China moves will revive property sales

* Confident will meet 14 bln yuan year sales target

* Sells 10 bln yuan worth of property in 10 months

* Defers 2 bln yuan land premium to 2009

* Sees Chinese property market reviving in Q1 2009

HONG KONG, Nov 11 - China-focused developer Shimao Property <0813.HK> expects the country's ailing property sector to pick up in the first quarter next year as home buyers return to the market, and said it is confident of meeting its annual sales target thanks to moves by Beijing to stimulate demand.

"The measures will help lead to a healthy and stable development of the property sector, and aid home buyers to regain confidence," Chairman Hui Wing-mau told in a telephone interview.

"Home buyers who are now staying on the sidelines will eventually return to the market," Hui said. "We will be able to see a recovery in the coming spring."

The group's property sales totaled 10 billion yuan ($1.47 billion) for the first 10 months of the year, against a full-year target of 14 billion yuan.

"We are doing a lot of work to catch up with our target," Hui said. "We are confidence that we can meet the target."

Last month, Shimao said property sales totalled 8.3 billion yuan for the first nine months of 2008, up 21.3 percent from the same period a year ago, thanks to contributions from its projects in Chinese cities such as Shanghai and Hangzhou.

Its biggest rival, China Vanke <000002.SZ>, China largest listed property developer, has reported a drop in property sales.

Hui also said the payment of some 2 billion yuan in land premiums, out of 2.5 billion yuan to be paid this year for its China property projects, has been deferred to next year, thanks to a series of measures by the Chinese government aimed at stimulating domestic demand.

Another 5 billion yuan in land premiums will be paid in line with the development schedule for the years to come and the schedule can be adjusted depending on the overall operating environment, Hui said when asked if the company's finances would be strained during the market downturn.

Shimao will conduct its short term borrowing in China because it is easier for firm to obtain loans there, Hui said. The company has syndicated loans amounting to US$328 million and US$600 million of bonds outstanding with long maturity.

Asked if the company planned to buy back equity or debt, Hui said it would consider both options if they benefited the company.

Hui also said Shimao would wait until the market picked up before it bought more property to add to its land reserves. Its existing land bank is sufficient for its development use in the next five to six years.

Shares of Shimao have fallen more than 75 percent so far this year to end at HK$4.90 on Tuesday.

(For a factbox on recent Chinese government moves to support the housing market, click on [ID:nHKG166373]) (US$1=HK$7.8=6.827 yuan)