Poly Real Estate Group Co, China's second largest listed property developer after Vanke, surprised the market yesterday by posting a 50 percent increase in 2008 earnings amid a market slump.

In a statement to the Shanghai Stock Exchange, the Guangzhou-based company said its net income for 2008 rose to 2.24 billion yuan from 1.49 billion yuan in 2007. Earnings per share for the period increased to 0.91 yuan from 0.65 yuan.

"The company's performance met with our expectations and its sales are much better than the industry average," said Chen Yan, senior analyst, Guosen Securities.

Poly said it sold a total of 2.05 million sq m of space in 2008, up 20.4 percent over 2007. The sales value increased by 28.5 percent to 19.96 billion yuan. The company's market share in terms of sales increased to 1 percent from 0.67 percent at the end of 2007.

The company's aggressive land acquisition spree last year could, however, have strained its finances. "Because of the rapid buildup of land bank and excessive commitment to new projects, the company may need fresh capital infusion this year," Chen said.

Poly currently owns 1.89 million sq m of development land. The company has 68 projects that are either under construction or development this year.

To ease the pressure on capital, Poly has indicated that it would raise 8 billion yuan through a private placement of newly issued domestic A shares to help finance eight of its property projects.

The new shares would be sold to 10 investors at a price of 15.89 yuan per share and would not exceed 20 percent of the company's existing outstanding share capital.

The company's A shares closed at 17.77 yuan yesterday, down 2.9 percent from Tuesday.

(China Daily February 19, 2009)