Chairman Statement

As a property developer engaged in both commercial and residential developments, 2017 marked a year of challenges and opportunities for the Group. Notwithstanding, the Group delivered an improved financial performance for FY2017 with revenue exceeding RMB1 billion for two consecutive years.

Dear Shareholders,

On behalf of the Board, I am pleased 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 2017 (FY2017).


Despite the persistent threat of various risks and uncertainties, the global economy experienced moderate growth in 2017. In the People's Republic of China (PRC), economic development remained steadfast as it advanced steadily with supply-side structural reforms. Headlining the economic performance was the annual gross domestic product (GDP) which increased 6.9% Y-o-Y to reach RMB82.7 trillion, strengthening its position as the world's second largest economy. Marking the country's first economy acceleration since 2010, the GDP exceeded RMB80 trillion for the first time and taking up approximately 15% of the world's economy market share. In addition, GDP per capita reached RMB59,660 (US$8,836), an increase of 6.3% over the previous year.

Outpacing the nation's GDP growth, Chongqing's economy delivered a healthy GDP growth of 9.3% Y-o-Y and reached RMB1,950.0 billion in 2017. Similarly, major economic indicators remained stable. In particular, total investment in fixed assets, total retail sales of consumer goods, and total value of import/export grew steadily. Permanent residents' urbanisation rate reached 64.1%, while disposable income of residents rose by 9.6% Y-o-Y in 2017. These positive developments denote the city's great potential and room for further growth.

For the year under review, the PRC's real estate market was ardent and dynamic amidst a strong emphasis on deleveraging and curtailing real estate speculation. The latest round of property curbs was exceptionally long-standing and extensive. Several cities with overheated property markets continued to impose policies to limit purchases, mortgages, selling prices, sales, and transactions. According to provisional statistics, more than 150 property-related restrictions have been issued in various PRC cities in 2017. The localised measures imposed in each city were relatively effective in tackling challenges of the different market conditions. As a result, the overall real estate market remained stable. In the first half of 2017, home prices in Tier 2 and Tier 3 soared while that of Tier 1 cities slackened. In the following six months, real estate markets in most cities slowdown following the introduction of more property restrictions. However, the nationwide real estate destocking achieved much progress as floor space of commercial housing sold increased by 7.7% Y-o-Y to 1,694.1 million square meters, while sales of residential housing rose by 13.7% to RMB13,370.1 billion in 2017.

In view of the sky-rocketing prices and surging sales in Chongqing, the city's municipal government strengthened housing policies according to the different districts. Apart from intensifying supply-side structural reforms, the municipal government focused on satisfying the hard core housing demand for first property owners and upgraders, curbing speculation, and cultivating and developing its housing rental market. These measures successfully led to a relatively stable housing market in 2017. Further to that, a series of purchase restriction measures were successively introduced throughout 2017 in Chongqing. They include real estate tax on buyers who has no local household registration, not corporate owners or unemployed, as well as prohibition on selling of homes within two years from the date of purchase. Even as the purchase restrictions limit mortgage and home sales, all in all, these regulations are still fairly subdued and effective in curtailing speculative home purchase to promote a steady and healthy development of the Chongqing real estate market. As evidenced in the data recorded by Chongqing Statistics Bureau for 2017, Chongqing's investment in real estate development increased 6.8% Y-o-Y to RMB398.1 billion, while new construction area for commercial housing increased 16.5% Y-o-Y to 56.8 million square meters. In addition, sales of commercial housing reached a record high in nearly five years to RMB455.8 billion in 2017, an increase of 32.8% Y-o-Y, of which residential sales increased 36.6% Y-o-Y to RMB360.2 billion.


Financial performance
As a property developer engaged in both commercial and residential developments, 2017 marked a year of challenges and opportunities for the Group. Notwithstanding, the Group delivered an improved financial performance for FY2017 with revenue exceeding RMB1 billion for two consecutive years. Key highlights of the year include:

  • Record revenue in FY2017 with main contributions from Ying Li International Hardware and Electrical Centre (IEC) Phases 1A and 2A, continued handover of Lion City Garden and sales of some investment properties which were previously tenanted;
  • Lower rental income was mainly due to loss of rental income from the sales of some investment properties which were previously tenanted. Occupancy rate for the IMIX Park malls and Future International mall was healthy and ranged between 94.0% and 99.0% in FY2017;
  • Divestment of Ying Li International Commercial Centre (ICC) to China Evergrande Group which is in line with the Group's business approach to expedite its capital recycling strategy in extracting value from assets;
  • Investment in Beijing's Tongzhou project, which began in late 2014, has appreciated in value with a fair value gain of RMB260.0 million in 2017 as a result of the increased home prices in Beijing; and
  • Total borrowings fell from RMB4.8 billion as at 31 December 2016 to RMB3.9 billion as at 31 December 2017.


The Group is currently focusing on the development of two integrated projects, namely Lion City Garden and IEC which made headway in 2017. In particular, the construction and handover of IEC Phase 1A and 2A progressed according to plan. The construction of IEC Phase 1A has since been completed while the construction and handover of Phase 2A commenced in the second half of the year. Following the handover, business owners of the retail shops are priming to kick-start operations at their new premises in 2018. To help shape the hardware and electrical industry and to ensure that businesses can begin operations swiftly and thrive in the hub, the Group formulated supportive measures to aid them in market cultivation and development which include six main areas - marketing, sales support, parking assistance, exhibition centre support and property management fees.

Construction for Lion City Garden Phases 2A, 2B, and 2C has completed. San Ya Wan station on Metro Line 10 which is situated right in front of the project has started operations at the end of 2017, increasing the connectivity of the area to other regions such as the airport which is only four subway stations away. As at 31 December 2017, the total sales and contracted pre-sales for IEC Phases 1A and 2A amounted to RMB1,257.0 million, while that for Lion City Garden Phases 2A, 2B and 2C amounted to RMB839.3 million.

Situated on a superior geographical location in Tongzhou, Beijing, the Group's investment in New Everbright Beijing Center made good progress in 2017. With Tongzhou as the new municipal administrative centre of Beijing, the new suburban railway line officially commenced operations at the end of 2017, shortening the travelling time between the existing Beijing CBD and Tongzhou to 28 minutes. Sales of the project remained stable. As at 31 December 2017, SOHO Tower 2 and 3 were successfully presold and achieved a sell-through rate of 98.0% and 88.0% respectively (SOHO Tower 1 was fully sold upon launch), and the average sale price have risen from RMB34,500 per sqm for SOHO Tower 1 to RMB48,500 per sqm for SOHO Tower 3.

A key development of the year, the Group announced the divestment of ICC to China Evergrande Group for a consideration of RMB3.29 billion in November 2017 upon careful consideration and lengthy discussions. This divestment successfully unlocked value from our asset which is line with our approach to expedite our capital recycling strategy. To leverage on the anticipated strong economic growth in the PRC, this transaction strengthens our financial position and provides us with greater flexibility to invest in other projects with shorter cash-flow cycles in the PRC's Tier 1 cities and other fast-growing cities within the country.

For our retail malls, following continuous adjustment of tenant-mix and optimisation of retail space to capture market trends and consumer preferences, the Group's IMIX Park malls have performed well as occupancy rate, foot traffic and rental income have stabilised or even improved in the year.

As a step further to optimise operations, the Group conducted an organisational restructuring in April 2017 via the implementation of a project-based management model to refine its risks and cost control procedures. With the new optimised system in place, the Group has improved its management and operational efficiency to one that is able to swiftly adapt to business development needs and accelerate efforts in reducing inventory levels.


The global economy is projected to continue its recovery path and external demand will continue to drive growth positively for the PRC's economy. The economies of both developed and emerging countries have exhibited healthy acceleration even as the international and domestic environment plaguing the PRC's growth remains complex. Notwithstanding, the foundation for the PRC's economic development is sufficiently strong to support a steady growth trajectory in 2018. Poised for a buoyant year, the quality and efficiency of the country's development are targeted to rally alongside the improvement in the quality of the economic activity.

Hailed as a pillar in the western PRC region, Chongqing is a strategic focal city for the development of the region and for the Belt and Road initiative, and also played a critical role in the Yangtze River Economic Belt project. Buoyed by strong policy support, the economic outlook for Chongqing is optimistic. With the continuous implementation of favourable policies such as the pilot Free- Trade Zone, Xinjiang-Europe International Railway, cross-border bonded zone, and the deepening of the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity project, the influence of the city shall be further elevated. On the property front, Chongqing is expected to usher in more foreign companies and expatriate in 2018 which will drive more hard core housing demand, amongst others. This will spur the healthy and stable development of Chongqing's real estate market.

The Group is cognizant of the challenges that are present in the current real estate sector. For the office market, a relatively high level of new supply will be coming onstream in 2018, but will gradually taper off from 2019. Jiefangbei CBD, as the heart of Chongqing CBD, will remain resilient as the preferred CBD for multinational corporations. On the retail front, e-commerce retailers will continue to gain market share from physical retailers. To combat this threat, experiential retail will further expand in 2018. At the same time, the commencement and impending commencement of several new metro lines will also gradually shift consumers' consumption behaviour and business prosperity to more regions.

In the residential space, the main theme "houses are for living in, not for speculating on" holds strong. To that end, short-term real estate speculation is being curtailed while supply for housing demand for owner-occupation will still be steady. However, continual mortgage tightening is likely to affect domestic demand for home purchases, which will lead to home prices stablising.

Moving forward, the Group remains cautiously optimistic of the development prospects of Chongqing while we continue to be watchful of market conditions. At the same time, the Group will source for sound opportunities to build pipeline growth while focusing on further improving the level of governance and ensuring the smooth progress of development and investment properties to deliver an improved business performance.


On behalf of the Board, I would like to extend my gratitude to our shareholders, bankers, customers and business partners for your unflagging support and patience throughout the year. I would also like to express my appreciation to our Board of Directors, management team and employees for your dedication and hard work. As part of the Board renewal process, I am pleased to welcome on board Mr. Hu Bing as Executive Director. At the same time, I would like to thank Mr. Ai. Yu, who resigned as our Non-Executive and Non- Independent Director, for his invaluable contributions to the Group. I wish him the best in his future endeavours.

To realize the long-term interest of shareholders, we will continue to work tirelessly in pursuit of this goal.

Yours sincerely,

Fang Ming
Executive Chairman & Group CEO