China Vanke, the country’s second-largest property developer by sales, said on Thursday it expects its net profit to stabilise in 2022 after chairman Yu Liang apologised to investors for the 45.7% slump seen last year.
Vanke reported a net profit of 22.5 billion yuan ($3.54 billion) in 2021, down from 41.5 billion yuan a year ago, dented by lower gross profit margins in the development business, a drop in investment income and the provision for asset impairment losses.
At the beginning of an earnings conference, Yu said he wanted to offer a “sincere apology” to the 520,000 shareholders. “Our 2021 financial performances have disappointed our shareholders,” he said.
Yu said profit in 2022 may see some growth because it has 710 billion yuan in sales from last year that have yet to be booked, and it expects profit contribution from non-development businesses.
The company forecasts the gross profit margin for property development business at 20%, after dropping to 23% last year.
The world’s second-largest economy needs more decisive policy-easing at the city level to stimulate demand from wary buyers and inject new credit to stop more property firms from defaulting, developers said.
Yu, who told a company meeting earlier this year that China’s real-estate industry has entered into an era of “black iron” from “white silver” as developers struggle to deleverage.
He said on Thursday that only those who do not use high debt for growing scale will survive in this market. Yu expects more policies to be introduced at the local levels to stabilise the property market.
Hong Kong-listed shares of Vanke rose more than 1% in early afternoon trading, versus a 0.5% rise in Hang Seng Mainland Properties Index.
- Reuters, with additional editing by George Russell
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