China Vanke profit rises 32pc

PUBLISHED : Tuesday, 02 March, 2010, 12:00am
UPDATED : Tuesday, 02 March, 2010, 12:00am

China Vanke yesterday posted a 32.14 per cent increase in net profit to 5.33 billion yuan (HK$6.06 billion) for the year ended December 31 on stronger property sales and effective cost controls.

The mainland's largest publicly listed developer said total property sales rose 32.5 per cent to 63.42 billion yuan.

That bolstered the group's turnover 19.2 per cent to 46.05 billion yuan.

Directors declared a final dividend of 0.70 yuan for every 10 existing shares held for the year in 2009, compared with 0.50 yuan paid in 2008. Basic earnings per share was 0.48 yuan, compared with 0.37 yuan in 2008.

Next year's profits have been partly secured, according to the company.

At the end of last year, the company had 3.75 million square metres of space sold but not yet completed and booked. This represented a contract amount of 38.23 billion yuan. Most of the property sales from these projects would be booked this financial year, the company said.

Last year, the gross margin and net margin of the company's property business were about 26 per cent and 13 per cent, respectively. This was a decline of 6.01 percentage points in the gross margin but an increase of 1.58 percentage points in the net margin compared with 2008.

'Owing to delay in revenue recognition in the property industry, the decline in booked gross margin reflected the fall in prices during the adjustment period in 2008,' said Yu Liang, director and president of China Vanke.

But a reduction in administrative costs and expenses helped create a modest increase in the net margin.

Yu said the company remained cautious about project investments, and it would adopt a prudent approach towards land acquisition.

At the end of last year, the gross floor area of China Vanke projects under planning amounted to 24.36 million square metres, which could essentially meet its development needs in the coming two to three years, the company said.

The company has cash in hand of 23 billion yuan, an increase of 15.1 per cent year on year. Looking ahead, Yu said the company was formulating a 10-year 'green plan' focusing on energy-saving construction.