Mainland developer Yuexiu Property posted a 63.2 per cent jump in first half core net profit, but warned that the outlook remains tough against the backdrop of a slowing Chinese economy and property cooling measures.
“The government has been very clear that they want to steady the property sector and the price of land. Rising US-China trade tensions has also made the property market nervous,” Lin Zhaoyuan, chairman of the Guangzhou-based company, said at a news conference to announce the interim results on Tuesday.
“In April and May, the whole [Chinese] economy began slowing, which has unnerved some property developers. With the policies put in place by the Chinese government, the property market has also entered a cooling period.
“We will remain cautious and steadily progress ahead in the second half.”
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The state-owned developer’s core net profit – excluding gains – was 1.83 billion yuan (US$259.24 million) for the first half, benefiting from property sales and operations, according to a filing to the stock exchange. The company reported 1.12 billion in core profit in the same period last year.
Yuexiu’s contracted sales grew 31.9 per cent year on year to 36.90 billion yuan, 54.3 per cent of its full-year target of 68 billion yuan.
The average selling price was 22,500 yuan per square metre, up 10.8 per cent year on year.
As of June 30, the developer had total land reserves of about 21.52 million square metres, a 10.9 per cent increase since the beginning of the year. 14 parcels of land was acquired in the first half in seven cities including Guangzhou, Shenzhen and Zhengzhou.
The company declared an interim dividend of 5.3 HK cents per share, 26 per cent higher than last year.
Its shares closed 4.88 per cent at HK$1.56, amid a wider plunge in the Hang Seng Index, which dropped to its lowest level since January.
Yuexiu Property is focused on growth in the Greater Bay Area in southern China, Yangtze River Delta region in eastern China and central China. About 49 per cent of its land reserve is located in the Greater Bay Area.
The Communist Party’s Politburo warned at the end of July against using property as a tool to stimulate the economy.
The Politburo, which met at the end of July to lay out economic policies for the second half, sent out a very clear message to curb the property sector, saying that “we should adhere to the principle that housing is used for living, not for speculation, implement the long-term mechanism for real estate, and not use property as a short-term means of stimulating the economy.”
These measures come on the back of earlier moves in May to tighten developers’ funding as Beijing has sought to clamp down on their high debt levels.
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