A Business Plan For The ZQDHGX Project

On November9th,2009, DingHu Branch of ZhaoQing Municipal Bureau of Land andResources issued an auction announcement to transfer the use right of the state ownedconstruction land located in A Districts, DingHu urban area of ZhaoQing City by means ofpublic auction. Since this land under the hammer is in the neighbourhood of the sourcefactory land of Lake Bioscience Co., Inc. controlled by our Group, after obtaining theLand use Right, we can develop the Land and the Soy Sauce Factory integratedly byenjoying better techno economic indicators and more preferential polices,meanwhile,integrated development itself will bring us better economic returns. Furthermore,ZhaoQing,as a post industrial city, with its superior geographical position and rapideconomic development,enjoys great development potential.Especially the implementation ofthe Integration of GuangZhou, FoShan and ZhaoQing, and the on going construction ofGuangzhou FoShan ZhaoQing Intercity Light Rail will definitely enhance the overalleconomic development and the land value of ZhaoQing.So we participated in thegovernmental bidding and successfully acquired the Land use Right. The total area of thisLand is187,117.68square meters (equivalent to280.67mu) and the net area is116,142.33square meters (equivalent to174.21mu). The land will be used for commercial andresidential purposes.After the comprehensive consideration,we plan to build this land into the first relaxationresidence on the Pearl River delta,the Dinghu leading international community forgreen collar workers, the Dinghu green recreational urban complex and ESD greenresidential area. To achieve this,we will rely on the scale advantage,take differentiationcompetitive strategies,take full advantage of the location superiority and follow the rules ofthe objective laws of market development.Through static financial analysis, the total cost ofthe project is RMB1.1billion(including the land cost of approximately RMB175million),the total sales revenue is RMB1.393billion, the gross profit is RMB19,300, the net profit isRMB14,500, the pre tax rate of return on investment (ROI) is17.51%, the after tax rate ofROI is13.13%, the rate of return on equity(ROE) is105.32%. According to the average rateof ROI of10%15%in the current real estate development industry, the static profitability ofthe project is in line with the industry average. The average annual rate of ROE of the projectis26.33%calculated at the rate of ROE and taking into account the four year developmentcycle. The financial internal rate of return of this project is as high as21.61%,much higherthan the base earning ratio. Since any project has its risks,this one makes no exception.The major risks of theproject are various,such as land cost rising, financing, marketing, social, engineering,cooperation, policies and technologies,but none of them is vital if we take rationalmeasures,we can keep it under control.In conclusion,with its obvious advantages,notablebenefit and certain relevance,the project is practical.As long as we adopt reasonableorganization structure,build a working team of high capability and efficiency,we can surelycreate the due values though regulating cost of development,enhancing constructive standard,carrying out the development properly and applying appropriate marketing strategies.