Agile Property to Speed Up Asset Sales as Profit Slumps 51%

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Agile Property Holdings Ltd. plans to accelerate asset sales after the Chinese residential homebuilder recorded a 51 percent slump in first-half profit.

The builder seeks to sell non-essential assets including hotels and commercial properties, Chief Financial Officer Sam Cheung said at a press briefing on Wednesday after the company’s earnings. It will use the proceeds to buy “better” projects, Chairman Chen Zhuolin said at the briefing. Profit slid 51 percent to 924 million yuan ($144 million) in the six months to June 30 from 1.9 billion yuan a year earlier. No timetable was set for the disposals.

Agile joins Chinese developers such as Shimao Property Holdings Ltd. and Guangzhou R&F Properties Co. in posting a decline in profits, as the recovery in home prices has yet to spread from first-tier cities to smaller ones. A more than 40 percent plunge in Chinese stocks from mid-June has also pushed home builders to hunt for cash, including flocking to the onshore bond market.

“We get money back from our non-core assets disposal so that we can invest in good projects in good cities in coming years,” Chen said. “Looking at the real estate industry from a long-term view, we believe it is promising if a proper adjustment took place.”

Agile plans to sell the assets “if the price is reasonable,” Cheung said.

The shares fell 0.3 percent to HK$3.42 at 9:46 a.m. in Hong Kong on Thursday, taking this year’s loss to 22 percent. They fell 7.3 percent to the lowest since March 2009 on Wednesday. The benchmark Hang Seng Index rose 2.1 percent on Thursday.

The developer expects to reach its full-year contracted sales target of 45 billion yuan, Chen said. It will adopt “flexible sales strategies” to shed inventory, the company said in the earnings statement.

The company’s inventory clearance, which includes shifting its focus to mass-market buyers from high-end users, may weigh on its margins, China International Capital Corp. analysts led by Beijing-based Eric Zhang wrote in a note on Thursday, adding that Agile may miss its full-year sales target.

Agile didn’t declare an interim dividend. The company aims to keep its full-year dividend payout ratio in the range of 25 percent to 30 percent, Chen said.