(Bloomberg) -- China Vanke Co. suffered another loss in the third quarter, underscoring the property developer’s challenges even after the government rolled out stimulus measures to support the sector.
The Shenzhen-based company reported a net loss of 8.1 billion yuan ($1.1 billion), bringing its combined losses for the first nine months of the year to 17.9 billion yuan, according to a statement to the Hong Kong exchange on Wednesday.
State-backed Vanke’s debt troubles show how even the highest quality developers have been ensnared by the unprecedented slowdown, now in its fourth year. The crisis is taking a toll on the closely watched builder, as the government’s efforts to stem the sector’s decline have yet to materially reinvigorate homebuyer demand.
“Vanke’s solvency in 2025 and 2026 could be increasingly at risk of an unrelenting sales slide,” Bloomberg Intelligence analysts Kristy Hung and Monica Si wrote in a note on Thursday. “The developer’s contracted sales could be poised for an extended slump as its intensifying cash crunch sabotages its project pipeline.”
In September, Vanke’s contracted sales declined 46% from a year earlier to 17.4 billion yuan, the biggest monthly slide since February, according to Bloomberg calculations based on company data.
Vanke has 25.1 billion yuan of onshore and offshore bonds maturing next year, including $423 million of dollar notes set to mature in May, Bloomberg-compiled data showed.
The state-backed developer, once considered one of the strong players in the industry, has been raising funds and looking to sell assets to calm investor concern over liquidity stress.
On a good note, Vanke’s gross margins recovered to 12.1% in the third quarter from 6.8% in the first half, Bloomberg calculations showed.
As China’s biggest cities loosen home-buying curbs, a shift in home sales mix to wealthy regions has led to higher profitability at the firm, said Jeff Zhang, an analyst at Morningstar Inc.
Chinese property stocks rose for a second day on Thursday amid expectations of further policy announcements to support the sector. Vanke’s shares also climbed 3.7% as of 11:24 a.m. in Hong Kong. A Bloomberg gauge of real estate shares increased as much as 6.3%.
“Vanke’s cash burn rate is a fire alarm for policy rescue,” Hung and Si said in the note.
--With assistance from Jing Jin.
(Adds market reaction in the fourth paragraph, more details and comments throughout. An earlier version of the story corrected the time period for the first and second graph.)
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