China Vanke Shares Slump After Soft Results Amid Continuing Property Downturn

By Tracy Qu

China Vanke shares slumped after it posted soft first-quarter results amid continuing pressure in China's property sector.

Shares were 9.5% lower at 4.48 Hong Kong dollars (US$0.57) in Tuesday afternoon trading, taking this year's loss to 38%. Shares rose 19% on Monday after a major Chinese city relaxed house-buying restrictions.

Vanke reported a 10% decline in revenue to 61.59 billion yuan (US$8.51 billion), according to a late Monday filing. It booked a CNY362.0 million net loss, compared with a profit of CNY1.46 billion a year earlier. Cash and cash equivalents fell 41% to CNY80.82 billion.

China's property sector is in a yearslong downturn, and supportive measures rolled out by policymakers have done little to boost home sales. In the latest effort to revive housing demand, Chengdu, the capital of China's Sichuan province, this week stopped reviewing home buyers' qualifications.

Jefferies maintained a holding rating on Vanke after the results but cut the target price to HK$4.75 from HK$6.17, saying that the developer's earnings are unlikely to recover in 2024.

Tight liquidity could translate to more aggressive price cuts to recycle capital, especially with physical market sentiment still soft, analysts led by Calvin Leung said in a note.

"While we agree Vanke has a high residential market beta, we remain cautious on its soft project pipeline, sustained earnings risk and deteriorating balance sheet," they said.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

April 30, 2024 02:20 ET (06:20 GMT)

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