Chairman Statement

Dear Shareholders,

On behalf of the Board, it is my pleasure to present Ying Li International Real Estate Limited's ("Ying Li" and together with its subsidiaries, the "Group") annual report for the financial year ended 31 December 2013 ("FY 2013").

Operational Highlights

Despite the global economy making its slow recovery five years after the global financial crisis, China's GDP maintain its steady growth of 7.7% in 2013 as it undergoes reforms to ensure long-term economic sustainability. While the Central Government continued its effort to cool the property sector, real estate investment and property sales in China experienced accelerated growth. Real estate investments accounted for 15% of China's gross domestic product (GDP) in 2013, translating to an increase of 19.8% from 2012, while property sales rose 17.3% in gross floor area and 26.3% in value terms, compared to 2012 annual increases of 1.8% and 10.0% respectively. The property sector remains one of the main drivers of the economy. Buoyant property sales as well as government efforts to promote development of affordable housing have enabled a greater rate of development and expansion in investment.

2013 was a significant year for the Group. The Group achieved a 9.2% growth in revenue to RMB 638.8million on the back of revenue recognition from the handover of completed residential units in Ying Li International Plaza project as well as higher occupancy at Ying Li International Financial Centre ("IFC") office units. Adhering to the Group's prudent financial management, the net debt to equity and debt to total asset was 60.1% and 35.1% respectively at the end of FY 2013. As Chongqing's largest landlord in the core CBD area, the Group's investment properties value rose 23.2% to RMB 3,837.7million, growing the net asset value per share from RMB 1.47 in FY 2012 to RMB 1.57 in FY 2013.

In March 2013, the Group successfully redeemed the balance outstanding S$ 195million 4.0% convertible bonds due in 2015. This redemption exercise demonstrated the Group's ability to generate cash to meet its obligations when due. With projects currently under development spanning a total gross floor area (GFA) of 1 million square meters("sqm"), we are well positioned for steady growth in the coming years. We have also started implementing Ying Li 3.0, the Group's strategic growth plan which aims to double the completed GFA within the next five years.

Our commitment to business excellence and delivering quality projects has won us widespread recognition, both from the government and the industry in China. In 2013, we received the following awards:

  • "Chongqing's Top 50 Real Estate Enterprise Award" from the Chongqing Municipality's Construction Commission, for 7 consecutive sessions
  • "Chongqing Real Estate Development Industry Trustworthy Brand Award" from the Chongqing Real Estate Development Association
  • "Chongqing Real Estate Development Industry Trustworthy Brand Award (AAA-highest category)" by Chongqing Real Estate Development Association
  • "2012-2013 China Luban Prize" for Ying Li International Financial Centre, awarded by The Ministry Housing and Urban-Rural Development of the People's Republic of China and China Construction Industry Association

The Group continues to adhere to its commitment in maintaining high standards of corporate governance, integrity, accountability and transparency. In the latest Governance and Transparency Index ("GTI") compiled jointly by National University of Singapore and The Business Times, the Group improved its overall GTI score and ranked 29th among 664 SGX-listed companies covered in the 2013 index.

Property Sector Outlook for China and Chongqing

Chongqing's economy continues to advance strongly. In 2013, Chongqing's GDP grew by 12.3% to RMB 1,265.7billion and GDP per capita was RMB 42,977, a year-on-year increase of 10.0%. Urban household annual disposable income increased by 9.8%, reaching RMB 25,216 while retail sales rose 14.0% to RMB 451.2billion. Fixed Asset Investments exceeded the RMB 1trillion mark for the first time, surging 19.5% to RMB 1,120.5billion. On the back of strong fundamentals and positive investment environment, Chongqing continues to be one of the leading investment destinations in China, attracting 235 of the Fortune Global 500 companies with foreign direct investment reaching USD 10.6billion. Investments in Chongqing's real estate sector grew 20.1% to RMB 301.3billion. As part of Central Government's effort to encourage rural residents to resettle in developed cities, Chongqing's urbanization rate continued unabated with 1.4% increase to 58.3%.

At the beginning of 2013, the Central Government announced the "Five New Measures" 《新国五条》 real estate tightening policies. Implemented by the respective local governments, the aim was to control the rapidly rising housing prices and to curb speculative purchases to ensure a healthy and stable development of the real estate industry. In reaction to these measures, sales have dropped significantly in many cities. However, this downward trend rebounded strongly in the second half of the year with the emergence of "land king" – a term that refers to the most expensive plot of land in a city. "Land king" has been picking up traction over the past few months as developers in first- and second-tier cities continue to shell out larger sums for land, hence driving up home costs and property prices. Despite the increase in property prices, the supply is met with strong underlying demand. In 2013, 1.31billion square meters of commodity (private) residential space was sold, up 17.3% year-on-year.

The market is positive on the long-term real estate investment environment following the stable progress on land reform measures and implementation of property taxation system. On 30 July 2013, the ruling Politburo met and proposed "To Promote Stable and Healthy Development of the Real Estate Market" and "To Promote Consumer Expenditure, Maintain Reasonable Investment Growth". On 12 November 2013, the 18th Communist Party of China approved decisions on "Major Issues Concerning Comprehensively Deepening Reforms"《关于全面深化改革若干重大问题的决定》during the Third Plenary Session. Part of the comprehensive reforms is to look at the long-term sustainability of the real estate market and establish a regulatory mechanism to guide the real estate market in the right direction.

As part of China's "Five New Measures", the Chongqing government has increased the supply of land for commodity residential units. Together with rising demand for housing and easing in the macroeconomic environment, Chongqing's real estate market shown stable growth in the past year. In 2013, Chongqing sold 48.2million square meters of real estate spaces, up 6.5%, of which sales of commodity residential took up 43.6million square meters, an increase of 6.2%. The prices for Chongqing commodity residential rose 8.3% to RMB 7,322 per sqm.

Shortly after being named Chongqing's Party Secretary, Mr. Sun Zengcai, proposed a regional development strategy for Chongqing to be divided into five functional areas – urban core area, urban functional expansion area, urban development new area, Chongqing northeast ecological conservation and development area, and Chongqing southeast ecological protection and development area. These five functional areas will help stimulate the growth of Chongqing's economy and accelerate the urbanization process, thereby creating more sustained demand and attracting more foreign investment and companies into Chongqing. Collectively, these factors would contribute to the long-term growth of Chongqing's real estate market.

We believe, as both the Central and local governments continue to implement the reforms, Chongqing's real estate market will see a new wave of unprecedented development opportunities. Also, the continuing strong economic growth, rapid urbanization rate, "Go West" national development plan as well as greater emphasis on consumption-led growth is expected to translate into demand for a wide spectrum of real estate products in the coming years. Ying Li, with more than 20 years of successful track record, sterling reputation and solid execution capability, is well poised to ride on the growth trends of the Chongqing economy and real estate market.

Projects under Development

In December 2013, the Group successfully completed and opened the Ying Li International Plaza retail mall (100,524 sqm GFA) and handed over most of the residential units in Tower 4 and 5 on schedule. Located in the centre of the bustling Yuzhong Daping area, Ying Li International Plaza (409,141 sqm GFA) is by far the largest and most complex development undertaken by the Group. We expect to complete the remaining 3 tower blocks on time in 2014. The Groupss success to date in this project attests to the strong execution capability of the Group and the quality of our products.

During the year, we commenced construction on two other large projects – San Ya Wan Phase 2 and Ying Li Financial Street. San Ya Wan Phase 2 is an approximately 307,000 sqm GFA residential project located in a residential/ commercial centre in the Liangjiang New Area, about 15 minutes' drive from Chongqing CBD and International Airport. We expect to start presales in 2014.

Ying Li Financial Street project is an approximately 297,000 sqm GFA high-end office-cum-retail development strategically located on the much anticipated Chongqing Financial Street in Chongqing's core Jiefangbei CBD. We expect to commence pre-sales of the office units in 2015.

The three projects under development, comprising Ying Li International Plaza, San Ya Wan Phase 2 and Ying Li Financial Street, total 1million sqm GFA. This project pipeline is expected to generate strong cash flow from pre-sales and sales of the properties yearly in the near future.

Ying Li 3.0 Growth Plan

The Board and Management have jointly formulated a strategic growth plan called Ying Li 3.0 to propel the Group forward. Under Ying Li 3.0, the Group aims to double the GFA completed every 5 years. To achieve this, the Group will:

  1. Deepen its presence in the Chongqing market by expanding in both core and district CBDs. Chongqing will remain as the Group's key investment market.
  2. Expand into high growth 2nd tier China cities
  3. Develop new real estate business, potentially in residential estate and capital/asset management such as real estate investment trusts for the Group's investment properties.

Besides strengthening our competencies to implement the Ying Li 3.0, we will seek to diversify our funding sources, including seeking joint venture partnerships with like-minded developers. We have also stepped up our efforts to identify and evaluate land and project investment opportunities.


Going forward, the Group will differentiate and compete by building products which have outstanding design, premium quality, eco-friendly features and rich user experience. In addition to this, we will also create continuing value returns for our stakeholders – our shareholders, employees, customers, partners, local government and the country.

This year we bid farewell to Mr. Lui Seng Fatt and Mr. Chan Hock Eng as they retired from the Board. The Board would like to thank them for their valuable service to the Group and wish them well.

On behalf of the Board, I welcome Mr. Ho Sheng, Mr. Tan Kim Seng and Mr. Tan Sek Khee to the Board. The Group will continue to attract talent at all levels to strengthen its management capability.

Finally, I thank shareholders, Directors and staff, customers, partners and the local government for your strong ongoing support to the Ying Li Group.

Fang Ming
Executive Chairman & Group CEO
March 2014