Sunac: Decline in land prices to continue

Sunac China Holdings Ltd, the Chinese mainland’s fourth-largest developer by sales, said the land and home price slowdown is likely to remain, with property regulations also continuing to tighten.

There are no signs that property regulations will be eased in the near future, and the tightening has far exceeded expectations, Sunac’s chairman Sun Hongbin told the media when announcing the company’s interim results on Friday.

He said the company will continue to maintain its cautious and conservative approach to land acquisition in the second half of the year, amid the nation’s property market controls.

Sunac CEO Wang Mengde said the company will remain focused on land expansion in tier-one and tier-two cities, as well as regions surrounding tierone cities.

Sunac acquired 29.2 million square meters of land in the first six months of the year. The developer now owns a total of 231 million square meters.

“Except for mergers and acquisitions, we have not been involved in public land acquisitions in the past two years. To avoid risks, we will continue to control the pace of buying,” Sun said.

He forecast the slower pace of buying would further decrease the company’s net gearing ratio, indicating an improved debt-to-equity ratio.

The developer reported a net gearing ratio of 232 percent on June 30, 2018, decreasing about 24.5 percentage points from the end of last year. Last year, Sun set the target of reducing the company’s net gearing ratio to between 90 percent and 70 percent by 2019.

Core profit attributable to shareholders more than tripled to 6.61 billion yuan ($967 million) for the six months ended June, up 287.7 percent year-onyear.

Sun said the robust financial performance reflected the company’s healthy sales in the past few years. However, with stricter regulations, property developers’ performance could change significantly in the next two years, he said.