Profit rises on tighter margins at Vanke
China Vanke, the mainland's largest residential property developer, posted a 2.8 per cent rise in third-quarter net profit but margins shrank in a sign of the slowing sector and economy.
Developers are battling excess supply, tight liquidity and home prices, which fell for five consecutive months.
Property accounts for about 15 per cent of the economy, which grew at its slowest rate - 7.3 per cent - since the 2008 global financial crisis in the September quarter. New home prices fell month on month in a record 69 of the 70 major cities.
Vanke said its gross margin fell 1.1 percentage points to 23.8 per cent from a year earlier, squeezed by sliding home prices and expensive land costs.
"Oversupply will remain in the market in the short term and the inventory of new properties in the market will further increase," it said.
Net profit for the July-September quarter was 1.65 billion yuan (HK$2.09 billion), compared with 1.6 billion yuan a year earlier, it said.
For the first three quarters of the year, net profit rose 4.8 per cent to 6.46 billion yuan.
Owing to higher inventory and intensified market competition, Vanke delayed preparatory work on some projects and said it expected the floor area of new starts for the whole year would be less than that designated at the beginning of the year.
Last week, China Overseas Land & Investment, the country's fifth-largest developer, said operating profit plunged nearly 50 per cent in the third quarter and warned that downside risks remained.