(Bloomberg) -- China Vanke Co. warned that losses grew substantially in the second quarter, with the big homebuilder saying that investment in some projects “has been over-optimistic.”
The firm, whose woes this year have been emblematic of the ongoing slump in China’s property sector, said in a Hong Kong stock exchange filing that it expects to post a first-half loss of 7 billion yuan (US$962 million) to 9 billion yuan. That signals a sharp downturn from the first quarter, when it reported a 362 million yuan loss.
“The company deeply apologises for the performance loss,” it said.
Vanke’s update is the latest sign that China’s years-long property crisis continues unabated, as the government’s supportive policies have yet to materially reinvigorate homebuyer demand. The company, once considered one of the more sound players in the industry, has been raising funds and looking to sell assets to calm investor concern over liquidity stress.
The state-backed developer hasn’t reported a first-half loss since at least 2003, according to data compiled by Bloomberg. In the first half of 2023, Vanke had a profit of 9.87 billion yuan.
This year has seen “material impact” from investments in some development projects that resulted in high land acquisition costs as the projected settled in 2024, according to the company. Vanke added that some of the first-half loss also came from discounts from clearing housing inventory and offloading assets.
It said that a package of plans were formed during the first half of this year for business reformation and risk mitigation. Vanke also sought to slim down and achieved “positive progress.” Also, 74,000 homes were delivered and Vanke “ensured repayment of open market debts on schedule.”
Executives told some analysts Tuesday that Vanke has reduced some of its short-term debt, according to minutes of the meeting published online by the builder. Debt refinancing and new financing has totaled 60 billion yuan this year as over 50 billion yuan of debt has been paid.
In a separate statement to the Shenzhen Stock Exchange on Tuesday, Vanke said it has a combined 4.3 billion yuan of onshore bonds due in the second half of this year and has made “repayment arrangements.” It added 10.5 billion yuan of offshore bonds were repaid in the first half and that no offshore bonds are due the rest of this year.
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