Fantasia's sales target cut highlights dilemma for developers on mainland

The first annual sales target cut announced by a major Hong Kong-listed mainland developer has revealed the dilemma facing many players in an industry downturn: to take the hit now or give up a bit later.

Fantasia announced yesterday that it had reduced its annual sales target to 10 billion yuan (HK$12.6 billion) from 15 billion yuan after it reported a 68 per cent year-on-year slide in first-half profit attributable to shareholder to 101.42 million yuan. Its shares ended the day down 2.1 per cent at 92 HK cents.

In the first seven months of the year, its sales sank 44 per cent year on year to 2.27 billion yuan, although the performance picked up by 7 per cent last month compared with June, at 475 million yuan.

"We won't be surprised to see more [mainland] developers cut their targets," said Franco Leung, a property analyst and assistant vice-president at Moody's Investors Service in Hong Kong.

The sales targets were set at the beginning of this year when mainland developers were coming off a record high performance last year. The targets were higher than last year's actual numbers, but sales performance has lagged this year as a downturn kicked in and turned out to be much worse than expected.

Edison Bian, chief China property analyst at UOB Kay Hian in Hong Kong, did an analysis on Tuesday to see whether major mainland developers could hit their annual sales targets. It found developers such as Poly Property, Shimao, CR Land, Sino Ocean Land, Guangzhou R&F, Kaisa and Longfor were under pressure, while some firms, such as China Overseas Land & Investment and Sunac China, were likely to hit their targets.