Vanke sees stellar year despite price curbs

PUBLISHED : Monday, 01 August, 2005, 12:00am
UPDATED : Monday, 01 August, 2005, 12:00am

China Vanke, Shenzhen's biggest property developer, said it remains confident that earnings will grow at least 30 per cent this year despite ongoing official measures to cool home prices.

Managing director Yu Liang yesterday said the company would see net profit for the first nine months double from the 386 million yuan posted during the same period last year, even though government austerity measures had compelled it to cut back on its first-half 2.76 million square metre construction target by about 10 per cent.

'We have about 1.4 million square metres, or 12,000 new residential units, ready for launch in the second half of this year,' said Mr Yu.

'We will speed up new launches before the government introduces new measures.'

The nearly completed units are spread among 34 existing and new projects in Shenzhen, Guangzhou, Shanghai, Tianjin, Chengdu, Wuhan and Shenyang.

The developer, with projects in 20 cities, derives about 80 per cent of its income from Shanghai and Shenzhen. The company controls a land bank developable into 9.62 million square metres of gross floor area.

To ward off speculators, the central government in June imposed taxes on new properties sold within two years of purchase.

Any land left idle for more than a year after purchase is also subject to special taxes.

Nonetheless, Shenzhen-listed China Vanke yesterday posted a 153 per cent rise in interim net profit to 799.65 million yuan, from 315.9 million yuan in the same period last year. Revenues rose 75.5 per cent to 4.1 billion yuan, from 2.34 billion yuan. Average selling prices stood at 7,161 yuan per square metre, up from 5,713 yuan a year ago.

China Vanke realised first-half sales of 3.5 billion yuan from selling developed properties on 543,000 square metres of land. Part of this income will not be booked until the second half of the year.

'We will remain cautious in setting prices for our new launches,' Mr Yu said, noting that weekly property transaction volume in Shanghai dropped recently to 400 units, from 1,000 units in February.

Property developer Shenyang Public Utility Holdings reported its delayed full-year results yesterday for the year to December, showing net losses of 195 million yuan.

The troubled H-share firm reported net profits of 17.8 million yuan in 2003. Revenues plunged 79.1 per cent to 35.3 million yuan from 169.1 million yuan the previous year. It said the decline was due to overspending on promotions and fewer property sales.

The firm, which also leases school campuses and cemetery plots, said it had overdue bank loans totalling 199.6 million yuan. It described a further 197.2 million yuan in accounts receivables as 'doubtful'.

The group did not explain why it had postponed its results announcement.