New | Greentown China’s H1 core net profit down 7 per cent

Greentown China Holdings reported on Monday a 7 per cent drop in its core net profit to 615 million yuan in the first half of this year due to a fall in the profitability of property sales and rising administrative expenses.

Greentown Group, which includes Greentown China and its subsidiaries and joint ventures, saw its revenue fall by 14.4 per cent from 12.56 billion to 10.756 billion in the first half, around 90 per cent of which were from property sales. This was primarily because of a 14.9 per cent year-on-year decrease in average selling prices of properties delivered during this period, particularly in third-tier and four-tier cities, where the real estate market is recovering slowly from a downturn compared to first-tier and second-tier cities.

The Hangzhou-based mainland developer is the 12th biggest in the country in terms of sales transactions.

During the first six months of this year, the group achieved more than half of its sales target of 60 billion yuan for this year, and it’s expected to complete 33 projects in the second half with a total gross floor area of about 4.15 million square metres, its interim filing said.

“In the core areas of the first-tier and second-tier cities, [we] will continue to invest in high-end products to meet the demand of high-end customers,” the company wrote in its interim filing ending on June 30. “In other regions, the company will focus on ‘the most cost-effective’ products and strike a balance between quality and cost which is in line with market demand and the need of the local customers so as to enhance the profitability of the company.”

In June, state-owned China Communications Constructions Group (CCCG) became the largest shareholder of Greentown China, owning 28.89 per cent of its issued shares. The synergy with CCCG is expected to reduce Greentown’s financial cost and “jointly explore more overseas development opportunities,” the filing wrote.