HONG KONG (Reuters) - China’s Country Garden Holdings Co Ltd ratcheted up its sales target for the year by 25 percent, citing strong room for domestic growth, after reporting a record high half-yearly net profit on booming property business in smaller cities.
Sales at the developer’s $100-billion Malaysian project are set to drop as expected, with Chinese buyers no longer coming forward following Beijing’s moves to stop capital flight into offshore investments. Country Garden, however, said the project was being “well received” by overseas investors.
China’s top property developer by sales posted a net profit of 7.5 billion yuan ($1.13 billion) for the six months to June, its highest ever half-yearly earnings. Core profit, excluding revaluation gains, surged 35 percent to 7.2 billion yuan.
Country Garden has been benefiting from its focus on smaller cities at a time when government curbs to keep property prices in check are weighing on larger centres.
“China’s tightening policies are for ensuring a healthy development of the property market,” Country Garden’s president, Mo Bin, said at an earnings conference on Tuesday.
“We’re confident in the policies, and regardless of the policies or not, China’s (home) sales are around 10 trillion levels (each year) which leave a lot of room for us to grow.”
The company said it would continue investing in the largest to the smallest, or the tier-one to tier-five, cities in the country and expects margins to keep rising into 2019.
Country Garden was also optimistic about revenue and sales.
It said it expects further revenue growth in the future given a number of pre-sold but unrecognised projects and that it was now officially targeting sales of 500 billion yuan for the year, up from the previous 400 billion yuan.
For the first six months of 2017, the company’s revenue rose 35.5 percent to 77.7 billion yuan.
Its sales over the period more than doubled from year-ago levels to 288.9 billion yuan, pushing the company up two notches to the top of the rankings table for Chinese developers.
Of this, 6 billion yuan came from the Forest City project in Malaysia, according to chief financial officer Wu Bijun.
“Our sales target for Forest City is 8 billion yuan; this is because we have almost zero Chinese buyers now, most sales are from other countries,” Wu told Reuters.
Forest City sales in 2016 came in at more than 10 billion yuan, accounting for 6 percent of the group’s contracted sales.
Country Garden said it had set up 23 international sales points for the Malaysian project. It halted promoting the project to mainland buyers earlier this year in response to Beijing’s capital outflow curbs.
Among other Chinese developers, Guangzhou R&F Properties reported a 22 percent rise in its first-half core profit to 2.1 billion yuan, while Soho China saw a 565 percent jump in net profit to 3.98 billion yuan due to higher valuation gains on investment properties.
($1 = 6.6610 Chinese yuan renminbi)
Reporting by Clare Jim; Editing by Himani Sarkar