Leading property developer sees revenue and profit rise in first half

A consumer views Vanke’s housing offers at an exhibition in Wuhan, Hubei province, in December 2021. [Photo provided to China Daily]

China Vanke, a leading real estate developer, remains confident in the market’s recovery trend despite recent concerns over mortgage payments as the company reported year-on-year growth in first-half revenue and profit.

Its interim results show that in the first six months, operating profit reached 206.92 billion yuan ($30 billion), a year-on-year increase of 23.8 percent, and profits jumped by more than 10% to 12.22 billion yuan. This is a hard-earned increase as its net profit nearly halved last year.

On the heels of the interim report, Vanke’s stock rose 4.66% to close at 16.63 yuan in the A-share market on Wednesday.

Vanke Chairman Yu Liang said in an online meeting on Wednesday that the main problem for China’s real estate sector now focuses on restoring market confidence as land and house prices have become stable.

He thinks rigid demand is still very strong. “About 1 to 1.1 billion square meters in the current housing market need to be renewed each year, but the number of new homes still cannot keep up with the speed of natural renewals,” he said.

When the market has shrunk too much, it will build up momentum for a spontaneous recovery, Yu added.

He said at a recent meeting with the company’s shareholders that the Chinese real estate market had bottomed out and the recovery would be relatively slow.

According to data from the National Bureau of Statistics, the selling area of ​​commercial housing nationwide in the first six months of this year fell by 22.2% year-on-year, but the volume of transactions in the housing markets housing in major cities jumped about 50% in one month. -month in June.

Sales volume fell sharply again in July as market confidence was shaken by a wave of homebuyers refusing to make mortgage payments due to delayed deliveries or stalled construction of their pre-sold homes .

Yu reiterated that rebuilding market confidence takes time. He guaranteed the delivery of Vanke’s projects on schedule and remained confident that Vanke will achieve the goal of “bounce back to stability, then to improvement” this year.

Adrian Cheng Chi-kong, managing director of New World Development, also said in a media interview on Sunday that the mainland’s real estate market has bottomed out and will slowly recover.

He is optimistic that he will recover well in the next one or two years. The company said it will invest 10 billion yuan in land in major Chinese cities over the next year.

A recent report from UBS Global Wealth Management’s chief investment officer suggested there were signs of stabilization in the property market following government promises to secure deliveries from stalled projects. He believed that sentiment in the real estate market would normalize in the coming months.

But Yue Xiangyu, an analyst with the Institute for the Development of Chinese Economic Thought at the Shanghai University of Finance and Economics, pointed out that most property companies are still under severe pressure.

“According to the interim results released recently, more than half of them reported a decline in revenue and only a third reported year-over-year net profit growth.

Yang Kan, chief analyst at Ping An Securities, agrees, saying the pressure on China’s real estate market still exists in the near term, but he said supportive government policies will improve the sector’s performance.

Regarding the long-term outlook, he expects profit margins to stabilize as some developers are pushed out of the market and the industry structure is further optimized.