China's Greenland in talks to buy Australia's agricultural firms
Sydney
GREENLAND Holding Group Co is in talks with Australian agricultural companies on possible takeovers and plans to complete its first deal in six months.
The Chinese state-owned company, which has already invested A$1.6 billion (S$1.8 billion) in Australian real estate, is now more focused on acquiring food, dairy and wine producers, chairman Zhang Yuliang told reporters in Sydney on Tuesday.
China "is a very big market and consumption habits are upgrading and changing", Mr Zhang said. Greenland's next step is to acquire "Australian companies and import more Australian products into China".
Closely held Greenland, one of China's most active global developers, is on track to reach A$20 billion (S$22.6 billion) of investments around the world this year, as the property market at home falters and the nation allows easier movement of funds in and out of the country.
A free trade pact completed on Monday between China and Australia allows more mainland companies to invest in the South Pacific nation, and makes it easier for those already there to boost operations, Mr Zhang said.
The pace of Greenland's growth is concerning ratings company Standard & Poor's, which in September revised the company's outlook to negative from stable. It cited unfavourable market conditions and the developer's "considerable" capital needs.
"Greenland Group's aggressive growth appetite and debt-funded expansion will constrain its financial risk profile in 2014 and 2015," S&P said. The developer "will continue to make significant land acquisitions and incur substantial construction costs over the next 12-18 months to support its growth plans, including in overseas markets."
Mr Zhang dismissed the concerns, saying that the company's growth will continue "in a very healthy way". While total debt is rising, the rate of growth isn't alarming, he said.
Greenland this year invested more than US$10 billion in its overseas projects, and expects revenue from outside China to be about US$3 billion, Mr Zhang said. The company will continue to expand its Australian property business, with plans to enter Queensland state, Sherwood Luo, managing director of the Sydney-based unit, said in an e-mailed response to questions. It is focusing on the Gold Coast, a city about 80 kilometres south of the state capital Brisbane, as Sydney and Melbourne prices become too expensive, he said.
Greenland is mostly interested in residential and hotel development, he said. "Prices are becoming more expensive in Sydney and Melbourne and thus people are looking at new markets such as south-east Queensland," Mr Luo said. "Gold Coast is attractive as the median unit and house prices are far lower than in Sydney and Melbourne."
The median dwelling price for the Brisbane-Gold Coast area is A$440,000, compared with A$680,000 in Sydney and A$555,000 in Melbourne, according to RP Data Pty.
Dwelling prices in the Brisbane- Gold Coast market have risen 9.6 per cent since a May 2012 trough, compared with a 30 per cent increase in Sydney and a 21 per cent jump in Melbourne, according to RP Data figures. BLOOMBERG
