R&F acquires construction firm | South China Morning Post
Guangzhou R&F Properties, the largest developer in the Guangdong capital, has bought a construction company for as much as one billion yuan to cut costs and improve building quality.
The 600 million yuan to one billion yuan purchase price of Guangzhou Tianli Construction would be about four times the target company's net profit this year, R&F said, without specifying its forecast for Tianli Construction's 2007 earnings.
The company expected the acquisition to help it to secure control over the construction of projects and improve cost efficiency.
R&F, which is expanding rapidly in mainland cities with many large-scale development projects, believed the acquisition could also help it to ensure the availability of construction capacity and building quality.
Tianli Construction's net profit more than doubled to 75.26 million yuan last year from 33.63 million yuan in 2005, while the company had 95.99 million yuan of net assets in December.
Analysts said the purchase price was reasonable and would not be a burden on R&F, although it was too early to say whether the acquisition could cut development costs.
R&F, which has most of its projects in Beijing, Tianjin and Guangzhou, is seeking growth farther afield. It plans to expand into coastal regions, including Shanghai, with the purchase of sites worth 10 billion yuan in the next two years.
The developer, which had 17.89 million square metres of land at the end of last year, has acquired a low-density residential site in Jiangsu province for 600 million yuan that could provide a gross floor area of 400,000 square metres.
R&F shares rose 0.49 per cent yesterday to HK$20.40.
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