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MarketScreener Homepage  >  Equities  >  SHENZHEN STOCK EXCHANGE  >  China Vanke Co., Ltd.    000002   CNE0000000T2

CHINA VANKE CO., LTD.

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China Vanke : March property investment grows most in eight months on looser policy

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04/16/2019 | 11:20pm EDT
FILE PHOTO - Man looks at a shantytown to be redeveloped next to apartment buildings, in Fu county in the south of Yanan

BEIJING (Reuters) - Property investment in China grew the most in eight months in March, as demand recovered and market sentiment improved in the wake of looser monetary conditions and a modest relaxation of home purchase curbs.

Real estate investment, which mainly focuses on the residential sector but also includes commercial and office space, is a key driver of growth in the world's second-largest economy.

The data, along with a raft of official economic indicators released on Wednesday, suggests growth may be stabilising after taking a hit from a multi-year government crackdown on debt risks and a bruising trade war with Washington.

China's real estate investment rose 12 percent in March from a year earlier, accelerating slightly from 11.6 percent growth reported for the combined January-February period, according to Reuters calculations based on data released by National Bureau of Statistics (NBS) on Wednesday.

That marks the strongest monthly growth since July 2018, when it rose 13.2 percent.

For the first three months, property investment increased 11.8 percent on-year, compared with a 10.4 percent gain in the same period a year earlier. The pace was the fastest quarterly gain since 2014 for the January-March period.

China's property market has seen a resurgence recently as some local governments have loosened restrictions on home purchases in a bid to boost economic activity, while Beijing's call for banks to ramp up lending and lower interest rates has also helped boost market confidence.

Economists expect China's real estate investment to rise by 7 percent for the year, a Reuters poll showed last month, up from 4 percent in the previous poll, as some developers have shown more confidence in the market as domestic financing conditions improve.

New home prices in China also grew slightly faster in March after a slowdown the previous month.

In March, property sales by floor area, a major indicator of demand, rose at its fastest pace in seven months at 1.8 percent from a year earlier, compared with January-February's 3.6 percent drop, according to Reuters calculations. In the first quarter of 2019, property sales by area fell 0.9 percent, narrowing from a 3.6 percent drop in the first two months of this year.

There have been signs that some smaller Chinese cities are easing restrictions on buyers as their revenue from real estate shrinks and local economies slow. But many economists say a blanket nationwide lifting of curbs is unlikely as policymakers remain wary of big price fluctuations.

Yet Beijing appears to be showing a bigger tolerance as it emphasises on a "city-based" approach that gives local governments more autonomy in policymaking.

Contracted sales at major developers, including China Vanke Co Ltd and China Evergrande Group, saw robust growth last month.

In another sign of an uptick in home purchasing demand, medium- to long-term new household loans, mainly mortgages, rose sharply to 460.5 billion yuan in March, according to Reuters calculation based on central bank data, from 222.6 billion yuan in the previous month.

Credit conditions have been on the looser side in recent months as China has cut the amount of cash banks keep as reserves five times since last year to boost lending to companies. Chinese banks in some regions also have been lowering mortgage rates for first-home buyers.

Funds raised by China's real estate developers in the first three months grew 5.9 percent from the same period a year earlier, compared with 2.1 percent in January-February, the NBS data showed.

Reflecting growing confidence among them, new construction starts measured by floor area surged 18.1 percent in March from a year earlier, compared with the 6 percent in the first two months of the year.

Beijing vowed this month to relax residency curbs in many of its smaller cities this year which would grant out-of-towners permits to buy houses, sparking speculation the move would fuel demand in the property market.

But economists noted the nationwide impact will probably be marginal unless restrictions in larger cities are also relaxed.

Housing sales are expected to fall 5 percent in 2019, according to Reuters poll.

(Reporting by Kevin Yao and Lusha Zhang; Editing by Shri Navaratnam)

Stocks mentioned in the article
ChangeLast1st jan.
CHINA EVERGRANDE GROUP 1.42% 21.5 End-of-day quote.-9.09%
CHINA VANKE CO., LTD. End-of-day quote.
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Financials (CNY)
Sales 2019 389 B
EBIT 2019 92 446 M
Net income 2019 41 347 M
Debt 2019 77 024 M
Yield 2019 4,76%
P/E ratio 2019 7,35
P/E ratio 2020 6,34
EV / Sales 2019 0,98x
EV / Sales 2020 0,79x
Capitalization 305 B
Chart CHINA VANKE CO., LTD.
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 31,9  CNY
Spread / Average Target 17%
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Managers
NameTitle
Jiu Sheng Zhu President & Chief Executive Officer
Liang Yu Chairman
Dong Xie Chairman-Supervisory Board
Xu Zhang Chief Operating Officer, Executive Director & EVP
Jia Sun Chief Financial Officer & Executive Vice President
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