Developer China Vanke reported a deeper third-quarter loss, highlighting mounting challenges as the prolonged property market downturn continues to weigh on its sales.
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The Shenzhen-based company posted a loss of 16.1 billion yuan (US$2.3 billion) in the three months ended September 30, roughly doubling its loss from a year earlier. That brings its combined losses for the first nine months of the year to 28 billion yuan, according to a statement to the Shenzhen exchange on Thursday.
Persistent weakness in China’s housing market is creating pressure on the developer’s bottom line, despite increased financial support from its largest state-owned shareholder, Shenzhen Metro Group. The company’s financial position remains vulnerable as it deals with a wall of onshore debt maturities.
The country’s home sales deteriorated further in July, and new-home prices fell at an accelerated pace. The price slump is deterring homebuyers who are increasingly concerned about the viability of buying real estate as a store of wealth.
The developer’s gross contracted sales will likely further decline over the next six to 12 months, Moody’s Ratings said in a note earlier this month.
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Vanke was once China’s largest developer but has become the latest flashpoint in the nation’s prolonged property crisis, underscoring the severity of the sector’s challenges.
The country’s new home sales by area may decline about 15 per cent from their current level before the sector stabilises, Fitch Ratings analyst Lulu Shi said earlier this week.