Mainland developer Fantasia Holdings Group's interim net profit plunged by nearly 60 per cent in the first half this year even though sales exceeded the company's expectations.
The Shenzhen-based developer's interim profit attributable to shareholders plummeted 59.7 per cent to about 201 million yuan (HK$245 million) from 498.7 million yuan a year earlier. Revenue for the period fell close to 40 per cent to about 1.2 billion yuan.
This year "is a comparatively challenging period" for the property market, Pan Jun, chairman and chief executive of the group, said yesterday.
Pan said the real estate industry had been hit by government measures including mortgage and home purchase restrictions, as well as the global economic uncertainties which affected economic growth on the mainland.
The group recorded contract sales of about 3.35 billion yuan for the first six months, and said it was better than expected despite dropping by 2 per cent from a year earlier. The figure equated to 47 per cent of the 7.2 billion yuan annual sales target. In July, the company recorded sales of 670 million yuan, which meant it has reached 55 per cent of its annual target in the first seven months of this year.
Pan said Fantasia is confident of meeting its annual contract sales target by the end of the year. He explained that in the first half, the gross floor area of completed projects only yielded 21,000 square metres, 3 per cent of the company's full-year target of 800,000 square metres. This means it could book more revenue in the current half when more projects will be built.
About 50 per cent of Fantasia's existing land bank will be used for commercial property projects, while the other half is earmarked for residential developments. Pan said the company will continue to focus on first and second-tier cities.
"We'll actively explore the business model of housing for senior citizens and continuously develop diversified property services and operation capacity such as commercial property development, boutique hotel services, property services and cultural tourism," Pan said.
But he added that he expects the austerity policies on the mainland market to continue to suppress demand, while the government's emphasis on low-cost housing may pose threats to the general home market, coming on top of an uncertain economic outlook.
Fantasia posted a core profit of about 30 million yuan, according to the company's executive director and chief financial officer Alex Chan. The price of Fantasia shares closed yesterday at 72 HK cents each, down more than 7.69 per cent on the Hong Kong stock exchange.