Chinese real estate giant Vanke’s profit fell 46 percent in 2023, the company said Thursday, as the country’s property market grapples with an unprecedented crisis.
Vanke is one of China’s top property developers and was the sector’s second-largest firm in terms of sales last year, according to specialist firm CRIC.
However, the market is facing major financial challenges, with some developers on the verge of bankruptcy and lower property prices deterring consumers from making investments.
Vanke reported a net profit of 12.16 billion yuan ($1.68 billion) last year, down 46.4 percent from 2022, according to a Hong Kong stock exchange filing on Thursday.
“The company’s profits are under pressure, and indicators such as capital stock and cash-to-short-term-debt ratio are on the decline,” the company said in the filing.
Moody’s, S&P and Fitch all downgraded their ratings for the embattled real estate firm this month, warning that economic conditions will continue to weigh down its performance.
Vanke’s largest shareholder, Shenzhen Metro, is wholly state-owned, which was once seen as a guarantee of financial stability.
Recent setbacks make it the latest Chinese developer to be caught up in a mounting real estate sector crisis, on the heels of Evergrande and Country Garden.
The industry, which once experienced two decades of meteoric growth as living standards rose across China, has long accounted for more than a quarter of gross domestic product (GDP).
Chinese authorities have introduced incentive measures and made announcements of state support in a bid to revive activity.
However, such efforts have had little impact on the ailing sector so far.
Chinese Housing Minister Ni Hong acknowledged the difficulties in stabilising the market during a news conference this month.
Real estate companies that “need to go bankrupt should go bankrupt, and those that need restructuring should be restructured”, he said.
