China New Town's 3Q net profit tumbled 70% to $0.65m

Blame it on increased operational cost.

China New Town Development recorded revenue of RMB58.37m ($12.04m) in 3Q from fixed-income investments in new town projects, mainly including those from Nanjing Two Bridges Project, Danyang Flood Discharge PPP Project, Danyang Xinmeng River Project, and Yangzhou Airport New Town Project, and accumulated investment gain of RMB3.56m ($0.73m).

The accumulated investment gain has been received till the end of September 30 2016, by CDBC New Town (Beijing) Asset Management Company Limited, a junior-tranche limited partner of CDB-BOCOMM New-type Urbanization Development Fund.

During the quarter, the group recorded revenue of RMB21.86m ($4.51m) related to land development, basically flat with the same period of 2015. This was due to the facilities fee earned at the Shanghai Golden Luodian project.

In the third quarter of 2016, other income decreased by RMB8.90m ($1.84m) as compared with the same period of 2015, which was mainly attributable to reduction in interest income from bank deposits, foreign exchange gain, and reversal of bad debt provision as compared with the same period of last year.

During the period, the group recorded RMB29.1m ($6m) cost of development of land. This was due to the corresponding cost of the facilities fee including cost to rectify certain facilities for the western part of the Shanghai Golden Luodian project.

In the third quarter of 2016, selling and administrative costs increased by RMB0.424m ($0.09m) as compared with the same period of 2015, which was mainly attributable to increase of selling and administrative costs in relation to CDB New Town Changchun Development Company Limited and CDB Modern Agriculture Investment Management (Beijing) Company Limited.

During the period, the Group incurred net finance costs of RMB23.84m ($4.92m), including the interest expense of RMB4.89m ($1.01m) on bank and other borrowings and interest expense of RMB18.95m ($3.91m) on senior guaranteed notes. This represented an increase of RMB1.05m ($0.22m) from the net finance costs in the same period of 2015, primarily due to the additional interest expenses arising from bank and other borrowings as compared with the same period of last year.

During the quarter, other expenses increased by RMB4.24m ($0.87m) as compared with the same period of 2015, which was mainly attributable to an increase in the fair value loss on financial assets.

In the third quarter of 2016, the Company recorded income tax of RMB1.14m (S0.24m) which was attributable to the profit from fixed-income investment projects.

A profit after tax from continuing operation of RMB3.13m ($0.65m) was recorded for the third quarter of 2016, representing a decrease of RMB7.41m ($1.53m) or 70% from the same period of 2015.