April 29 (Bloomberg) -- China Vanke Co., the nation’s biggest developer by market value traded on mainland exchanges, said first-quarter profit dropped 5 percent as revenue slumped after it completed fewer new projects than planned.
Net income declined to 1.53 billion yuan ($245 million), from 1.61 billion yuan a year earlier, the Shenzhen, China-based company said in a filing to the city’s stock exchange yesterday. Housing projects completed in the first quarter accounted for 7 percent of its full year target, dragging revenue down by 32 percent from the same period in 2013, Vanke said.
The profit drop came even after Vanke, which focuses on smaller apartments less affected by the government’s property curbs, boosted sales by 24 percent in the first quarter from a year earlier. Total homes sold in China slumped 7.7 percent in the January-March period amid tight credit and as new-home price increases eased across the country as scarcer mortgage lending and tighter restrictions in some cities prompted developers to give discounts.
Vanke still forecasts steady growth for its 2014 earnings as it expects completion rate of new projects to quicken in the coming quarters, the company said in the earnings statement. Project completion in the first quarter is not a good indicator of future performance due to seasonal reasons, Vanke said.
About 91.5 percent of Vanke’s projects were homes of less than 144 square meters (1,550 square feet) in 2013, helping it boost sales, the company said last month. Since November, at least 10 Chinese cities tightened local restrictions by taking measures such as raising down payments for second homes, making purchases more difficult. New home prices surged 12 percent last year, according to SouFun Holdings Ltd., which tracks 100 cities.
Contracted sales rose 21 percent to 170.9 billion yuan in 2013, Vanke said last month. Chinese developers begin selling homes while they are under construction and book profits upon completion.
Sales in the first quarter rose 12 percent by area from a year earlier as the value of homes sold jumped 24 percent to 54.2 billion yuan, Vanke said April 3.
China’s broadest measure of new credit in March fell 19 percent from a year earlier and money supply grew at the slowest pace on record, according to the People’s Bank of China.
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