China Vanke Co., the country’s second-largest developer by sales, reported lower profit in the first half, underscoring how even developers with partial state support aren’t immune to an unprecedented housing slump.
(Bloomberg) — China Vanke Co., the country’s second-largest developer by sales, reported lower profit in the first half, underscoring how even developers with partial state support aren’t immune to an unprecedented housing slump.
Net income declined 19% to 9.9 billion yuan ($1.4 billion) in the six months ended June 30, the Shenzhen-based company said in an exchange filing Wednesday. That compares with largely flat growth for 2022. Vanke won’t issue a dividend payout.
Backed by a local state-owned firm, Vanke has until now been weathering the two-year property crisis that’s weakened the economy and left competitor Country Garden Holdings Co. at risk of becoming the latest private-sector developer to default. A growing number of state-owned builders have warned of half-year losses, in a sign that the crisis is spreading to companies with government support.
Vanke’s gross margin declined to 18.9% as home prices fell. The nation’s property slump has worsened in recent months, with July new home sales falling the most in a year. Vanke’s Chairman Yu Liang recently backtracked from his view that the market was stabilizing, saying it was worse than he’d expected.
Vanke’s sales decline might deepen after a 9% year-on-year drop in the first seven months, given the poor housing-market sentiment in the wake of Country Garden’s debt crisis, Bloomberg Intelligence analyst Kristy Hung wrote in a note before the earnings.
The developer said its cash coverage for short-term debt stood at 2.7 times.
(Updates with more earnings details from the fourth paragraph)
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