BEIJING – China Vanke, the nation’s second-largest real estate developer by sales, arrested an earnings slump by posting 22.6 billion yuan (S$4.4 billion) in annual profit, underscoring the divide between private firms and those with state support amid a liquidity crisis.
The company’s profit growth was largely flat for 2022, after dropping 46 per cent a year earlier, the Shenzhen-based company said in a filing.
Vanke’s stabilisation underscores the importance of state backing as China undergoes a record slump in the property market. The divergence between real estate companies is crystallising, paving the way for higher-quality developers to consolidate market share.
While Vanke chairman Yu Liang repeated his view that the housing market peaked in 2021, he brushed off concerns that sales nationwide may fall off a cliff. Housing demand can still sustain sales at around 1.2 billion sq m, slightly above the 1.1 billion sq m last year following a record plunge, he said.
“If the external environment does not change drastically, the housing market can stay at that level for a while,” Mr Yu said in a post-earnings briefing. “While there is a ceiling of new home demand, there is a floor too.”
Mr Yu’s forecast stands in sharp contrast with that of the chairman of smaller rival Greenland Holdings, who expects the market to slump again this year. It is also more upbeat than that of Greentown Management Holdings’ chief executive officer, who estimates that sales will stay at around one billion sq m for a long time.
Responding to concerns that China’s housing recovery looks short-lived with a sales rebound waning in March, Mr Yu said the market remains in a “mild” recovery, adding that industry transactions last month still topped most months in 2022.
Vanke’s revenue reached 503.8 billion yuan in 2022, topping estimates. Sales at the developer rose 2.6 per cent in February from a year earlier, gaining for the first time since April 2021.
The company raised HK$3.9 billion ($659 million) from a share placement in Hong Kong in March. It proposed to raise as much as 15 billion yuan onshore in mainland China.
“Vanke might have found the bottom for its construction capacity,” Bloomberg Intelligence property analysts wrote in a note before the earnings release. “This is poised to pave the way for the developer’s 2023 sales pickup.”
Earlier on Thursday, larger rival Country Garden Holdings reported its first full-year loss since its 2007 listing in Hong Kong. BLOOMBERG
