Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
  1. Homepage
  2. Equities
  3. China
  4. Shenzhen Stock Exchange
  5. China Vanke Co., Ltd.
  6. News
  7. Summary
    000002   CNE0000000T2

CHINA VANKE CO., LTD.

(000002)
  Report
SummaryChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

China's top developers poised for strong sales as debt woes linger

01/10/2018 | 01:07am EDT
FILE PHOTO: Apartment blocks are pictured in Beijing

HONG KONG (Reuters) - China's large developers are tightening their hold on the country's real estate market, capturing an ever-larger share even as sales growth is expected to slow and worries about debt persist.

According to the U.S. investment bank Citi, the top 10 China developers are forecast to achieve close to 35 percent market share this year, up from around 27 percent now. They held just 14.2 percent of the market in 2012.

The number of developers posting more than 50 billion yuan in sales increased to 40 in 2017 from 25 in 2016, with sales growth of 53 percent to 84 percent, real estate developer CREIS said. The number of smaller developers, with sales between 10 billion and 50 billion yuan, fell to 104 from 106.

And although the total number of home transactions is expected to drop about 5 percent, securities firms and rating agency analysts said Hong Kong-listed developers could see 30 percent sales growth on average this year, compared with an average of 40 percent growth in 2017.

But the growth will not be without risk. Ramped-up land purchases mean the developers will add debt, throwing uncertainty into the stated plans of some to deleverage.

China Evergrande (>> China Evergrande Group) and Sunac China (>> Sunac China Holdings Ltd) had the highest gearing ratios at more than 200 percent in the first half of last year. Both said in October they intended to reduce their debt ratio, but neither halted their buying sprees.

If there is a market correction, developers' liquidity will be tested. But Standard & Poor director Christopher Yip said even in that scenario, he didn't see a large impact.

"We don't think there'll be a big probability for rated developers to be unable to repay their debt other than very weak ones with poor liquidity and refinancing prospects; others should have secured the financing before they buy land," Yip said.

Several major developers told Reuters that they were confident in double-digit sales growth this year. The companies could not be identified as the information is not yet public.

"Last year we sold so many flats, we'll need to replenish; our land acquisition budget has to be larger than last year because our size is also larger," said a senior executive of a Shanghai-based developer, who declined to be identified as he was not authorised to speak to the media.

A softening but still resilient property market, underpinned by steady prices, would be welcome news for both China's policymakers and developers. Beijing is eager to keep the market stable as the government tackles an alarming build-up in debt.

Many investors are overlooking debt risks and focusing more on revenue, as evidenced by surging share prices.

China property stocks were among the best performers in Hong Kong in 2017, propelled by robust sales, with Evergrande up 480 percent, Sunac jumping 460 percent, and Country Garden (>> Country Garden Holdings Co Ltd) climbing 270 percent. Nine other developers saw shares surge more than two-fold.

Some analysts questioned whether the expansion rate of China's largest developers could be sustained.

"China's property shares rallied in 2017 thanks to top-line growth, but this momentum will slow in 2018. The growth story this year will be weaker," said CLSA analyst Nicole Wong. "Last year, many sales were from smaller cities, but as liquidity tightens, sales to these cities will be more difficult." 

The price to earnings ratio of the China property sector rebounded last year after the share rally, but it was still at relatively low levels.

BUYING SPREE

The larger developers, despite sounding notes of caution, have continued to aggressively pursue growth.

According to data by property researcher CREIS, Evergrande bought a total gross floor area of 16.2 million square metres in the second half of 2017, compared to 9.7 million in the first six months, via both public land auction and mergers and acquisitions. Sunac bought 520,000 square metres in the second half, a slowdown from 1.4 million from January to June.

Country Garden, China Vanke <2202.HK> (>> China Vanke Co., Ltd.) and Evergrande breached the 500 billion yuan ($76.93 billion) mark for annual sales for the first time in 2017, according to CREIS.

Top-performing developers spent 40 to 50 percent of their sales revenue on land acquisitions last year, CREIS said, much higher than smaller rivals, which spent 27-36 percent of sales revenue.

While big companies splurged 74 percent more on land purchases than the previous year, a bigger percentage rise went to smaller cities as tightening policies took hold elsewhere.

China has imposed measures to crack down on property speculation since early 2016, and China's home price growth is likely to stall in 2018 as the boom in smaller cities is expected to lose steam, while measures to tighten credit and other property curbs constrain the market, a Reuters poll showed.

(Reporting by Clare Jim; Editing by Anne Marie Roantree and Gerry Doyle)

By Clare Jim


© Reuters 2018
Stocks mentioned in the article
ChangeLast1st jan.
BEST INC. 5.87% 2.0601 Delayed Quote.-3.92%
CHINA EVERGRANDE GROUP -3.91% 2.95 End-of-day quote.-80.20%
CHINA VANKE CO., LTD. 0.00% 20.3 End-of-day quote.-29.27%
COUNTRY GARDEN HOLDINGS COMPANY LIMITED 0.26% 7.86 End-of-day quote.-26.68%
JUST GROUP PLC -0.49% 92.1 Delayed Quote.32.40%
LAND CO., LTD. 0.00% 12 End-of-day quote.50.00%
LETS HOLDINGS GROUP CO., LTD. -1.26% 6.28 End-of-day quote.-19.28%
LOOK HOLDINGS INCORPORATED 0.29% 1404 End-of-day quote.46.71%
SQUARE, INC. 1.29% 255.4236 Delayed Quote.15.88%
SUNAC CHINA HOLDINGS LIMITED -2.39% 16.32 End-of-day quote.-43.04%
US DOLLAR / CHINESE YUAN RENMINBI (USD/CNY) -0.74% 6.3822 Delayed Quote.-1.39%
All news about CHINA VANKE CO., LTD.
10/18China’s Home Sales Tumble 17% in September Amid Property Slowdown
MT
10/16CHINA VANKE : Chinese property executives ask regulators for 'appropriate loosening' of re..
RE
10/13CHINA VANKE : Date of board meeting
PU
10/12China Vanke Co., Ltd Announces Resignation of Li Qiangqiang as Non-Executive Director
CI
10/12CHINA VANKE : List of directors and their role and function
PU
10/11CHINA VANKE : Update regarding sales and newly added development projects for the month en..
PU
10/11Morgan Stanley Lifts Outlook on China’s Property Market on Potential Policy Easin..
MT
10/11China’s Top 100 Property Developers Post 36.2% Drop in September Sales
MT
10/10CHINA VANKE : Logs Nearly $6 Billion in September Contracted Property Sales; Shares Jump 5..
MT
10/10China Vanke Co., Ltd. Announces Sales Results for the Month and Year to Date Ended Sept..
CI
More news
Analyst Recommendations on CHINA VANKE CO., LTD.
More recommendations
Financials
Sales 2021 477 B 74 445 M 74 445 M
Net income 2021 39 848 M 6 222 M 6 222 M
Net Debt 2021 60 641 M 9 468 M 9 468 M
P/E ratio 2021 5,65x
Yield 2021 6,02%
Capitalization 230 B 35 834 M 35 974 M
EV / Sales 2021 0,61x
EV / Sales 2022 0,54x
Nbr of Employees 140 565
Free-Float 68,6%
Chart CHINA VANKE CO., LTD.
Duration : Period :
China Vanke Co., Ltd. Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends CHINA VANKE CO., LTD.
Short TermMid-TermLong Term
TrendsNeutralBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 25
Last Close Price 20,30 CNY
Average target price 27,70 CNY
Spread / Average Target 36,5%
EPS Revisions
Managers and Directors
Jiu Sheng Zhu President, CEO & Executive Director
Hui Hua Han Executive Vice President & Head-Finance
Liang Yu Chairman
Dong Xie Chairman-Supervisory Board
Xiao Liu Chief Operating Officer & Executive Vice President
Sector and Competitors