Chinese property developers’ 2023 results hit by sector downturn

By Clare Jim

HONG KONG (Reuters) -A string of Chinese property developers reported weaker financial results for 2023 on Thursday, including Vanke, China’s second largest property developer by sales, where core profit fell 50.6%.

China’s property sector, a pillar of the economy, has lurched from one crisis to another since 2021 after a regulatory crackdown on high leverage among developers triggered a liquidity crisis. Overall housing sales declined 6.5% in 2023 from the previous year and 35.9% from the industry high in 2021.

Country Garden , the country’s largest private property developer, on Thursday delayed the publication of its 2023 financial results, saying it needed to collect more information to make appropriate accounting estimates and judgements. The company defaulted on $11 billion of offshore bonds late last year.

State-backed Vanke’s core profit, which excludes foreign exchange impact and change in the value of assets and financial instruments, was 9.8 billion yuan ($1.36 billion).

Vanke’s net profit fell 46.4% to 12.2 billion yuan while revenue dropped 7.6% to 465.7 billion yuan. Interest-bearing debt rose around 1.9% to 320 billion yuan, for a net debt ratio of 54.7%, 11 percentage points higher than 2022.

Investors have been dumping Vanke’s shares and bonds in the past few weeks, triggering a rare central government directive to help the Shenzhen-based developer beat a liquidity crisis.

Regulators asked financial firms and creditors to step up financing support for Vanke, Reuters reported this month.

Local policymakers’ stimulus and easing measures have struggled to boost sales or increase liquidity, while many property developers have defaulted on debt obligations.

Vanke said in a separate statement that it expected more supportive measures from the Shenzhen government would be implemented in the future, following an announcement from its major shareholder state-owned Shenzhen Metro, that it would subscribe around 1 billion yuan in Vanke’s consumption REIT (Real Estate Investment Trust) which is to be listed.

Beijing-based Sunac China, once a top-five developer in the country and the first developer to complete an offshore debt restructuring in the crisis, reported earlier on Thursday a net loss of 8 billion yuan for last year, versus a net loss of 27.7 billion yuan in 2022.

Smaller rivals, Kaisa Group and KWG Group, reported widening net losses of 19.9 billion yuan billion yuan and 18.7 billion yuan, respectively.

But some state-owned developers are faring better as some homebuyers turn to policy-supported companies to make sure their homes are completed.

China Overseas Land & Investment said its net profit rose 10% last year to 25.6 billion yuan, though core profit eased slightly by 3.2% to 23.7 billion yuan.

($1 = 7.2285 Chinese yuan renminbi)

(Reporting by Clare Jim; editing by Christopher Cushing, Miral Fahmy Jason Neely and Jane Merriman)



Close Bitnami banner