China Vanke's Q1 net profit down 16.5 pct, sees growth for full year

HONG KONG, April 27 (Reuters) - China Vanke Co

, the nation's second biggest property developer,

said on Thursday it expected a further rise in net profit this

year, despite reporting a 16.5 percent drop in its first-quarter

profit due to higher costs.

Vanke said in its results statement that while its sales by

area in the first quarter rose 81 percent from a year ago, the

overall area pre-approved for sale in the 14 major cities it

focuses on recorded a decrease of 37.9 percent, pointing to a

lower supply in the market.

Vanke's core profit in the Jan-March period, which excludes

revaluation gains, declined 16 percent to 676.2 million yuan

($98 million), while net profit fell 16.5 percent to 695.4

million yuan on revenue up 27.2 percent at 18.6 billion yuan.

"The group is of the view that the year-on-year decline in

the profit for the first quarter of 2017 was not very meaningful

to its annual results," the company said.

On Wednesday the central city of Xian's housing authority

said it had suspended sales by Vanke, which has 12 development

projects there, on suspicion of some property transactions being

"against regulation".

The Xian House Management Bureau, in statements on its

website dated April 24, said it suspected three property agents

sold units at Vanke's Oriental Legend and Cityglory projects

before obtaining pre-sale approval.

The local authorities of major Chinese cities imposed price

caps on new launches late last year in an effort to rein in home

prices that were causing worries of a housing market bubble

developing.

Some Chinese developers are delaying the launch of new home

sales in the hope of riding out the restrictions.

Vanke declined to comment on the impact of the sales

suspension in Xian, which accounted for about 4 percent of its

overall sales last year, according to analysts.

It's unclear what the total value of the suspended projects

is, but media reports said Vanke was aiming for sales worth 20

billion yuan in the city this year, up from the 15 billion yuan

of sales made last year.

Smaller peer China Overseas Land & Investment Ltd

last week said its first-quarter operating profit rose to HK$7.8

billion ($1 billion) from HK$7.1 billion in the same period last

year before restating for CITIC Ltd's residential

property business acquired in 2016.

Vanke, the subject of a long-running battle for boardroom

control, did not comment in the statement on the affair even

though the current board's term of office expired on March 27.

Vanke said last month no time had been set for the selection

of a new board as various parties were discussing proposals,

while company rules allow the current board to remain in place

until a new board is appointed.

($1 = 6.8930 Chinese yuan renminbi)

(Reporting by Clare Jim; Editing by Greg Mahlich)