New | Sunac China cautious on acquisitions as first-half core profit drops

Mainland Chinese developer Sunac China Holdings said on Tuesday it had enough cash to acquire small property companies but would exercise caution in land acquisition and regional expansion, and focus on risk controls given the slow property market recovery.

The company has about 16.8 billion yuan of cash on hand. In the first half of this year, it abandoned some overpriced land parcels and secured some prime plots in Shanghai through a joint venture with Greentown China Holdings.

Apart from its five major operating cities - Beijing, Shanghai, Tianjin, Chongqing, and Hangzhou - it also entered Jinan and Nanjing, two second-tier cities, during the same period, and recently Chengdu, through an acquisition.

"Our standard of selecting which city to enter is: first, its economy is doing well with strong industry support; and second, the city has a net inflow of population," said chairman Sun Hongbin.

Sunac China reported a 2 per cent decline in its core profit to 1 billion yuan for the six months ended June. Its revenue was slashed by 40 per cent year on year to 5.44 billion yuan, primarily due to the slow growth of property sales because of fewer deliveries in existing projects.

It will launch eight projects in the second half, increasing its annual saleable supply worth more than 100 billion yuan, which "will ensure the fulfilment of the company's annual sales target", Sunac said in an exchange filing.