China Property

China Vanke reports 28pc profit growth as home sales rebound

PUBLISHED : Wednesday, 27 April, 2016, 9:04pm
UPDATED : Friday, 15 July, 2016, 10:32am

China Vanke, whose top management has been battling conglomerate Baoneng Group for control over the nation’s largest home builder, posted a 28.1 per cent year-on-year rise in net profit on the back of a state-supported property sales rebound.

The Shenzhen-based and listed firm recorded a net profit of 833.2 million yuan for the three months to March 31, from 650.2 million yuan in the year-earlier quarter, it said in a filing to Shenzhen’s stock exchange. Revenue jumped 64.3 per cent year on year to 14.61 billion yuan.

“Benefiting from a relatively loose credit environment, and the government’s measures to support reasonable public home demand ... national home sales saw a significant rebound [of 60.3 per cent year on year to 1.61 trillion yuan in the first quarter],” Vanke said.

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Home construction starts also grew 14.8 per cent in the first quarter, ending a declining trend since 2014, it added.

Chinese home sales have been rebounding since last year’s second half following a string of government market support measures as Beijing tries to cut excess inventory of homes in smaller cities.

Vanke’s China-listed shares have been suspended from trading since December 18 until at least June 18, pending progress on its restructuring, amid a battle for control of the firm between top management and property-to-financial conglomerate Baoneng.

It last month signed a non-legally-binding agreement with state-backed subway operator Shenzhen Metro for the latter to become one of its major shareholders by injecting up to 60 billion yuan (HK$71.7 billion) of property projects along its subway lines.

China Vanke chairman Wang Shi said the two firms aimed to build a “strategic” relationship to cooperate on a “railway plus property” model, starting from Shenzhen and gradually expanding to other Pear River Delta cities.

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Chinese media subsequently reported that state-owned China Resources , one of the largest shareholders in Vanke and a long-time supporter of Wang and his management team in the takeover battle against Baoneng, complained the potential transaction was not discussed or voted on by Vanke’s board.

But Wang said it had been in touch with China Resources about the planned cooperation with Shenzhen Metro and had followed a protocol of reaching out to its major stakeholders, adding the deal would need to be voted by Vanke’s board and shareholders.

Senior Vanke managers had informed China Resources of its intentions during a visit before the Lunar New Year, he said, while pledging to improve communications in future.

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China Vanke had also signed another non-binding cooperation agreement with an unidentified party late December, and has been in talks with other potential partners.

Vanke’s Hong Kong-traded shares on Wednesday closed 0.6 per cent higher at HK$19.64 ahead of the results announcement. It has fallen 14.2 per cent since December 18, when its Shenzhen shares were halted.