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Vanke's foray into smaller cities pays off
Source: Bloomberg News |
August 9, 2011, Tuesday
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CHINA Vanke Co, the nation's biggest developer by market value, said first-half profit rose 5.9 percent as it expanded into smaller cities where home-buying demand defied government curbs.
Net income increased to 2.98 billion yuan (US$460 million), or 0.27 yuan a share, in the six months ended June, from 2.81 billion yuan and 0.26 yuan a share a year earlier, the company said in a filing to the Shenzhen stock exchange yesterday. Revenue rose 19 percent to 20 billion yuan.
"Vanke's sales are better than its peers because most of its products target the mass customers rather than high-end properties that the government is cracking down on," Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG with a "buy" rating on the stock, said before the earnings. "Their move to smaller cities also helped, because the measures in those markets weren't as strict as those in big cities."
Vanke's profits jumped as home prices climbed in all but three cities that the government monitored in the first six months, even as measures including higher second mortgage down-payments were intensified to fend off speculators. China's State Council said last month it will extend the curbs to smaller cities after limiting home purchases in Beijing and Shanghai.
"Against the backdrop of home-purchase restrictions, speculation has been refrained," Vanke said in the filing. "We implemented a strategy to focus on small- and medium-sized homes and aimed to sell quickly in the first half of the year."
The company's contracted sales, based on bookings of apartments before they are built, rose 64 percent to 74.1 billion yuan in the first seven months from a year earlier.
Net income increased to 2.98 billion yuan (US$460 million), or 0.27 yuan a share, in the six months ended June, from 2.81 billion yuan and 0.26 yuan a share a year earlier, the company said in a filing to the Shenzhen stock exchange yesterday. Revenue rose 19 percent to 20 billion yuan.
"Vanke's sales are better than its peers because most of its products target the mass customers rather than high-end properties that the government is cracking down on," Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG with a "buy" rating on the stock, said before the earnings. "Their move to smaller cities also helped, because the measures in those markets weren't as strict as those in big cities."
Vanke's profits jumped as home prices climbed in all but three cities that the government monitored in the first six months, even as measures including higher second mortgage down-payments were intensified to fend off speculators. China's State Council said last month it will extend the curbs to smaller cities after limiting home purchases in Beijing and Shanghai.
"Against the backdrop of home-purchase restrictions, speculation has been refrained," Vanke said in the filing. "We implemented a strategy to focus on small- and medium-sized homes and aimed to sell quickly in the first half of the year."
The company's contracted sales, based on bookings of apartments before they are built, rose 64 percent to 74.1 billion yuan in the first seven months from a year earlier.
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