HONG KONG, April 27 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
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
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)