China Vanke Co. (000002), the country’s biggest developer by sales, said first-half profit climbed 5.6 percent as it sold more small and medium-size homes that are less affected by market downturns.
Net income increased to 4.81 billion yuan ($782 million), or 0.44 yuan a share, from 4.56 billion yuan, or 0.41 yuan, a year earlier, the company said in a Shenzhen stock exchange filing today. Sales fell 1 percent to 40.96 billion yuan.
“The developer’s focus on smaller homes for owner occupiers is resilient in the slowing property market,” Jeffrey Gao, a Hong Kong-based analyst at Nomura Holdings Inc., said before the earnings announcement. “Big companies such as Vanke are better positioned than peers amid the downturn.”
China’s four-year efforts to rein in property prices have included home-purchase restrictions and higher mortgage rates. The real estate industry, facing a surplus of empty units and slowing prices, has become a drag on the world’s second-largest economy. The central bank in May called on the nation’s biggest lenders to accelerate the granting of mortgages and urged them to give priority to first-home buyers.
About 92 percent of Vanke’s projects were comprised of homes of less than 144 square meters (1,550 square feet) each in the first half of the year, the company said. That helped it boost sales even as the slowdown in the country’s property market has put pressure on economic growth.
With more cities easing housing policies, developers’ sales should improve in the second half of the year, Gao said. Nomura rates Vanke’s H-shares, which trade in Hong Kong, a buy.
Contracted sales rose 17 percent to 114.2 billion yuan in the first seven months, the company said on Aug. 4. Chinese developers begin selling homes while they are under construction and book profits upon completion.
Vanke had 42.86 billion yuan of cash at the end of June, it said.
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