Pan Hong Launches Mainboard IPO


SINGAPORE, September 11, 2006 - Pan Hong Property Group Limited (“Pan Hong” or the “Group”) (汎港地产集团), today announced that it has registered its prospectus with the Monetary Authority of Singapore and will be launching its initial public offering (“IPO”) of 125 million Invitation Shares at S$[0.35] per share, in connection with its proposed listing on the Main Board of the Singapore Exchange Securities Trading Limited. Pan Hong’s history can be traced back to 1983 and is a recognized property developer in Huzhou and Hangzhou cities in Zhejiang Province and Nanchang City in Jiangxi Province of the PRC.

“We have been focusing primarily on property developments in the second-tier cities in the PRC since 1992. Over the years, we have gained a reputation as a developer of quality property development projects, and have entrenched our position in the cities where our development projects are located. Our listing will serve as a good platform to raise our corporate profile and with the funds raised from this IPO, we will be able to implement our expansion and growth plans. We will also be able to strengthen our position as a leading property developer in the second-tier cities in the PRC,” said Mr. Wong Lam Ping (汪林冰), Executive Chairman of Pan Hong.

The Invitation

The Invitation of 125 million Invitation Shares of S$[0.35] each, comprises 120 million New Shares and 5 million Vendor Shares. This represents approximately [26.0%] of Pan Hong’s enlarged share capital.

The Invitation is structured as follows: -
• [5] million shares by way of public offer; and
• [120] million shares by way of placement.

At the issue price of S$[0.35] each, the New Shares are priced at a [18.8]% discount to its adjusted appraised net tangible asset value per share of [209] RMB cents as at 31 December 2005.

The public offer opens at 9.00 am on September [12], 2006 and will close at 12 noon on September [18], 2006. Trading of its shares is expected to commence on September [20], 2006.

CIMB-GK Securities Pte. Ltd. is the Manager, Underwriter and Placement Agent for Pan Hong’s IPO.

Use of Proceeds

Pan Hong intends to use the net proceeds of approximately S$[x] million for the following purposes: -
• approximately S$[22.9] million for acquisition of land reserves; and
• the balance as working capital.

Corporate Profile

Established in 1983, Pan Hong develops residential and commercial properties in Zhejiang and Jiangxi provinces in the PRC. The Group focuses on developing cities with significant growth potential. To date, it has completed six property development projects in Hangzhou and Huzhou cities, Zhejiang Province. Setting its eyes on the growth in the property market in the PRC, especially the developing cities, the Group has accumulated land reserves of approximately 457,635 sq m with a planned gross floor area (“GFA”) of approximately 818,774 sq m in Zhejiang and Jiangxi provinces for development over the next three to five years.

The Group primarily targets at the middle to upper-middle income group in the respective cities that their projects are located.

The Group is currently developing the Wuxing Balidian Market (吴兴八里店社区综合市场), the first sole commercial property undertaken by the Group. It is located in the largest town in Huzhou City, occupying a total area of approximately 14,247 sq m and has a GFA of approximately 23,824 sq m. It is an integrated commercial development comprising an agricultural free market, supermarkets, retail shops and dining and leisure/entertainment area, and is the only commercial development in the area.

Future Projects

The Group has accumulated substantial land reserves for the development of residential cum commercial properties projects over the next few years. Two of the major planned projects are Nanchang Honggu Kaixuan and Huzhou Huacui Tingyuan.

Nanchang Honggu Kaixuan (南昌红谷凯旋)

Nanchang Honggu Kaixuan will be the largest development project for the Group. It has a site area of approximately 78,361 sq m with a planned GFA of approximately 390,000 sq m. The development is strategically located in the new central business district in Nanchang City, which is the capital city of Jiangxi Province. It will consist of 33 high-rise apartment blocks with 2,139 residential and commercial units enclosed within a shopping centre. The project has commenced piling works in April 2006 and will be developed in three phases. The Group targets to complete the entire project by end 2011 and as at December 31, 2005, the appraised value of the land use right was approximately RMB348.5 million.

Huzhou Huacui Tingyuan (华萃庭院)

Huzhou Huacui Tingyuan is located at the tourist destination of Taihu Meidong, near Taihu Lake. The site area is approximately 133,423 sq m with a planned GFA of about 140,000 sq m. It will comprise 832 residential units in cluster houses, low-rise and medium-rise blocks, and commercial units. The Group targets to kick off the project in the last quarter of 2006 which is planned to be completed over three phases by December 2010. The appraised value of the land as at December 31, 2005 was RMB204.6 million.

Apart from the two large-scale projects, Pan Hong will also be developing two other projects, namely Hangzhou Liyang Yuan and Huzhou Liyang Phase 2 and owns a 220,767 sq m (site area) land reserve, currently named Huzhou Hailian, for future development.

“We are particularly excited about Nanchang Honggu Kaixuan, as it is our largest project. In 2005, the GDP of Nanchang City increased to approximately RMB100.8 billion, a 16.8% jump over the previous year. Urban household income also increased 13.5% to RMB3,879 over the previous year,” commented Mr. Wong.

Financial Highlights

The Group’s revenue increased 331.8%, from RMB66.7 million in the financial year ended December 31, 2004 (“FY2004”) to RMB288.0 million in the financial year ended December 31, 2005 (“FY2005”). Gross profit increased to RMB93.2 million in FY2005 from the RMB8.9 million recorded in FY2004. The Group also saw its gross profit margin increased from 13.4% in FY2004 to 32.4% in FY2005, while net profit margin increased from 5.7% in FY2004 to 20.3% in FY2005.

For the financial period ended March 31, 2006, the Group has recorded revenue of RMB33.3 million and commanded a gross profit margin and net profit margin of 40.7% and 30.8% respectively.

Future Plans

Explaining Pan Hong’s future plans, Mr. Wong said: “Going forward, we will continue to target at the middle to upper-middle level residential property development. As part of our efforts to increase our market share, we will expand into other developing cities in the PRC, such as Nanning in Guangxi Province, Changsha in Hunan Province and Yichun in Jiangxi Province while we strengthen our foothold in the cities we are currently in. We will also look at expanding further into commercial property market. As land reserves are important to support our growth, we will continue to seek new and suitable land reserves through direct acquisitions, or forming joint ventures or business alliances with land owners for joint development.”