HONG KONG (Reuters) - Chinese state-backed property developer China Vanke said its profit would be under pressure in the short term amid a market correction, but that would not hurt its cashflow.
China's real estate market, which accounts for roughly a quarter of the world's second biggest economy, is grappling with a debt crisis that has rattled global markets and sparked fears of financial system contagion at a time when the country is already struggling with a broader slowdown.
Shenzhen-based Vanke, which is considered to be financially sound, on Wednesday reported a 19.4% fall in net profit year-on-year to 9.9 billion yuan ($1.36 billion) for the first six months of this year.
Vanke told a press conference on its results on Thursday that it has slowed down its investments to adopt to the slowing market, spending only 28% of sales on buying new land in the first eight months of 2023, compared to 40% previously when the market was good.
The company said its financing channels including bond issues and bank loans were still smooth.
Offshore, it said it has completed 15 billion yuan worth of offshore refinancing in the first half, and it is getting ready to repay its three bonds totalling 11 billion yuan maturing next year.
It would decrease its offshore debt because of rising U.S. dollar interest rates, it added.
Commenting on the broader market, company chairman Yu Liang China's property market has "overcorrected" as sentiment over-react to the negative news in the sector. He cited news that home construction starts, measured by total floor area, have plunged this year to 2006 levels as an example.
Yu said that as policymakers have been stepping up efforts to stabilize the market, he hoped the new easing policies can be implemented as soon as possible.
As pressure mounts on the real estate market, more Chinese cities are easing mortgage curbs in hopes of reviving consumer demand for homes.
Wuhan, the capital of Hubei province, said on Thursday it would let people take preferential loans for first-home purchases regardless of their credit record from Sept. 1, following major cities like Shenzhen and Guangzhou in easing mortgage rules.
($1 = 7.2882 Chinese yuan renminbi)