Property developer China Vanke expects 2022 earnings to stabilize

The China Vanke company logo is displayed during a news conference announcing the property developer’s interim results in Hong Kong, China August 22, 2016. REUTERS/Bobby Yip

HONG KONG, March 31 (Reuters) – China Vanke (000002.SZ), the country’s second-largest property developer by sales, said on Thursday it expects its net profit to stabilize in 2022 after the Chairman Yu Liang apologized to investors for the 45.7% crisis seen last year.

Vanke reported net profit of 22.5 billion yuan ($3.54 billion) in 2021, from 41.5 billion yuan a year ago, due to lower gross profit margins in the business of development, lower investment income and the provision for asset impairment. losses.

At the start of an earnings call, Yu said on the webcast that he wanted to offer a “sincere apology” to the 520,000 shareholders. “Our 2021 financial performance disappointed our shareholders,” he said.

Yu said profit in 2022 could see some growth as he has 710 billion from last year’s sales that have not yet been accounted for, and he expects profit contribution from non-development companies. .

The company expects gross profit margin from property development business to be 20% in the future, after dropping to 23% last year.

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Yu, who told a company meeting earlier this year that China’s property sector has entered an era of “black iron” from “white money” as developers struggle to deleverage, said Thursday that only those who don’t use high debt to grow the scale will survive in this market.

He expects more policies to be introduced at the local level to stabilize the property market.

Shares of Hong Kong-listed Vanke rose more than 1% early in the afternoon, against a 0.5% rise in the Hang Seng Mainland Properties Index (.HSMPI).

($1 = 6.3489 Chinese Yuan)

Reporting by Clare Jim; Editing by Sherry Jacob-Phillips

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