Vanke’s first-quarter loss deepens to US$860 million despite Shenzhen Metro Group rescue

China Vanke’s first-quarter loss widened, underscoring the property developer’s challenges even after the government in its hometown of Shenzhen stepped in to take control of operations.

The company reported a net loss of 6.25 billion yuan (US$860 million) in the three months ended in March, steepening from a 362 million yuan loss a year earlier, according to a Hong Kong exchange filing on Tuesday.

The loss stemmed mainly from declines in home settlements and gross margins, Vanke said. Margins dropped to 6.1 per cent from about 10 per cent last year, according to Bloomberg calculations on reported figures.

As part of a government-led overhaul in January, Vanke’s two top executives stepped down and an official from Shenzhen Metro Group, its largest state shareholder, took over as chair.

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The loss followed significant write-offs in the final quarter last year. Bloomberg Intelligence (BI) said Vanke’s contracted sales risk dropping 30 per cent this year due to weakening buyer confidence and a shrinking supply pipeline, according to a note earlier this month.