It's almost time. Let's begin. Welcome investors, for coming to Sino-Ocean Group Holding Limited's Interim Results Announcement. Typhoon number 10 was hoisted and there was heavy rain, and today we need to thank the weather because the weather is fine, so we are in better mood. Let me introduce to you members of the management in attendance today. Chairman and CEO, Mr. Li Ming. Executive Director and Vice President, Mr. Li Hu. Executive Director and CFO, Mr. Adrian Sum. Company Secretary, Mr. Paul Chung. I am Chris Wang, CEO Assistant and General Manager of Capital Operation Division. Now, over to you, Chairman Li.
Thank you very much for coming to SOG's interim results announcement. I'm going to take you through our 2017 interim results. First of all, our main property development business. In the first half, for our property development business, the overall results are quite good.
Contracted sales was CNY 30.5 billion, up 48% year-on-year. Revenue was CNY 17.26 billion, up 85% year-on-year. Net profit CNY 2.67 billion, up 84% year-on-year. Core net profit CNY 1.52 billion, up 59% year-on-year. EPS, CNY 0.358. Around double of that of last year. Interim dividend HKD 0.167 per share. Again, double of that of last year. Dividend payout up 5 percentage points year-on-year. Finance cost is 5.07%, down 31 basis points year-on-year. New land bank, 12.56 million square meters, up 1.6 x year-on-year. These are our performance highlights concerning sales. In the first half of the year, we completed CNY 30.5 billion of contracted sales, and it's 51% of the yearly target. We completed 51% of our year's sales target. In the past, usually in the first half, sales were smaller. This year, this is the first time that we completed more than half of the yearly target.
Cash proceeds from sales CNY 24.5 billion, up 20% year-on-year. Cash collection ratio 80%. Cash proceeds or cash collection is relatively low because in the first half, mortgage policies were tightened. Besides, in April and May and June, sales were greater. GP margin of sales was 27%. In 2016, GP margin was 25 point something percent. GP margin of sales increased. That is about our sales. Now, let's turn to distribution of our sales. Distribution is more even than in the past. Beijing-Tianjin-Hebei dropped from 47% to 36% in terms of share of the total. For the other regions like the Yangtze River Delta, Yangtze Midstream, and Chengdu-Chongqing, PRD, they accounted for more equal share. Now, there are these fundamental changes in the structure. For first-timers and first-upgraders, they account for 78% of total sales, almost 80%, up almost 20% from last year.
Fast turnover products increased significantly. In the second half of this year, sales should exceed that of the first half. Our sales target was lifted from CNY 60 billion to CNY 70 billion. There won't be a problem for us to complete this target in the second half of 2017. For saleable resources, totaled CNY 80 billion. If we can achieve a 50% sell-through rate, then we can achieve CNY 70 billion. At 60% sell-through rate, then we can achieve 80% of sales. For 2018, current saleable resources already reached CNY 160 billion. In the coming one quarter or so, we will continue to replenish saleable resources for next year. Next year, we hope to be able to achieve bigger sales target. Then about profitability. Sales revenue was CNY 17.26 billion, up 85% year-on-year.
Locked-in contracted sales was CNY 58.3 billion, 40% of which is expected to be booked in the second half of this year. Next year, 40% will be booked, and 20% will be booked in 2019. Net profit and core net profit increased quite significantly from last year. EPS also increased comparing with last year, and also dividend. You are interested in GP margin. Recognized GP margin was 22% for the first half, more or less the same as last year. Because in the first half, most of the projects delivered were sold in 2015. In 2015, our GP margin of sales was rather low. Our company's GP margin has exhibited a fundamental change. In the past, our GP margin was very high. When it was low, it is particularly low. Now, for 2016, GP margin was 25.7%. This year, it is 27.7%.
In the future, or in the second half of this year, GP margin would surely increase, because those projects were booked last year. So we would be able to reach 25% for the whole year. Now, because sales increased, and we also did cost control, SG&A and interest expenses accounted for 7.1% of sales revenue, two percentage points lower year-on-year. Finance cost. Now, if you look at our financial data, finance cost on average was 5.07%, down 31 basis points from last year. We have diversified and stable financing channels. In March, we obtained NAFMII's approval for CNY 10 billion medium-term notes issuance. We have already issued CNY 4 billion. For three year, the interest rate is 4.77%. For five-year notes, coupon rates was 5.05%. We have already issued CNY 4 billion. There is another CNY 6 billion to go.
In June, we obtained NDRC's approval for 600 million USD offshore bonds issuance. Together with the remaining CNY 6 billion of MTN quota, the bonds will be issued based on business needs and market window. Now, for our one year that is due within one year, accounted for 14% of interest-bearing debts. For interest-bearing debts, the total is CNY 55.8 billion, slightly higher than last year. But because of the increasing scale of sales revenue and sales, our overall interest-bearing debts are still stable. Based on some rating indicators, well, there are slight improvements. So our position is stable in this regard. Now, we have got from Moody's and Fitch, the stable outlook rating. In the second half of the year, or actually in the first half, Moody's adjusted their rating from need to monitor, to stable.
Concerning land replenishment, well, we have Tier 1, Tier 2, Tier 3, Tier 4 cities breakdown. According to market situations, so we categorize our land replenishment into five major city clusters of Beijing-Tianjin-Hebei, Yangtze River Delta, PRD, Yangtze Midstream, and Chengdu-Chongqing. So we do analysis and research based on these five major city clusters. Now in 18 cities, we have already acquired altogether 44 new projects, totaling 12.56 million square meters . 12 million is used in traditional residential development. There are 210,000 sq m for commercial and office development. From now till Q4 and first half of next year, we believe that it would be a good investment timing and opportunity in the land market. So we will select opportunities through various projects and M&A to very quickly enlarge our land bank. Up till now, in 26 cities, we have altogether 40 million square meters of land bank.
Attributable land bank was 20 million. Why is it that attributable land only accounted for half of the total? This is our strategy. Now, together with the original acquirer and relevant working partners, we put in place a cooperation method. At appropriate time, at appropriate prices, we will expand our share of attributable interest. In the first half of the year, land cost was around CNY 6,100 per sq m . In these past few months in Beijing, we acquired three to four sites with a higher cost for our land bank. Perhaps you are interested to know the cost of Shenzhen urban redevelopment projects is around CNY 10,000 per sq m . The layout and quality of our land bank, comparing with three years ago, is now totally different. Quality improved significantly. The above summarizes our results of our property development business.
Now we have other new businesses. Let me go through our new businesses for you. Overall speaking, we are working hard to develop new business segments, and we hope that they can operate independently in the future. There are four segments. One, investment properties. We give this segment a new brand, Sino-Ocean Commercial. Real estate finance is actually real estate funds. We call it Sino-Ocean Capital. The third segment is senior living. The name is Senior Living L'amore. Property management and services, and that is Sino-Ocean Home Plus. After a few years of development, all these segments have achieved certain scale, business model, and sustainable profitability. In the next stage, we will enhance their ability to develop independently, sustainably, and fast. Now let me go through these segments one by one. First, investment properties.
We invested mainly in offices, urban complexes, and community retail space in Tier 1, Tier 2 cities. GLA at present is 1.13 million. Rental income was CNY 1.4 billion for the first half, EBITDA CNY 900 million. Valuation is almost CNY 40 billion. They are mainly offices, urban complexes, and community retail space. These are the three main components. For our office business in the first half, last year, it was a tenancy renewal period. In the first half of this year, for some major tenants, rent increased by about 7% and 10%. In the second half of this year, we have newly added a lot of area in Beijing and Shanghai. We acquired the area through M&A. The new area was 200,000 square meters. Right now, rate of return is above 6%. Complexes.
There are two projects which we cooperated with Swire Properties in the first half of the year. Operation began to show effects. Rents and also foot traffic improved quite a lot. Indigo Beijing saw 17% growth. Sino-Ocean Taikoo Li, Chengdu, 43% growth. In the first half of this year, we developed Hangzhou Grand Canal Place. Trial run took place already, and the results are quite good. For investment properties in the future, now, there are some projects which are being built. In 2018, 2019, 2020, in each of these years, there will be new properties starting operation. They do not include new projects. For attributable rent in the coming five years may reach CNY 4 billion with all these projects. Of course, in the coming two to three years, we have to seize market opportunities to make sure that our brand and management operation advantages can be realized.
Through M&A, we want to also expand this segment. Next, real estate finance segment. The name seems to be big, but the contents are the following three things. Number one, real estate funds. Number two, equity investments on behalf of the group. Number three, overseas investments. Real estate funds are our core business in this segment. They would like to make a return on investment and also revenue from operations. Besides, this segment also creates synergy with our other business segments. At present, AUM reached CNY 50 billion. In the past two to three years, the development was fast. In this segment, we have invested CNY 6.5 billion, mainly in equity investment. Real estate funds mainly invest in development projects in Tier 1, Tier 2 cities. For equity investment, it invests in China Resources, China Logistics, Beijing Capital Juda, and so on.
For overseas investment, the investment size is not very big. For financing, it is independent with other large enterprises and financial institutions like China Life, Ping An Insurance, China Cinda Asset Management, CITIC Group, and so on. Our company works with them. It doesn't occupy our company's credit facilities. In terms of management, this segment takes advantage of our whole industry chain in real estate and seeks synergy with other business segments. Also, our competitive advantage in commercial property operation. We help the investees and the customers to enhance management. Since last year, one cycle lasts two to three years. In the first half, in terms of the scale of exits, it's no more than CNY 3 billion. The ROI is quite good. If you look at risk management and rate of return, they are all quite satisfactory.
For this segment, in the next stage, we hope that it can develop independently and fast. Senior Living L'Amore . We have been working hard on this segment for a few years. In the first half of this year, we began to see fast development stage and fast growth too. Now, we have almost 2,000 beds in operation. Before the end of this year, this number should be doubled, so there would be an additional 1,000 odd beds. At the end of this year, we will have at least 2,500 beds. Now we have 7,000 odd beds in reserve. This year, we should reach above 2,000. Next year, at least 4,000. The year after next year, at least 8,000. The year after that, at least 20,000. In other words, we hope to achieve a scale of 20,000 beds.
After a few years of exploration and three to four years of operation, we have started to achieve profitability. For new projects, when we started to seek properties, and then renovation and team building, the cycle is longer and also costs are coming down. Now our team is rather mature already. At least in five major city clusters, 16 core cities, we will be expanding the development of our senior living segment. Now, we have been working with our shareholder, China Life, to see how senior living and insurance and their overall insurance strategic plan can be better integrated. We have been discussing with them. Property management. I think this segment is quite clear. We have already set up an an independent company, already listed in NEEQ. At present, they manage 100 odd projects, and they are managing 30 odd million square meters of area.
We emphasize the profitability and sales revenue of this segment. Sales revenue in the first half was CNY 500 odd million. Profit was almost CNY 100 million. Among counterparts, our profitability is among the top. For property management, the focus must be profitability. Now we are in the fast growth stage. Scale of management and also scale of reserve are increasing. In the coming three to four years, we should be able to exceed 100 million of management scale. Operations are rather satisfactory, so we want to further upgrade our service quality and we want to do more service innovation. For these four new business segments, overall speaking, they possess the conditions of independence and fast development. I will pass the floor to Adrian Sum to report our financial highlights.
In order to facilitate overseas analysts' understanding, I will present in English. The financial performance of the first half of 2017 was in line with our business budget and management plan. Here are the financial highlights. The revenue for the first half of 2017 increased significantly by 85% to CNY 17.3 billion as compared to first half of 2016. This is due to the strong contribution from property development business. Gross profit increased sharply by 69% to CNY 3.8 billion, with GP margin remaining stable at 22% for the first half of 2017. Profit attributable to owners of the company showed a significant increase of 84% to CNY 2.7 billion. Core profit also increased significantly by 59% to CNY 1.5 billion for the first half of 2017, with core net profit margin of 8.8%.
In line with the growth in net profit, basic earning per share drastically increased by 101% to CNY 35.8 cents as compared to the first half of 2016. Dividend payout ratio increased 5 percentage point to 40% as compared to the first half of 2016. We expect the payout ratio in the full year of 2017 will remain at this level. Taking into account that we have high confidence of our future earning, the dividend payout ratio of 40% will be our future benchmark. Dividend per share in the first half of 2017 increased 111% to HKD 16.7 cents. We maintain a sufficient cash resources on hand of CNY 23.4 billion and a healthy net gearing ratio at 62%. For the revenue composition, the property development segment remained the largest contributor to the total revenue, with an increase of 5% point to 88% during the first half of 2017.
With our home base in Beijing-Tianjin-Hebei region contribute 44% to revenue from property development business and remained the largest contributor. In line with our regional planning, the contribution from other regions became more balanced, and we will persistently maintain a balanced project portfolio. Financial position remains stable with adequate financial resources to support our business development. Our cash resources at the interim period ended 2017 were CNY 23.4 billion. Net gearing ratio was 22%, maintained at a healthy level, and this will be our benchmark as well. Unutilized credit facility were approximately CNY 146.7 billion at the interim period end of 2017. This is the end of our financial presentation, and now we go to the Q&A section, and we pass time to Mr. Li Hu.
Thank you, Adrian. Because of time constraints, each investor should ask a maximum of two questions. Please state your name and the organization you represent before you ask questions. Thank you.
Congratulations on your very good results. I am from BOC International. Two questions. First of all, in the first half of the year, land acquisition was rather aggressive, so you have bought some land parcels. I can see that there are similar companies entering new cities. In the first half, you entered Nanchang as a new city. For your future land acquisition scale, will you continue to be aggressive or will you continue to increase? Concerning your strategy, will you enter some new cities in, for example, PRD? Will there be some chance to enter some new cities? Are you going to stay in existing cities to fulfill your needs?
Second question, you are now operating farms and you are also in senior living and leasing, so you have accumulated some experience on these. The state is promoting some long-term apartments. There is some experience from you that may be utilized. What do you think will be the prospects of long-term rental apartments? Thank you.
Thank you for your questions. Concerning our new land development in the past, we considered based on Tier 1, Tier 2, Tier 3 cities. Now we are of the view that this method of analysis is rather outdated. We now focus on city clusters. Yangtze River Delta, Pearl River Delta, Yangtze Midstream, Chongqing, Chengdu, and TRD and so on. We manage our resources in this way. There are traditional definitions of cities being Tier 1, Tier 2, or Tier 3, but this traditional definition is not important.
We want to see whether they are in major core city cluster and whether there is good people flow. That will be our main criterion. We will not care too much about whether it is a Tier 1, Tier 2, or Tier 3 city. In regards scale, I think we have to make sure that ends are met. We have to look at our own development capability and our existing management resources. We also have to assess our own profitability, because in the past, we had gone through the past difficulties in relation to business cycle. Our management has been in position for quite long time, and I am rather old. We have different feelings and experience. You talked about long-term rental apartments. It is also a direction, but I did not mention it in our presentation. Last year in Q1, we have a specific brand operating this kind of apartments.
They are in operation already, so please feel free to visit the place. They are targeting at young people. We do have a registered brand, and in fact, we have been working on this mode for three to four years. We have done a lot of studies. We do think that it is promising. I will not talk about the small scale ones, but there are larger scale ones with more than 100 rooms. The project has started operation already. Please feel free to take a look. This gentleman is not coming through.
For this business model of long-term rental apartment, does it take the form of funds or will it be a subtenant, or are you operating as the landlord and so on? Is it like asset?
Right now, we do it as a leasing business, at leasing, and then we retrofit it, we renovate the apartments, and then we rent them out. Well, I think property purchase is more or less the same as senior living. If you buy it is not really very viable.
Management. Good morning. I am from Citi. I have two questions. First, concerning your growth rate. Last year, you said that you should achieve CNY 80 billion in 2020 and rent CNY 5 billion. Of course, the market keeps changing. Mr. Li, can you share with us in the future, in the coming three to five years, in terms of sales and profitability, what kind of growth rate can you achieve? Next year, there will be like CNY 160 billion of resources. In the past two to three years, you were in an adjustment stage.
The market is also conservative about your company, and now you have accelerated your development. Is it true that you are now more optimistic about the market, and in the consolidation period, you have developed faster? These are my two questions.
In relation to our growth rate, in the past, we have done a five-stage strategy, which was put in place three years ago. Sales would reach CNY 80 billion next year, and the rhythm, the funding, and other plans are made according to that judgment. Now, I think that this year, if you look at the market and also the purchase and also price restrictions, well, of course, they are troublesome. I don't think there will be problems to achieve CNY 80 billion. Next year, I think it doesn't matter whether we can reach the scale of like CNY 100 billion of sales.
I think this is related to our market view. In the past, you may say that we are relatively conservative, not really pessimistic. Now, we are optimistic or optimistically prudent. In the past, total sales was CNY 10 odd trillion, very high. It is difficult to maintain 20% or double-digit growth, and so on and so forth. It seems that this industry has reached a peak, a turning point. But last year and this year, the reality told us that the market is quite good. The pace is fast, growth is also fast. I have been thinking of how to understand and interpret this market. My conclusion is that in the coming two to three years, there will be double-digit growth. The market will stay at a high point. Why? Because we have overlooked the issue of population flow.
We should analyze the market based on another angle, not based on absolute number of population based in a place. We have to look at population flow as well. There are economic layoff factors and also new ideas, new concepts being implemented and finalized, and these will facilitate population flow. While we are talking about real estate being fixed assets, but then the people are moving. I am now much more optimistic than in the past concerning the coming two to three years. But in the long run, after three to five years, I think we still need to stay prudent. Because if you think of the properties available for rent, well, it is of course limited. One person doesn't need to rent 2,000 sq m, 3,000 sq m. Well, people can rent 50 sq m, 100 sq m. That's good enough. There are limitations.
Besides, for housing policies, if you refer to leasing and also real estate tax, all these are now in place, and they will have an adjustment effect. We need to be optimistically prudent. Thank you.
Mr. Li, management, good morning. Your share price has risen a lot today. Mr. Li, you said next year it is not an issue even if sales is at CNY 100 billion. Is that a bottom line sales target? Can I understand it this way?
Yes, no problem. You can treat it that way.
I have two more questions to ask. Number one, concerning your profit margin. You have quite a number of cooperation projects, and your attributable interest is relatively low, referring to your financial statements. Apart from GP margin, if you look at operating profit margin, can you give us some guidance?
Second question, if you look at growth of sales and also increase of profit, dividend payout, and so on, growth rates are good and the trend is an upward one. Your majority biggest shareholder, China Life, are they happy with these results? If you look at the realization of your growth rate target, are you confident? Thank you.
Okay. Let's listen to our biggest shareholder first.
Thank you. Last year during results announcement, I said already that China Life Insurance has been treating Sino-Ocean Group as our important property investment platform. Concerning their development and also our first half interim results this year, from China Life's point of view, of course, we hope to see stable growth. We are happy with the interim results. Concerning the future, Mr. Li just mentioned the target of CNY 100 billion, and also other new business segments development, we are also confident. There is no doubt about it. Thank you.
Concerning profitability, of course, at the end of the day, we want net profit. You want to have sales and gross profit. The final goal is net profit. This year in the second half, net profit return. What we can achieve in the first half can also be achieved in the second half. Next year, we'll be able to achieve what we did this year. So that's the indication on net profit. Thank you.
Good morning. I'm Allen from Mizuho. I have two questions. First, today, the biggest shareholder is here, but the second biggest shareholder is not here. Recently, there were quite a number of rumors about him. I don't know whether there'll be any unstable element. It's difficult for you to answer, but we would like to listen to your views.
Secondly, concerning GP margin, there's stable growth, and of course, we are happy to see that. If you look at the average selling price of CNY 20-odd thousand, this is excellent in the industry. In the past, you have been making active plan in Tier 1, Tier2 cities. GP margin of 27% is not really very high. However, you have done a good job in cost control, so your costs are not that high. Your counterparts achieved 30%-odd percent GP margin. Is there any way for you to further increase GP margin, Mr. Li? Thank you.
Let me take your second question first. Actually, after three years of business structure and debt structure and regional distribution adjustment, we have reached the harvest stage for our core business. We need to speed up our development.
The core point is that we have to assess our own ability and profitability before we do anything. We have to make sure that we have the capability to achieve the goal. If you look at land, of course, there is the land cost, and also, it is closely related to auditing and budgeting. How to make sure? I really appreciate the companies that can achieve 30%-odd percent GP margin. I think that we need to be sound in coming up with the budget. In our financial statements, there is total asset and the valuation is rather high. I hope that our selling price is a level which we can sell out all our products in the market. Of course, we hope to make sure that our products can be sold out.
Our asset quality is very high, especially for our development. If I give a very high number in budget, and then at the end of the day, there are a lot of not satisfactory asset numbers, then there will be problem. In the second half of this year, I discussed with my team and we have created one new department. It is asset management department. So it manages the business based on asset management criteria. In the budgeting and accounting of projects, my goal is to achieve 30% GP margin for property development. That is my ideal. I haven't thought of exceeding 30%. Of course, I have to make sure the GP margin won't fall below 25%. For our existing projects, this is the standard that we are working at. For your first question, it is true that I should not answer it.
I know you are interested. We are also interested in the matter, but I cannot represent our shareholders, but I can share some of my viewpoints. Apart from China Life, there is also other shareholders, including Anbang. Based on our working relationship, we haven't identified any problems so far. There may be changes in those companies. Yesterday, we had a board meeting, and Anbang colleagues attended the meeting yesterday. There isn't much change, and perhaps that person in charge did not have any problems, so he seemed to be fine. Concerning Anbang, they are giving our company full support. It seems that their attitude is even more determined than in the past. That's the point I would like to say. Another point is, based on China Insurance Regulatory Commission's requirements, the status of the view that properties are for living and insurance is for giving protection.
For external investment by insurance companies, the core should be financial investment. That's according to the requirement. This is a point that needs to be stressed. But independence of the investees should also be emphasized. For large investors, including China Life and Anbang, if there are internal changes in their company, still, I think that our company, Sino-Ocean Group, is still healthy and sound. I haven't seen any problem. Anbang has sold some shares. Did I buy them? I think no one wants to be a disobedient child, so I think the present situation is even more stable than in the past. That's my feeling. Thank you.
Thank you.
Thank you, management. First of all, congratulations for your excellent interim results. I have two questions. First, regarding your land bank, Mr. Li, you just talked about 20 million square meter out of 40 million square meters, where 20 million square meter was attributable interest. Will there be any cooperation agreements? Are the contracts locked in? In the future, after the projects are completed, how high can the attributable interest reach for ASP of CNY 20,000? It is rather high in industry.
When the regions expand, for the newly added land, can you still maintain this ASP? Mr. Li, in the second half of this year and next year, it will be quite a good window for land purchase. Do you have any plan or arrangement? Thank you. Mr. Li, you talked about senior living too. In the coming years, there will be quite big increase. It will be a rapid growth stage. In the past few years, it was a stage of preparation. How big is your level and scale of investment? Thank you.
Thank you. If you talk about our land bank right now, the total is 40 million square meters. Attributable interest was 20 million. The shortfall was 20 million. There are two reasons. One, for some newly added land, we have working partners. Of course, if we spend more money, we can increase attributable interest. But in our past history, we are of the view that too big a land bank may not be something good. If you invest too fast and too big, it is also a risk. 40 million square meters is not a small number. I think that this is related to future market. If the market is good, price will go up. When the market is good, of course you can spend money to buy up your working partner.
That may be worthwhile. Otherwise, if you shoulder a big burden, it is a risk. ASP of CNY 20,000 is reasonable according to our plan. In the past, we entered Wuhan, Nanjing, Hefei, and some other central cities in inland China. We believe that CNY 20,000 is reasonable. We plan to develop cities where there is bigger population size and bigger flow of people. Our land cost was CNY 6,000 odd, so ASP at CNY 20,000 is reasonable. Otherwise, the CNY 6,000 per square meter land cost would be too high. Then about Senior Living, right now we have identified the model, and we possess the conditions for fast development. You ask the amount of investment necessary. In the past, when it comes to senior living, you spend some money to buy properties and then you spend money on renovation. Now things are calculated on the basis of number of beds.
The amount of investment per bed, to lease the bed, to buy the bed, to decorate it and to lease it out and so on. Calculations are on the basis of number of beds. For one bed, if you talk about fixed investment or staff cost, everything, no more than CNY 500,000 . We work out our revenue based on this. At 20,000 beds, the total will be CNY 10 billion.
CNY 10 billion, how much income is that?
More than 1 billion CNY 1 billion CNY to CNY 2 billion every year income. These are the calculations that we have done. Now we are using the CB mode, so with the CB mode, we can reach this scale. However, CLRC mode and also other community mode, we are still looking into these possible modes.
Just talking about the CB mode, we can start operation in six months, and then in three years, we can reach full occupancy, and then two years break even, and then three to four years, a balanced cash flow, and so on. That's the model that we have built.
Thank you very much.
Good morning. I'm from DBS. My name is Ken. I have two questions. First, in relation to your commercial segment, the attributable value of commercial properties, CNY 25.7 billion, it's more or less the same as your market cap today. For your commercial valuation standard, what are the standards? And how much is the cap rate in the future? About commercial property, can you speed up the development of residential properties? For net gearing, your gearing ratio has gone up, and the management said that you need to speed up land acquisition.
In the future, how are you going to control your gearing ratio? Thank you.
You asked about valuation. That is on the book. That is under accounting. Attributable interest is around CNY 20 odd billion. You mentioned our market cap, that's the number. Won't be a lot bigger. For our new business segments, they do possess the condition for independent development, and in the future, they will go independent. Perhaps within a short period of time, that will happen. In other words, we will focus mainly on development of businesses, and the other segments will have clearer road maps and room for development. When a daughter grows up, she will have to get married, right? Only in that way are you able to realize good value. Then about gearing. At present, our net gearing is 0.6, it's quite good.
After marrying your daughter to other person, well, perhaps you can consider this kind of purchase and sale. It depends on how many wives you want to have. It depends on how fast your development is. After your daughter has got married, you can remarry yourself. You can even get a few more wives.
Good morning. I'm from Macquarie, Wilson. My first question is about sales. Today, based on your sales plan and progress, I think you will be able to achieve your previous five-year target earlier than scheduled. Do you have any new targets? Now, by 2022, you want to achieve CNY 4 billion attributable interest. Do you have the same sales target? My second question is about your incentive system. There has been a lot of feedback.
Apart from stock option incentives, do you have other incentive mechanisms to help your company realize your targets and indicators and plans?
Concerning target, I, in particular, want to tell you that in the future, we have CNY 200 billion, CNY 300 billion target. But to be exact, when I worked out the target, I have to go back to the return of our attributable equity or capital. I hope that our rate of return can be double digit. I hope it can reach about 15%. That's my goal. I do not aim at selling CNY 200 billion, CNY 300 billion of sales. I want to ensure the return of attributable equity. That's the core. I want to see stability at at least 10%. If necessary, if I really need to sell CNY 500 billion to reach the goal, then I will do it.
If I have to monetize the new business segments, then I will do it. If long-term rental apartments can help us achieve the goal, I will do it. I think that is the path I have to adhere to. Concerning incentives, I have a new idea about the market. I think that is really necessary. I think shareholders need to incentivize me as well. We can talk later about this. I get 1% to 2% equity, and I can deliver these results. It is already quite good. Secondly, we also need to motivate young people. In the past one to two months, the senior management has made a major adjustment to our team. At present, in the senior management team, apart from myself, there is no team member over 50 years old. All are 50 years old and below or below 40 years old.
We have made these adjustments. Recently, we issued some stock option plans, and I did not accept it. Other older colleagues cannot take them. The goal is twofold. One, we hope that for the core members, their fate, their destiny, will be linked to Sino-Ocean Group's dream. We hope young people can get more rights and benefits. This is really necessary. And we have to work with our shareholders together in this regard. Other details are still being discussed. I cannot really say too much because of time constraints. Okay.
Good morning, Mr. Li, management. I have a question. In the first half of this year, all your developments are more or less the same as what you search. Now you have listed out clearly your new businesses. How should we interpret Sino-Ocean Group's business?
In the coming three to five years for your new businesses, which one will be more outstanding? Which one will stand out more? Which one of your new business segments can reposition Sino-Ocean Group? Another question about your capital business. For land purchase, there is attributable equity or interest of 10% to 15%, but how do you differentiate it from your capital segment? And which are the core cities that you are investing in, and what is the performance of those projects? Thank you.
Now, I will ask Mr. Hongjie to comment on real estate finance.
Okay. I am so happy that I have the opportunity to answer questions after four to five years in the company. For our real estate finance segment, its positioning is that we are operating real estate funds, equity investment, and overseas investment. It is an alternative investment type.
We invest in external real estate projects and real estate funds. Source of funds is also external. You just referred to equity cooperation with our internal projects, but this is rather rare. You also asked about our existing investment. Where do we invest with our internal funds? For our own funds, we invest in strategic equity investment and PE projects. For real estate fund, we are now in 20 to 30 cities. For equity investment, it is in big logistics, big data, big healthcare, and big environmental protection segments. We are still in exploration stage for equity investment. The amount is like CNY 3 billion to CNY 4 billion. You just asked how to comprehend Sino-Ocean Group, to be frank. After the past few years' adjustment, we have reached a time where we will see changes. I shouldn't talk about shareholders because that is a bit remote.
Now, if you talk about our business, you have to divide it up. There is property development business, and there are new business segments. If you look at the new business segment scale, profitability and stable, well, of course. Property development is the first, and we have reached a rapid change stage. Sustainability of our profit will be better. If you look at our property development business, new land bank, 70% to 80% of it. Of the projects to be sold in the second half and next year, 70% to 80% of these projects are developed from newly added land based on new land standards and in new regions according to new conditions. The profitability, sustainability, and liquidity are very different from past projects. Quality is greatly enhanced.
Because of time constraints, we will conclude our results announcement here. Thank you for coming.