Ladies and gentlemen, good afternoon. Thank you for taking your time and coming to the 2015 annual results announcement of Greentown China Holdings Limited. First of all, allow me to introduce the members of the management to you. They are Cao Zhounan, Executive Director and CEO, Li Qingan, Executive Director, and Simon Fung, CFO. Our result presentation would first compose of the management walking over the operational review and financial highlights. Then we move into a Q&A session.
Good afternoon. First of all, I would walk over the highlights and performances of 2015 for Greentown. Simon Fung would then talk about the financial highlights. Lastly, our CEO, Mr. Cao, would talk about the outlook and strategy of the company. If you look at the PPT, please. In 2015, Greentown, the group has recognized a revenue of CNY 26.47 billion.
That is 18.7% down from 2014. The main reason was because of the splitting of the financial resources. Our GFA for 2015 has seen a decline. The land reserve in third and fourth city has been impacted. The property sales is up to a 22.5% decline from last year. It is at CNY 23.326 billion. Profits attributable to owners of the company were CNY 813 million, and that is a 60.8% decline. There are two reasons causing this. First is that in 2015, the provision has increased by CNY 300 million. There are exchange rate losses, and that is CNY 420 million. We have been enhancing on our pre-sales rate in 2015, and that has increased our cash flow. The core profit attributable to owners of the company was CNY 103.3 million in 2015, and that is 53.8% downwards when compared to 2014.
As far as our cash position is concerned, we are at CNY 18.239 billion. That is sufficient to cover our borrowings and senior notes and notes that are due within a year. Our net gearing ratio was at 73%, representing an improvement of 76.7% in 2014. The third piece is debt capital raising. on February 10, 2015, the group has issued an additional 8% senior notes due in 2019 up to CNY 200 million. In August 11, 2015, we issued a CNY 500 million of new five-year senior notes at 5.875%, and that is comprising of an exchange offer for the company's USD senior notes with higher coupon. The group also completed a consent solicitation of terms amendment on the USD and English notes.
In the second half of 2015, the company has two trenches of a total of CNY 7 billion domestic bond, and the average coupon rate was at 4.75%. This would be the third point. The fourth point of a highlight is that we have formed the Greentown Management Group in 2015. We have completed acquisition of the Greentown Dingyi Real Estate Investment Management Company, as well as the Greentown Shidai City Construction and Development Company Limited, forming the Greentown Management Group. Currently, there are a total of 60 projects under this group with a total GFA of 19.21 million sq m. The fifth point is the pre-sales. In 2015, we have sold a total of sellable area of 3.9 million sq m, and the contracted sales was approximately CNY 71.9 billion. The annual sales target has been achieved, exceeded actually, the target of CNY 60 billion.
At December 31, 2015, Greentown Group recorded subscription rates of CNY 1.8 billion. Sixth highlight is the largest shareholder by CCCG, China Communications Construction Group. This has been completed on March 27, 2015, and they now hold 524 million plus shares. On June 4, 2015, CCCG acquired another 100 million shares of the company at CNY 11.46 per share. At the date of this announcement, CCCG holds 28.899% stake in Greentown, becoming the single largest shareholder. These would be the main happenings in 2015. Let's talk about presales overview. Number one is Greentown. We are a leading China real estate developer with a very strong brand recognition. In 2015, the Greentown Group, including Greentown China Holdings Limited and its subsidiaries together, has sold a sellable GFA of 3.9 million sq m, and total contract with sales is CNY 71.9 billion.
Our total full-year sales has exceeded the target of RMB 60 billion set at the beginning of the year. At the end of the year, we still have CNY 1.8 billion of subscription sales. In 2015, there were 120 projects that were on sale. The average selling price was CNY 18,449 per sq m, and that is a slight decrease over that of 2014. If you look at these three charts in here, as of December 31 of this year, our 2015 presales when compared to 2014, there has been a slight decline. However, this has taken out the platform issues, which are CNY 1.8 billion, has been transferred to Rongchuang. If we compare apples to apples, then 2015 enjoys a significantly higher sales level than 2014. Also, average sales rate has been kept stable versus 2014, only experiencing a slight decline.
The geographic distribution, as you can see in the pie chart, approximately there hasn't been much differences. Zhejiang and Hangzhou regions continues to be our largest market, and then followed by Shandong, Jiangsu, Shanghai, and Beijing, as well as other cities. Another area would be our scale of development. As you can see, historical GFA under construction on the left chart from 2013, 2014, and 2015, we have kept it at around 10 million square GFA. We have been insisting on quality development. The product innovation and the sales strategy, it has been systematically reformed for a market-based strategy. We have also promoted product innovation, has implemented a 2-6-2 ratio, meaning 20% high-end to meet high-end demand needs to support the brand value of Greentown.
60% would be for those that have value for money, the fast-moving products with a high return ratio. The other 20% is on high-quality social products, social housing in the third and fourth city. We have identified 15 cities Beijing, Shanghai, Guangzhou, and Shenzhen. Apart from these four, then there are also 11 more core cities. In 2015, our investment basically would be in these 15 cities. Another area would be our construction management business. It has developed in an orderly manner. We have integrated the construction management platform and centralized business plans and pool advantages resources together. On August 2, 2015, we've completed the acquisition of Greentown Dingyi Real Estate Investment Management Company Limited, as well as Greentown Shidai City Construction Development Company Limited. We have formed the Greentown Management Group and are expanding in our scale.
At the moment, we have 60 projects under this management group with a GFA of approximately 19.21 million sq m. The total revenue we anticipate would reach CNY 136.3 billion, and we anticipate that we can get a management fee income at a range of CNY 5 billion. in 2015, we have recorded a revenue of CNY 336 million, with a net profit of CNY 105 million. Leveraging the construction brand and management output, we would increase the proportion of asset-light businesses and integrate project management strength, and also to accelerate the formation of a unified and comprehensive construction management brand. Now, I would also report our newly added land bank in 2015. Greentown, in accordance to our new investment strategy, has obtained five high-quality land sites with a total GFA of 2.51 million sq m. Those attributable to the group is 1.33 million sq m.
The new investment on this land premium is CNY 15.3 billion. The average land price is CNY 81,066 per sq m. Now, if you can look at this pie chart, the breakdown by region goes to Hangzhou 20.7%, Shandong 33.6%, Beijing 11%. However, towards the end of last year in the Chinese New Year, we have also obtained another plot of land in the fourth ring area of Beijing. So the Beijing contribution would be ranging the first towards the end of the year. Also, there's Guangxi Liuzhou, a plot of land that gives 8.2%. Then Hangzhou, apart from Zhejiang, has 26.4%. Now, if you look at this table here, by end of 2015, Greentown has a total of 81 project sites.
Total GFA is 31.24 million sq m, and total sellable GFA is 23.08 million sq m, of which 13.56 million sq m are attributable to the group. There are some very detailed numbers here, which I will not go into detail one by one, and this is the overall land bank overview. Now, let's also look at the brand and accolades last year, mainly in three areas. We have, for consecutive 11 years, been awarded by the Development Research Center of the State Council and the Institute of Real Estate Studies at Tsinghua University as the top 10 largest Chinese real estate enterprises. The second accolade was in September 11th, 2015, also at the 2015 China Real Estate Brand Value Survey that's being coordinated by these three organizations.
Greentown, with a CNY 21.183 billion of brand value, has been named the 2015 top 10 brands of Chinese real estate companies, and it was also elected as the 2015 top brand of Chinese real estate companies in customer satisfaction. Also, by December of last year, our brand value has increased from CNY 900+ million to CNY 21.183 billion over the past 10 years. Also, let me talk about after CCCG becomes the single largest shareholder, what are the changes to the shareholding structure? In 2014, it has been completed, and there's no change in 2015. So by January 15 this year, CCCG has appointed Mr. Liu Wenzhong as the executive director as well as the Co-Chairman of the Board. So Mr. Zhu Bixin, the original Co-Chairman, has another assignment from the State Council. So we now have new Co-Chairmen.
Now, as of now, in the seven directors that CCCG has appointed some directors, there has been no change in other structures. CCCG's support to Greentown is also in its day-to-day operation as well as board composition. Now, mainly in three areas, it actively participates in Greentown's strategic planning, specifically in the 13th five year plan. Five out of the seven executive directors in Greentown are now appointed by CCCG, and it also actively participates in Greentown's daily businesses. The third area is that CCCG in 2015 has consolidated Greentown into its financial statement starting 2015. As far as the board structure is concerned, I will not repeat the structure as it has already been reported. CCCG is not only a very strong strategic partner but also a very strong leverage.
As you can see, the CCCG partners have been providing finances to Greentown and also are providing various financing options to Greentown. As far as cooperation is concerned, this partnership with CCCG comes in various formats, including financial support, strategic partnership, brand synergies, resource sharing, as well as overseas development. As far as brand synergy is concerned, CCCG, as a Fortune 500 company and a model SOE, and Greentown as a top 10 real estate company in China, both together can leverage on their complementary brand influence. As far as overseas development is concerned, it would help Greentown to move abroad and leverage on advantages. So the partnership with CCCG is a multidirectional, comprehensive, and deep, I mean, a visionary strategic partner. Now, let's move into financial highlights to be given by Mr. Fung.
Thank you, Mr. Li. Just now, Mr. Li has talked a lot about the financial figures already. There isn't really a lot for me to say anymore. But I would like to share with you about this very challenging year for us. Our revenue has declined by 18.7% this year. As you can see, this has a lot to do with our subsidiaries and the partnership companies. But actually, as you are aware, last year, we have 18 projects that were passed to Rongchuang. So those projects of the second half of the year have not been booked into our books. However, when compared based on apples to apples, we actually have a 20% improvement. So there are three areas that have caused the decline of 60% of our profits attributable to shareholders.
The first would be a revenue decline, and also gross profit has also declined by, I mean, the gross profit margin remains stable, but the gross profit reduced by 33.3%. Also, our product mix. If you have been following us, you will know that in the first-tier and second-tier cities, for those who are selling at CNY 40,000 and CNY 50,000 , the margin is not an issue. However, for those that are at a lower price, those have an issue. We are slowly lacking in these higher-priced assets. As you can see, in the last couple of plots of land that we had are all in the first-tier cities and coming in at a good costing. So this is where we are working on. This is the growth. Also, our administrative and cost has also increased. The administrative cost, there is CNY 400 million of exchange losses.
This is calculated at fair value closing. That is because of the depreciation of RMB, and we have a lot of US dollar-denominated debt, and hence the impact. Many investment bankers have been asking that we should be actually doing hedging. But hedging is actually very difficult to do. If it is at 6.5% cost, then they do not do it for you at 6.6%, they would do it at 5.7%. That is just a gap that you really have to pull money out of your pocket to fill. Then in three to five years, do you know whether the RMB is going to depreciate or appreciate? This is very difficult. For those hedging tools that are available in the market, we actually did study a lot in detail about them. But I think this is not as simple as an insurance package that you are entirely covered.
Hedging is something that has been clearly calculated and meticulously calculated by the bank, and it only covers this tiny little spot, and if you do not fall under that spot, then you really do not have any protection. There are three hotels that have started into operation in the second half of last year. That brings in CNY 100 million of impact into the expenses. Taking out the new hotels as well as the exchange cost, then the true increase of expenses is only 10%+ percentages. That is in human resources, et cetera, which is quite reasonable expenditure. Selling expenses, meaning bonuses in the Rongchuang age, there are some policies that we have to check and therefore, bonuses for 2014 have been paid out in 2015. Cutting that off, we have a 12% increase in selling expenses.
Year-on-year, our sales have enjoyed a 3% increase, and that is really under control. As far as financial cost is concerned, this is the number on the P&L. We have a large piece that was capitalized as a cost. Total cost in 2015 was CNY 3.2 billion, and last year was CNY 3.1 billion. Only a slight increase. Because our overall debt has increased by CNY 10 billion, and our capitalized percentage in 2014 is 78%, and now it is only 70%. With a lower capitalization ratio, then our P&L losses becomes bigger. However, our weighted interest cost is dropping from 7.9% to 7.3%. However, our financing cost has come down, but the overall number of financing has increased. That is why you see this number increasing. These numbers have already been explained.
If you look at the balance sheet, as you can see, our borrowings increased from CNY 35.8 billion to CNY 44.9 billion. The bank balances has increased significantly. Despite the fact that we had a bigger loan, we also have bigger bank cashes. Total equity went from CNY 34.6 billion to CNY 36.6 billion. Bank balances has improved 100.8%. Land Appreciation Tax payable. After exchanged, the exchange losses has also been booked. Our net gearing ratio has dropped from 76.7% to 73%. Revenue and cost structure, as you can see, under the breakdown, you can see land cost is 23% and gross profit is 18%. The price has also come down from CNY 15,000- CNY 14,000. Why is it there is a gap with our anticipated sales price?
Anticipated sales price was all for ground areas, but what we've booked in here also included underground areas like car parks, et cetera. For car parks, typically, we would be selling CNY 7,000- CNY 8,000 per sq m, and therefore diluting the overall price per sq m. Another area would be the taxes. These are after-tax numbers, whereas when we do the pre-sale, they included business tax. Page 20, that is debt and cash position. As you can see, loans within a year, that's CNY 12.5 billion and total CNY 27.4 billion. However, all of these financing has been done. We have announced already CNY 700 million of syndicated loans, and we will be announcing other loans in the next several days. So all of our financing has been put in place. It will soon be announced. Our refinancing has been done very well this year.
For CNY 720 million of borrowing, we only have an average LIBOR rate of 3.3%. Our net gearing ratio, we have already talked about. Our foreign debt is CNY 15.6 billion. That is 37% of total. As far as our financial position is concerned, bank credits, we're not really concerned about. We have only used a very small part of what we have been given. Only CNY 17.3 billion of the CNY 67.1 billion of facilities that has been drawn. However, we will be very prudent as to how we draw down on our credit facilities, and there's absolutely no pressure with financing. Also, there has been a $500 million at 5.872% coupon. We have been very successful in launching those.
With CCCG support, our grading in mainland China has actually been improved, and we have been enjoying cost of financing that is even lower than what you are seeing here. Just now we have been talking about those loans that will mature within a year, has already been secured, and the announcement will be made in the next several days. So please pay attention. Let me pass the microphone to our CEO to talk about the outlook.
Good afternoon, new and old friends. Our Mr. Fung and Mr. Li has already talked over the 2015 financial and operating status of the company in 2015. Quite frankly speaking, I am very much happy to open up and talk to you about the present and the future of Greentown. Looking at the data from the financial report this year, this is actually a very challenging year.
What the figure goes to say is that the company in its operation, what are the issues or what are the issues that we can see? For example, you will see that starting, looking at the GFA and the volume, you can see that the company has not been buying a lot of land since 2012. As far as the gross profit margin of all the investment projects is concerned, it also goes to say that our investment strategy has a lot of room to be improved. For example, in the third and fourth city, our product size seems to be too big. This year, our pre-sales has rate, has exceeded 351 million sq m. However, we still have CNY 70 billion yet to be sold. Some are in Hainan province and other third and fourth tier cities.
Now, as far as investment structure and quality is concerned, there is also another reason. For example, in 2015 with Rongchuang, there was this event that has caused an impact to the pricing as well as the gross profit margin. I am very open to a frank discussion with you. These data goes to tell the story of our operation and our strategy and our financing as well as our product strategy back two, three years ago. Several years ago, we have already, well, in 2015. 2015 is the most challenging year for Greentown ever since its founding. Looking at the data, it is far from ideal, but I would like to very frankly report to you that since our overall strategy from last year as well as our outlook for the future, the first includes an investment strategy.
Starting last year, our investment strategy has been entirely revamped and confirmed. That is, we have decided to be active in 15 cities in mainland China. Just like Mr. Li has said in Guangxi, there is a piece of project that we believe is of high value. We were going up. As of second half of last year, we have 152 plots of land. Most of those are in the first and second tier cities. Into the future, we would focus on the first tier cities plus Tianjin, Jinan, Hefei, Nanjing, Hangzhou, Fuzhou, Xiamen, and Wuhan, as well as Chengdu and Chongqing. Apart from these, in principle or fundamentally, we will not move into all other cities except from these.
This result has been under a repeated strategies, and the reason is that the Greentown properties and products has to go into cities that can afford this price. From last year, including all the way to quarter one, we have been implementing on this. We believe that after two years, our gross profit margin will definitely return to a high level. I have seen many familiar faces who are very familiar with Greentown. As long as we sell high quality products in first tier or second tier cities, could we have a pricing power? It has been many years when we have issues with pricing. The key is our cost.
I have to frankly tell you, fellow friends, as far as cost is concerned, we have already strictly controlled that. With our new products in the common platform, our cost, our view cost, our building cost, as well as other costs, has come down greatly. I have compared it sincerely with our peers. We are only a bit higher than them. As far as our financial cost is concerned, with CCCG help, it has come down. When compared to 2014, our financial cost has dropped by 3% or more. As far as management fee and sales fee is concerned, our budget has also indicated a great come down. All in all, I believe that our gross profit margin as well as our net profit margin in the next several years, we will not see a great change in the next two years.
But however, we will have to focus on strictly implementing our strategy and do not move into the third and fourth tier cities. Secondly, we will continue to optimize our product mix. As you can see, last year, Greentown in mainland China has four main key brands in Hangzhou, in Beijing, including brands like Janali and others. Now, these have been products that we have invested significantly and for Yangloujun, over one single day, we have been able to sell 1,000 flats. Now the phase two is open for sales today. It has been welcomed significantly by the market. So the product mix of Greentown continues to be number one in mainland China, and we continue to step up on our investment.
However, as far as quality is concerned, meaning that we have targeted our strategy to target the bigger market, meaning that our product needs to cover a bigger market segment. I believe that in the next several years, you will continue to see this strategy being implemented. We are targeting a much larger audience, and we are offering much higher value in our products. So this is another area of change. The third is, since the early part of this year, there has been a lot of reform in our management. The first segment would be investment and development segment, and then there is the branding and acquisition business. As you have been told that we have been acquired two companies already. Last year, this business has been CNY 300+ million , and this year, it's already close to CNY 1 billion.
We will continue to step up on this leasing and financing business. The revenue in the next several years has already exceeded CNY 10 billion. Now, in the Chinese real estate companies in China, only Greentown can build this part of the business. Now, this business must rely on first our top-end quality and brand value. So under normal circumstances, our asset operation group can reach CNY 800 million of net profit. Now, if this asset operation business can drive a net revenue of CNY 500 million, then we are already in the blue as far as this segment is concerned. So these are the fundamentals that we're building. The third is that Greentown has already owned 25 hotels. We have invested CNY 11 billion, and there are other subsidiaries to these hotel business.
Now, Greentown, as you are well aware, in mainland China, we are called Greentown Real Estate Property, and we have two faces. We have two names, one for external, one for the domestic market. We will continue to optimize our management structure. Now, all of these three segments are with real estate currently. This year, we will conduct some reform. We will single out the asset operation group. This is for Greentown. There will be three subsidiaries under Greentown to be formed quickly, and the division of market and responsibility would be very clear. The headquarters would control investment and control fundings, as well as the human resources and performance measurement of the subsidiaries. This is very clear. The three subsidiaries would operate separately. Now, one concentrates solely on investments, the other one on asset operation group.
Just now, Mr. Fung was talking about the hotel group, as well as the foreign exchange losses. Now, in the future, with investment in real estate, there is no such risks, as far as our foreign exchange risk is concerned. Now, going forward, this will be clearly delineated. Shareholders. All of these results would be folded up and rolled up into the holding company's performances. We will step up on implementing this strategy, and I think Greentown, as you know very well how we are. Now, once we have been able to clear this structure, and also once we have been able to work on optimizing on our product mix, also with CCCG becoming our main shareholder, that will bring in significant advantage as far as financing cost is concerned. For CCCG, Greentown is a very important component for its real estate business.
They can help us guarantee finances, and we will provide our capability, our high-caliber people, as well as our experience. So, with this strategic cooperation and elaborate reform, as well as clear delineation of roles and responsibilities, as well as our strategy, we are prompt to explore expanding the market. Now, for the central government and the local government, with the supporting policy to the real estate, these cannot go on forever and ever. As you can see, deleveraging, doing away with the existing stock, these are something that is temporary. That's why I think the implementation of Greentown's strategy must be completed by mid-next year, meaning this year and next year, we will have to do away with all of our existing inventories. Meaning starting from mid-last year, our inventory, 90% of that, will be built in our new strategic cities.
Now, if we fail to do this, then the future would be very, very rough. This is the key to our future. So I hope that next year is 2017, and 2018, when we sit here, I hope that you will be very happy with what we would have achieved. We hope to be able to sit here very relaxed by 2018 to share with you our great results. So I will just stop here. Thank you.
Thank you. Now let's move into Q&A. Before your question, please name yourself and your company. Now, in order to allow maximum opportunity for all to ask, please limit yourselves to two questions. The first one, please. Gentlemen on the third row.
Thank you. I'm from Credit Suisse. I am Du Jinsong. I have two questions. One is just now, when we talk about CCCG, I have small follow-up questions.
First is, the long-term planning conducted together with CCCG. As you can see, CCCG has just restructured its A-share company, Zhong Fang. So I'd like to understand what is the plan going forward and what would be the long-term impact? Also with CCCG, apart from supporting us on financially, would there be any impact on the cost control, especially construction cost? Because CCCG is a construction company, and would it have any help? Would offer any help to us as far as construction costing is concerned? Previously, we have been saying that there may be some shares that will be distributed after CCCG. Has that been implemented? Mr. Cao has talked about a very important component regarding the changing of your product mix. Now, how is that doing? Are you lowering the third and fourth-tier cities pricing? Would that be an impact to the net profit?
Would you be using other ways? On page 29, the sellable GFA in 2016, it seems to be smaller than previously. These would be the two main questions that I have.
Thank you, Mr. Du. You are a very experienced analyst, as you may well be aware. As you can see, there has been some reform going on. The CSRC has also raised multiple questions for CCCG. Quite frankly speaking, the business segment of CCCG, I think in this segment, Greentown would be the most important component. That is because of the development capability of Greentown. As far as Chinese construction companies are concerned, they are targeting the lower and mid-end with not too many projects. This has to do with history, what they have been actively on. There has been a lot of room for improvement for this company.
Talking about long-term strategy and planning, CCCG has a strategy for Greentown. Strictly speaking, Greentown's position in CCCG's real estate segment would be defined by focus in domestic market, mainly first and second-tier cities. The other products, meaning the lower and middle-end markets, would be targeted by other companies under CCCG. For CCCG, in the past year, let us say the two plots of land in Beijing and one in Chongqing and also in Guangzhou and Shenzhen, CCCG has played an irreplaceable role in terms of helping Greentown to obtain those lands. We basically went into the bidding together with all of the bigger plots of land. As far as I can recall, CCCG is also working with the CSRC, and they are still working on the delineation of different roles and responsibility amongst its subsidiary companies.
However, we do know that we will continue to invest, for example, in Los Angeles, in New York, in Australia. We are working with CCCG on these investment opportunities. As you may well be aware, CCCG is already into 80 cities in the world. According to them, they believe that there are many projects in the overseas market that actually returns a much higher yield than domestic ones. As to who would do what, that is something that is still being studied by CCCG as far as its overall strategy is concerned. You also talked about the changing, the upgrading of the products. This may be a simple and yet complicated question. As you may well be aware, last year, we have spent CNY 15.2 billion on Beijing Mentougou, and also two other plots of land in Hangzhou and one in Chongqing, one in Shandong.
The entire process took four months with a very high gross profit margin. I think this adjusting first would require a capital. A capital that would be deployed in the newly strategically targeted cities. If you do not complete the new projects, then this is simple and yet not simple. First, you will have to have new capital sources in order to deploy your new strategy. Where does this money come? First you have to cash in on your existing inventory, and we have already completed CNY 28 point something billion of investment, of which CNY 13 billion has been completed at the beginning of this year. Including the one in the Fourth Ring Road in Beijing. This project is a highly valued project.
Now, with this new deployment completed, I am highly confident that by end of next year, as long as there isn't any fundamental change in the market, our land bank, as at the end of next year, would be highly competitive and this is something that we must do. Just now, it has already been said. Now within such a short target to time, you have to complete your target, then it will cause a price issue. In 2016 and 2017, there would be an impact on the books. However, we will also be doing sales, so this will also be buffered. With the amount of delivery, the amount of some revenue that can be booked, that may have an impact. However, it would not be lower than this year. The third piece would be the price.
We definitely must rely on the central and the local government policies. I've said that 2015 is a transition. These two years would be another change in the Chinese real estate property. If we look at it now, what I said is basically correct. Individual cities are considering their own land circumstances. There has been some individual regulations that's been implied. That is natural. However, it does not impact the overall strategy and trend of de-leveraging and doing away with inventories that has been stipulated by the central government. So in the next two years, we will try to do away with our inventory at an appropriate price, with the help of the central government. These are actually a very good opportunity, in the next two years, when we can swap these products at an appropriate price.
If we are successful in doing this, I think we will have a very bright future. Frankly speaking, I don't think we should have a very, very high hope. Meaning that if the Chinese property market is to go back to a normal level in two years' time, then it will have to be dependent on providing good quality products. Because with the deleveraging, with the doing away with inventories and all that, only the most fitted would survive. The business tax has already declined to 3% from the original 5%. Originally, we would multiply 11.5% on top of our sales price. What we're doing now is only 9.3%. So our central government would reserve a huge tax income based on this.
With this type of an impact on the central purse, do you think that this regulation would continue for a long, long time?
I think in two to three years' time, the real estate market will go back to a healthy level, depending on that would allow only those with a high quality, high branding, high differentiation to survive. I think in two, Greentown would be poised for that. We must grab this opportunity in the next two to three years. So this is my view as far as the overall Chinese real estate market outlook is concerned, because competition is going to be very keen. I don't know whether I've answered your question clearly, Mr. Jinsong. We have been introducing Mr. Rong, our Chairman Rong, from CCCG. The management of CCCG is already deploying on this strategy. Thank you.
Next question, please.
I'm Wang Pei from the Morgan Stanley. Quick question. Just now, we have talked about short-term loans. That's been already tackled.
Last year, we have shifted some loans from 2018 to 2020. However, in February this year, there is still some overall debt. I do not know, with the CNY 700 million loans, would that be to pay off the older loans and the other ones are used on callbacks? Is that the case? Last year, we have CNY 7 billion of loans. Would there still be any venturing or financing from private equities, et cetera?
Yes, your figures were correct. 2018, we have CNY 662 million. The syndicated loans is CNY 700 million. That is larger than the original. So we have an additional CNY 520 million. So these are the correct numbers. I do not have anything else to implement or supplement. Last year in Mainland China, the CSRC has approved this. I still have CNY 3 billion that I can still issue with private equity loans. That is not part of the quota.
This year we will be issuing bonds.
Thank you. Next question, please.
I have a very simple question. That is, just now the management has said that in the third and fourth tier products, there is still CNY 700 million to be deduced. These will be moved to first and second-tier quality land banks, meaning that what are the impacts to the GP margin with 2016 and 2017? Can you provide a very clear guidance, please?
Excellent question. Thank you. That would actually cause us to have some discussions. Quite frankly put, since the second half of last year in Beijing and Shanghai and Hangzhou, we have been switching our land bank here. We have actually done a model on investing in tier one cities.
I hope that with this shifting of product mix, regardless whether it is a land bank or operation or financing, we hope to be able to deploy in a steady way. Just now, Mr. Fung has said, as far as cash is concerned, Greentown, in the foreseeable future, does not have any issue with our cash. In international meetings, I emphasize that in the sales process, what we are looking for is profits. We do not want accumulations. First is you need to have the cash, then you need to have the profit. Since our cash flow does not have any issues, so in the future, what I would go after more would be the profits. You analysts, you all know this is the common pain point for the real estate market in China.
The sales team is not working in line with the management, because the commission is 0.2% to 0.4% of whatever the sales price is. Since Chinese New Year, the market has been changing and the volume has been growing. What the sales team needs is that if this house is sold at a price, then with their commission they could get some commission based on the product price. If it is CNY 24,000 per sq m, then the additional profit would go to the company. So this is a major problem with the Chinese real estate companies, meaning the sales team's interest is not aligned with the managements. For example, with Mentougou, the net profit, for example, is CNY 3 billion. Then how would you price your product? If you can sell it at this price, then the commission would be at 0.4%.
Now, if you cannot reach that, then you don't get that commission. What I wanted to say is that the interest of the sales team has to be aligned with that of the company. This is, for the last three decades, has been a problem with the entire industry. I think you have asked an excellent question. Now, in the course of doing away with inventory, with some third and fourth tier cities, if the market has not recovered, then I'm sorry, we will have to do away with it. I hope that in 2016 and 2017, our profit would continue to be ensured. We have been giving targets to our subsidiary companies. If you cannot meet that target, if you do not fulfill that, then I'm sorry, we will have to cut the people as well as the commission.
Apart from the net profit from selling houses, we also have other operating profits. To me, I pay a lot of attention to the protection of the profits in our changing of our product mix in 2016 and 2017. Not only not allowing a decrease, we actually would very much go for an increase in that profit margin. Thanks for your very excellent question.
Next question, please. Gentlemen in the middle row.
Good afternoon. I'm from Macquarie. My name is Wilson. I have two very simple questions. First is regarding the dividend ratio, and the other one was that in your presentation, you will see that some of the products would move to the 2-6-2, two ratio six two strategy. So what are the respective gross profit margin that you're expecting from these?
As far as profit and the dividend ratio, payout ratio is concerned, in our board meeting this year, we have explained and discussed in detail with the directors. Under Chairman Song, all along, we have been quite generous in our dividend payout. In the past, we have been having a 50% payout ratio. However, later, with the cash flow and market changes, last year, we did not give out a dividend. This year, as you can see with our performance, there are a lot of reasons to support payout of dividends, like we have to be responsible for a return for our shareholders. However, despite the debt ratio has come down, the cash is not very strong. If we continue to distribute dividends, then it has a big impact to the company.
After deliberation, it has been decided that there will be no distribution of dividend this year. Apart from our shareholders, we also have debt holders, which we have to be responsible for. In the future, when business and profit becomes normal again, we will once again very generously distribute dividends. This is no doubt. Regarding gross profit margin, in our 2-6-2 product mix, we will do some adjustments because as far as the policy is concerned, the first 20% would continue to increase. For 2016 and 2020 is a high-end, 2016 is high-value products, with the largest gross profit margin, and the other 20% would be welfare housing. Because the market changes, the first 20% would increase, just like Mr. Fung has said just now, because our gross profit margin remains very high in this segment.
My personal view is that with such an investment policy being deployed, the GP margin of Greentown would definitely lead in the industry. Now, if we can look at 25% or maybe 28%, I am personally very confident about this, because with each of our product with the entire process, from getting the land to building the product, we have all along have gross profit margin in our mind. So we are committed to bringing it back to 25% or 28%, or maybe even higher. We are very confident with GP margin, because after the cutting down of our cost, including those synergies with CCCG, we do have a lot of opportunities.
Thank you for your questions and the answers because of time constraint. The session today will end here. Thank you very much for being here. Thank you.