The increased business revenue from land transfers in Pudong and investors' confidence in the nation's pledge to turn Shanghai into a world financial center are the main reasons for the big surge in Shanghai-listed Lujiazui's operating revenue, said analysts yesterday.

Operating revenue of Shanghai Lujiazui Finance & Trade Zone Development Co Ltd, one of the key State-owned property developers in Shanghai, nearly doubled in the first half of 2009, rising year-on-year by 93 percent to 2.85 billion yuan, the company said.

Lujiazui's profit stood at 963 million yuan, rising almost 30 percent year-on-year over the same period last year, it said.

"As a real estate developer whose main business is from land transfer, Lujiazui definitely has a promising business outlook due to the abundant land resources it has in hand," Lu Qilin, deputy director and researcher with Shanghai-based U-win Real Estate Info, said.

Lujiazui's business revenue came mainly from the recent transfer settlements of land slots of commercial complex Century Metropolis, sold to Hong Kong real estate giant Hutchison Whampoa at 1.82 billion yuan.

Lujiazui also signed a deal to sell the Tangdong slot in Pudong to Sinopec at 525 million yuan in April.

"Money generated from these two deals were recorded in the second quarter, so that's why (there is such a big rise)," Jiang Ping, board secretary of Lujiazui, told Caijing Magazine yesterday.

However, Lujiazui so far "has no plan to be involved with the widely-anticipated Shanghai Disneyland project," Jiang was quoted as saying.

In March this year, Lujiazui was widely reported as saying that it will become one of the major shareholders in the Shanghai Disneyland amusement park, leading to a continuous surge in its share prices.

Despite the bright industry outlook, shares of Lujiazui ended down by 6.44 percent to close at 25.59 yuan yesterday.

"The drop is within industry expectations, if you look into the 5.79-percent drop in Shanghai Composite Index and the overall sluggish performance of property stocks yesterday, with some even dropping near the 10-percent limit," said Lu.

He said the central government's pledge to make Shanghai a world financial center is one of the reasons why Lujiazui shares fell only moderately yesterday.

"Investors are set to favor shares of companies like Lujiazui, Zhangjiang Hi-Tech and Waigaoqiao Port, with the Shanghai expo slated for next year," he said.

Lu said as a State-owned developer, Lujiazui should actively seek to transform itself as a comprehensive real-estate developer, adding such transformation will bring more business income and revenue.

"Lujiazui used to be classified as a State-owned developer mainly operating land slot transfers and its main business was not directly involved in commercial property development, but in my view, such transformation will be imperative in the long run," he said.

Lujiazui said it expects to complete five projects in the second half, with 180,000 sq m of land to be developed, including Lujiazui financial center plaza, a 46,000 sq m Class-A commercial project in central Lujiazui.

Meanwhile, seven projects with a combined floor space of 1.1 million sq m are also under construction in the second half, it said.

(China Daily August 18, 2009)