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State-owned property developer China Overseas Land and Investment and Poly Property saw first-half net profit slide by 20% and 50%, respectively, compared to a year earlier as home sales continued to shrink.
China Overseas said its first-half net profit fell by 19.4% year over year to 13.5 billion yuan and it cut its interim dividend by 12.5% to 35 HK cents from the previous year. Revenue for the period declined 14% to 89.2 billion yuan. Basic earnings per share from continuing operations was 1.23 yuan compared to 1.53 yuan a year ago.
The group said the demand in China’s housing market was insufficient in the first half and the market continued to trend lower, but the group has sufficient cost advantage and sound financial condition to deal with the challenges.
CICC lowered the target price of China Overseas by 4% to HK$24.87, maintaining an Outperforming rating. The bank lowered the forecast of the company’s profit in 2023 and 2024 by 4% and 7%, respectively, to 25.7 billion yuan and 27.3 billion yuan.
Jefferies slightly lowered the target price of China Overseas to HK$23.5 from HK$24.71, keeping a Buy rating. Citigroup cut the target price to HK$21 from HK$24, reiterating a Buy rating.
Another state-owned property developer Poly Property said its net interim profit slumped by 49.6% compared to the same period last year to 639 million yuan, with no dividend declared. Revenue fell 16% to 15.6 billion yuan.
It noted that the total contracted sales reached 37.4 billion yuan in the first half, surging 127% from a year earlier.