China Vanke Swung to Loss in First Half

By Sherry Qin

China Vanke swung to a net loss in the first half on declining home sales, becoming the latest victim of China's yearslong property crisis.

The Shenzhen-based state-linked developer reported a net loss of 9.85 billion yuan for the first half of 2024, equivalent to $1.39 billion, compared with a profit of 9.87 billion yuan in the year earlier period, it said late Friday. The result was wider than its guidance for a net loss in the range between 7.0 billion yuan and 9.0 billion yuan.

The company attributed the losses to a decline in scale and gross profit margin in its property development business, impairment provisions, and financial losses.

Revenue declined 29% to 142.78 billion yuan in the six-months, as its contracted sales dropped 25% on year.

China's property sector has been in a yearslong slump. A slowing economy and weak consumer sentiment have weighed on the sales of many property developers, who are facing a liquidity crisis. The inability to tap debt markets has caused many developers to default on loans and bond payments, with some going bankrupt.

Vanke has taken new loans from state banks to ease its liquidity pressure and shore up its finances. It raised and refinanced 61.2 billion yuan in the first half of the year, it said in the filing. Last week, the developer applied for a combined loan of 1.085 billion yuan at two of China's state-owned banks in Shenzhen.

After repaying $612.6 million of its offshore bonds due this year in June, Vanke is among the few major developers yet to default.

Vanke, whose largest shareholder is a state-owned subway operator, is a top property pick for many analysts amid the Chinese government's ramped-up efforts to rescue the property sector, with Beijing recently encouraging local governments to buy up excess apartments and turn them into public housing.

For the second half, Vanke said it aims to ensure delivery of its 188,000 units and repay public debts on time.

The company has previously said it intends to reduce interest-bearing debt by around $14 billion, from around $44 billion, by the end of 2025.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

September 01, 2024 21:15 ET (01:15 GMT)

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