First-half profit at China’s biggest property asset buyer soars 16-fold after acquisitions
Aggressive acquisitions in the quarter and a higher gross margin drove the dramatic increase
Sunac China, one of the country’s biggest property developers, saw its first-half net profit surge by 1,683.4 per cent to 1.3 billion yuan, boosted by its aggressive acquisition of property projects and higher gross margin.
Revenue rose 25.9 per cent to 13.3 billion yuan and Sunac’s gross profit margin improved to 19.6 per cent compared to 13.7 per cent at the end of 2016.
“The company maintains a cautious attitude for the real estate market in the second half of the year,” said chairman Sun Hungbin in a statement to the Hong Kong bourse, citing the fact Sunac expected the government would continue to tighten loans for home buyers and developers.
Sun said Sunac would look to increase sales turnover and eliminate inventories faster in order to generate quick return of funds, while following “more prudent land acquisition principles in the face of an overheated land market.”
Sunac’s core profit was 1.37 billion yuan for the six months to the end of June, an increase of 204.2 per cent from a year ago.
The company said it will not issue an interim dividend.
Sunac’s shares hit a historic high of HK$23.55 on Thursday and closed 2.6 per cent higher at HK$23.5, ahead of the result announcement.
The Tianjin-based real estate developer made headlines in July after it agreed to pay 43.8 billion yuan (US$6.57 billion) for 13 theme parks and tourism-related projects from magnate Wang Jianlin’s troubled Dalian Wanda Group.
It has spent roughly 100 billion yuan on property acquisitions so far this year to expand its scale quickly so as to catch up with its bigger rivals.