China Resources, Longfor see more volatility in China property market

HONG KONG, March 21 Fri Mar 21, 2014 6:30am EDT

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HONG KONG, March 21 (Reuters) - Chinese developer China Resources Land Ltd and Longfor Property Co Ltd both expressed cautiousness on the country's property market on Friday and said they see more market volatility in 2014.

China's home price inflation slowed for the second straight month in February, the latest sign of cooling in the country's frothy property market, fuelling fears of defaults in the sector after the collapse of Zhejiang Xingrun Real Estate amid tight liquidity.

"We are cautiously optimistic now, more towards cautious this year, while we were more optimistic last year," China Resources Land chairman Xiangdong Wu told a press conference.

"I agree that the price hike last year was bigger than expected...it's not good for a market to always remain hot. A little cooling is good."

He added that the company, the fourth-largest listed Chinese developer by enterprise value, may consider lowering price of some projects that see high profit.

Beijing-based Longfor also said it is taking a more cautious view on the property market in 2014 as it sees more market volatility and "changing demand and supply dynamics" in the future, and squeezing margins has now become an industry trend.

"Supply is big in the third and fourth-tier cities so there is more pressure. Our focus this year is to clean up the inventory we have so there may be some impact on margins," Longfor chief financial officer Wei Huaning told reporters.

The company said it will take a more open attitude towards cooperation and joint venture opportunities to expand investment potentials.

"Joint ventures and partnerships can help lower risk and capital pressure. We are working with onshore funds and talking to insurers now," Wei said.

On Friday, China Resources Land said its 2013 core net profit jumped 30 percent to HK$9.4 billion ($1.21 billion), while its net profit rose 39 percent to HK$14.7 billion, beating analysts median forecast of HK$9.9 billion polled by Thomson Reuters Smartestimates.

Longfor's net profit last year was 8 billion yuan ($1.28 billion), up 27 percent from a year earlier. It was forecast to post a net profit of 6.4 billion yuan. Core profit was 6.2 billion yuan.

Smaller peer Poly Properties, an overseas unit of Poly Real Estate Group, says net profit rose 3.3 percent to HK$2.7 billion, in line with expectations. Twelve analysts have forecast the company to record a net profit of HK$2.7 billion.

($1 = 6.2275 Chinese yuan)

($1 = 7.7645 Hong Kong dollars) (Reporting by Clare Jim; Editing by Matt Driskill)

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