March 10, 2017 / 12:06 PM / 10 months ago

Chinese builder targets 30 pct revenue jump as infrastructure boom continues

BEIJING, March 10 (Reuters) - Zhongnan Group, one of China’s largest builders, targets a 30 percent jump in revenue this year, topping 100 billion yuan ($15 bln), as it benefits from fresh spending on roads and hospitals, a senior executive said.

Lu Guiqing, who joined the company as general manager from builder China State Construction Engineering Corporation last month, told Reuters that the privately run firm was also bullish on the property market.

“I think we will be able to see 10-20 percent growth in housing, and with so much construction, infrastructure work going on in China I think we will be able to see a 30-50 percent jump there,” he said on the sidelines of China’s annual meeting of parliament.

“We aim to cross 100 billion (yuan) in revenue this year,” he said.

Zhongnan Group, whose listed subsidiary is Jiangsu Zhongnan Construction Group Co Ltd, reported revenues of 75.5 billion yuan in 2016, according to its website. It is one of China’s biggest builders with assets of 100 billion yuan last year.

Property development accounts for over 60 percent of its revenue, while infrastructure construction makes up about a quarter, Lu said.

Chinese building companies have benefited from a red-hot property market and from a ramp up in infrastructure spending as the government has sought to stave off a sharp economic slowdown.

Real estate investment rose 6.9 percent in 2016 as property sales in China saw the fastest annual growth in seven years, and the government plans to invest a further 1.2 trillion yuan between 2016 and 2018 to develop information infrastructure.

“I‘m still optimistic about the real estate industry, China is at a stage of development where we have not seen an end to urbanization,” Lu said.

He is not worried by the government’s forecast for economic growth of 6.5 percent this year, its slowest in 26 years.

“China’s economy has experienced 30 years of high-speed growth ... it’s normal for it to slow,” he said. “Of course (the construction business) won’t be flourishing as much as past years, but I don’t think it will be too uncomfortable.” ($1 = 6.9161 Chinese yuan renminbi) (Reporting by Brenda Goh and Yawen Chen; Editing by Susan Fenton)

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