Vanke, Zhenro and China Overseas post falling profits as clampdown adds to dimming economic prospects in driving homebuyers to the sidelines
- China Vanke said its core net profit halved to 22.5 billion yuan while sales fell 10 per cent to 628.78 billion yuan
- Zhenro Properties said its core profit slid 30.9 per cent to 2.28 billion yuan while China Overseas Land & Investment posted a 4.3 per cent profit dip to 36.38 billion yuan
Several Chinese property developers have reported plunging 2021 profits, as a clampdown on home prices combined with dimming economic prospects to deter buyers from committing to big-ticket purchases during the Covid-19 pandemic.
China Vanke, the country’s third-largest real estate company by sales, said its core net profit halved to 22.5 billion yuan (US$3.54 billion) while sales fell 10 per cent to 628.78 billion yuan, according to a statement to the Hong Kong stock exchange.
Zhenro Properties, which failed to redeem its US dollar-denominated perpetual bonds, reported a 30.9 per cent slide in its 2021 core profit to 2.28 billion yuan. Even one of China’s most conservative borrowers, China Overseas Land & Investment, posted a 4.3 per cent profit dip to 36.38 billion yuan.
“Our financial performance has disappointed our shareholders,” Vanke’s chairman Yu Liang said, delivering his “sincere apology” to the company’s 520,000 investors. “We will aim to stop the decline and to stabilise our profit.”
The days of runaway home prices are over, marking the end of the era of super profits for property developers, Yu said, adding that China’s central government will offer more supportive measures to buttress the property sector, which will lead to an improvement for the industry.
“Neither high nor low profit is sustainable,” he said, after scrapping the title of partner from its corporate hierarchy, to send executives to the company’s front line. “The sector needs to return to a normal level.”