longer talking about inventory this year. We do not have much when we are selling CNY 30 billion, CNY 40 billion. Today, we are talking about CNY 80 billion or CNY 88 billion. So inventory is no longer an issue. After rapid growth, our quality was decreasing, and today all these issues have been eradicated. So the biggest change is better products, better quality, and less inventory.
We believe these are the three major changes. In 2017, we welcomed the first year of growth, and that was rather difficult because when sales improve, the cost will go up at the same time, but the collection rate is still not that fast. We have to wait until 2018 and 2019. So our performance is good, but are we really growing that much? Perhaps not.
2017 is a year for us to set the foundations, like constructing a building. If your foundation is weak, you cannot even build 50 stories. If you have a strong foundation, we can build all the way up to 100 levels. I think today, people buy their lifelong homes. They want upgrading; they want improvements over time, but they want to buy quality home the first time around. So are they going to choose us or someone else? We have to go back to the basics. In the past, people just accumulate properties. They did not really care about the location. It could be Mongolia. They just wanted to accumulate a lot of properties. But today, investors and buyers are focusing on quality, not just quantity. And we are improving both. Staff incentive, we have had a lot of internal discussion. Core energies, commissions, and other incentives.
We believe our scheme is very comprehensive, and we have made reference to other players. Many players will do a lot of loans. But I think, really, in terms of stock options. Our core staff members, they get profit-sharing arrangements. So we have multiple incentive measures. The quality and products are the key. Otherwise, some developers have fake certificates, and when the properties are handed over, there will be problems. We do not want to attract people who work for us for one year, two years, and then run off. We want people who stay with us.
Allow me to supplement. Perhaps you are a bit disappointed today. We have not talked about any target, like CNY 200 billion or CNY 100 billion. We do not want to use one single target. We want to do it step by step so that we can walk and be steady along the way.
We did not want to offer any specific figures. We want to be grounded and do it step by step. If it is CNY 88 billion, it is 88. We do not need to talk about CNY 100 billion just for the sake of announcing a figure. So we will continue to improve our products, improve quality, our competitiveness. We are improving our cash flow, and we make our plans carefully. We do not need to set a timeline. We do not need to change any figures. Because I also expect you to be grounded. Only then can you go far. If you look at the level of satisfaction from our customers, and you can look at all the figures, you would know we are growing. The first half of our performance is also improving. We want to be grounded in moving forward.
Like previous years, if we grew very quickly but we were not supported by quality, we had a high level of inventory, poor satisfaction. That is quite scary. We want to be stable and steady.
I am from DBS. I have three questions. You are buying faster and faster. What about the lengthy talk? Gross profit 30%, you are acquiring that, and below 20%, perhaps you are acquiring that as well. How do you really decide what and when to acquire? Second question: third-tier cities, you are going to do a lot of promotion to push forward sales. Which are the more important projects? For the second half, how much of your newly acquired land reserve is actually in third-tier cities? If we do not calculate the down payment ratio, what is the total payment ratio?
We acquired a lot more compared to last year, 45% in strategic locations, perhaps 60% or 70% for the whole year. It depends on whether we can successfully acquire some parcels at the end. Some are auctioned in the open market. How do we decide? Do we have positive cash flow in a certain region? What about that city? If it is Beijing or Shanghai, if it is a first-tier cities. Unless you are talking about spending 10 years on relocating the residents. Then the impact on cash flow should be positive. From our judgment, of course, growth will be stronger in more premium locations. Of course, we also need to consider the restrictions imposed by the government. If you are talking about a land parcel of 30,000 sq m, or you do not have much negotiating power, because that will be gone very quickly.
It depends on the size of the parcel, location, which city. We have this investment committee, they are very professional. Then supply. We have increased a lot in terms of third- to fourth- tier cities, including Fujian, Fuzhou, Xiamen, peripheral places. For this year, we have very good prospects for profit because the consideration was very attractive. Also Yangtze River Delta like Wuxi. The prices have doubled, so we want to move more quickly. Can we sustain this doubling effect? What about Hangzhou, a third- to fourth- tier city in the past? Our gross profit margin, 40%. We want to sell more. What about cash collection? Yes, we do face a little bit of pressure. If you exceed the average for the city, government won't book the transaction, and you can't really complete the transaction.
We have increased the down payment ratio to 50%. In some cities, if there is a price restriction, for example, a project can sell for CNY 20,000, the government wants the selling price to be CNY 18,000 only, and it is a big discount- then we won't sell. We will wait and see. For example, this year, we can get CNY 100 billion. But that won't happen if we offer big discounts like 20% and 30% off. Maybe 10% off is possible, or we have to communicate. We can charge a bit more from renovation here or touch-ups there. But in some other cities, these practices are not permitted. We can't just make up something and charge people. About 30% are paid one-off. In the second half, we will improve the sell-through rate in premium locations, so that may improve even further in the second half.
Well, just now, someone talked about cash flow. You did not really give a real answer. I want to ask you, the total consideration not yet settled in the first half- what is that figure? That is the first question. Secondly, also relevant to cash flow. I think it should be within 60%. That is a requirement from the rating institutions. Do you have any further guidelines?
Well, as I have said, land acquisition: CNY 25 billion attributable. The acquisition cycles are very short, five days, one-off payment. Some five months, some one year. Not the total amount of CNY 25 billion is paid in one go. We can only give you the total figure for 2017 by the end of 2017, because there could be major changes in the second half. For large parcels, sometimes the payment will last for a year.
For the whole year, we will settle all the expenses. It is going to be a negative cash flow figure. Debt has been reduced. I think 60% is very much under control. We will do it by installments, and it will spread through one year. In the interim, our stock price should improve a lot. We believe there will be very good growth, but we cannot specifically tell you which city and how much for each city. There are many competitors, so we cannot really offer the exact figures or specific details. There are uncertainties involved. Any further questions? That is the end of today's presentation. Thank you very much for your time.