China State Construction Engineering sees profit rise 34.4pc
China State Construction Engineering (CSCEC), the mainland’s largest real estate conglomerate, posted a 34.4 per cent year-on-year rise in net profit in the first six months of the year to 11.8 billion yuan (HK$14.8 billion).
But the state-owned firm warned in a statement to the Shanghai Stock Exchange on Sunday of challenges arising from a property market downturn, tight credit and local government debts.
The conglomerate suffered a net cash outflow of 7.4 billion yuan in the first half. It controls Hong Kong-listed China State Construction International and China Overseas Land & Investment, the biggest Hong Kong-listed mainland developer in terms of market capitalisation.
“As the company is already the world’s biggest construction and property firm, the biggest challenge is no longer scale but efficiency of operation,” it said, adding that it would closely watch progress in major railway and light rail projects and pursue breakthrough in ports, water and road deals in the second half.
The company’s shares opened slightly up on Monday but later pared their gain to a loss of 0.3 per cent at 11am, when they were trading at 3.18 yuan.
In the first six months of the year, revenue grew 24.2 per cent to 374.9 billion yuan, and gross profit gained 27.6 per cent to 46.3 billion yuan, as margin improved 0.4 percentage points to 12.4 per cent. It is aiming for full-year revenue of 750 billion yuan.
Revenue from new construction projects rose 9.8 percent to 720 billion yuan, due to a 15.6 per cent jump in housing construction business to 632.3 billion yuan. Infrastructure business fell 20.8 percent to 82.8 billion yuan. The design and survey section expanded 8.9 per cent to 4.9 billion yuan.
Real estate sales fell 13.5 per cent to 68.2 billion yuan, including 56.7 billion yuan contributed by China Overseas Land & Investment.
CSCEC added about 7.6 million square metres of land reserves in the first half, giving it a total land bank of about 66.6 million square metres by the end of June.
The company signed overseas contracts worth 42.3 billion yuan in the first half, up 88.6 per cent on year. Revenue from abroad rose 23.4 per cent in the first half to 20.5 billion yuan and accounted for 5.5 per cent of its total, unchanged from a year earlier.