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Neo China Group starts the first cooperation with District Government of Tianjin
On November 22, 2006, Neo China Group (Holding) Co., Ltd (Neo China Group) (HKE Code: 0563) announced that through its sole-invested subsidiary, Neo China Real Estates (China) Co., Ltd (Neo China Real Estates), a cooperation agreement has been signed with Tianjin Xinzhuang Economic Development Center (Xinzhuang) and Tianjin Dianshi Investment Consulting Co., Ltd (Dianshi Investment) consigned by Tianjin Jinnan District People’s Government to prepare for the establishment of a Chinese-foreign joint venture, Tianjin Neo China Water City Property Co., Ltd (JV Company) to invest on the primary regulation and development of about 7,000,000 m2 in Jinnan District of Tianjin (Tianjin Haihe Project). It is the first cooperation of Neo China Group with China’s regional government for the urban development strategy and future land trade planning of Tianjin so that the land can be marketed through auction at a proper time. Additionally, it has also shown the advantage of Neo China Group in cost control, establishment of relation, acquisition of land and risk management.
On November 21, 2006, Tianjin Jinnan District People’s Government confirmed in writing that the JV Company, Tianjin Neo China Water City Property Co., Ltd will exclusively assist in the investment and development of its Tianjin Haihe project so that the relevant land can satisfy the condition for auction. The city government agrees that the profit thereof shall not be more than 25% of the auction price, while the rest will belong to the cooperative company.
According to the cooperation agreement, Neo China Real Estates, Xinzhuang and Dianshi Investment will hold respectively 65%, 25% and 10% of the equities, while the profit will be distributed according to the share ratio of the parties thereto. The total investment of the cooperative company is USD 29 million and the registered capital is USD 15 million. Neo China Real Estates will contribute USD 15 million to be paid in within 30 working days upon issuing of the business license of the cooperative company, while Xinzhuang and Dianshi Investment will provide the management specialist and other resources for the Tianjin Haihe Project.
Chairman of Neo China Group, Mr. Li Songxiao expressed: “With our success in the sales of Laochengxiang Project in Tianjin, we believe that the establishment of the cooperative company will further expand our real estate business in Tianjin.”
Mr. Li also said: “since the primary regulation and development operator can earn profit upon completion of the primary regulation and can buy back the area for additional profit, it is believed that this profit margin can benefit Neo China Group to acquire the land later on when it is listed for sale. Comparatively speaking, the other developers need to consider thoroughly the cost factor. Since a number of cost factors for development of the land have been defined, we believe the involvement in the primary regulation benefits us to acquire the land effectively, the primary regulation will become the future tactics of Neo China Group to acquire land so as to control the cost and reduce the market risk.”
Tianjin Haihe Project is located on the south side of the central section of the Haihe River with an area of 7,000,000 m2 in Jinnan District, Tianjin and will be developed for the leisure holiday resort, metropolis ecological industry, ecological residence and modern center. Haihe River is one of the seven big rivers in China and the biggest river basin in North China region with a total area of 318,000 km2. The Haihe River basin is positioned the heart of China, covering Beijing, Tianjin and most of Hebei region and running through Henan, Shandong, Shanxi, Neimenggu and other provinces and cities. The region is the political, economic and cultural center of China, holding an extremely strategic position.
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