China

China Vanke Posts 0.77% Increase in Net Profit for 1H 2015

Summary:

  • Real estate developer China Vanke (000002.SZ) announced that its net profit for the first half of the year has increased 0.77% year-over-year to RMB 4.846 billion, as reported by Sohu.
  • The company posted a 23% increase in revenue to RMB 50.2 billion.

Why It Matters:

  • The 0.77% net profit increase was China Vanke’s worst performance since 2002. The company revealed that although the total sales of its housing projects increased 9% to RMB 110 billion, the average house price decreased 3.4% compared with last year to RMB 10,626 per square meter. As a result, gross profit decreased 0.84% to 21.04%.
  • China Vanke has partnered with other real estate developers on many projects. Consequently, minority interests accounted for 47% of total net profit for the period.
  • The liquidity of real estate developers has been a major concern for investors, especially as the non-RMB debt burden increased significantly after the recent depreciation of the RMB. China Vanke said that its total cash and cash equivalents stands at RMB 44.6 billion, much higher than its short term debt of RMB 23.7 billion. The company’s net debt ratio is only 15.7%, which is very low compared with other real estate developers.