UPDATE 1-Greentown China seeks M&A, plans promotions as credit crunch bites
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By Clare Jim
March 24 (Reuters) - Developer Greentown China said on Monday it was on the lookout for acquisition opportunities as smaller developers fail and plans various promotions to clear inventories.
The sector has witnessed a loan default and a mushrooming price correction since the start of the year as government curbs and tighter lending weigh on some developers.
Market watchers expect more small developers to run into cash problems, following the default by Zhejiang Xingrun Real Estate Co last week, creating potential buying opportunities for some of China's larger property companies.
"The number of credit problems, restructuring and consolidation will increase, so we can acquire these projects with low costs," Greentown chief executive Shou Bainian said at a results briefing on Monday.
"We will be watching very closely ... over half of the projects last year were from acquisitions. Looking for suitable acquisitions is also one of our goals this year."
Greentown also aims to make clear inventories through various promotions, although it stressed it did not plan steep price discounts.
"We need to quicken our turnover, so we need to be flexible with pricing. But we will not cut prices extensively - we will carry out various promotions," Shou said, adding Greentown was also looking at joint ventures with fund houses to raise capital.
Forty-eight percent of Greentown's saleable area in 2014 is in eastern Zhejiang province, including the city of Hangzhou, a trouble spot for some developers that has made headlines over the past two months.
One small developer had cut prices by 12 percent in Hangzhou, generally considered a Tier 2 city, Xinhua said in February, adding that a day later another company slashed prices for a development in the same city.
Chinese property developers are stepping up the use of sales promotions, such as free car park spaces and renovation options that translate into discounts of 5-10 percent, for some suburban housing projects, an early sign that a slowdown in property prices that spooked investors in February may be spreading.
Greentown said on Monday its core profit in 2013 was 4.4 billion yuan ($706.83 million), up 4.4 percent from a year ago. The company aims to achieve contracted sales of 65 billion yuan this year, the same as 2013.
Shares of the company closed down 4 percent, underperforming the 1.9 percent rise in the broader market. ($1 = 6.2250 Chinese Yuan) (Reporting by Clare Jim; Editing by Anne Marie Roantree and Jeremy Laurence)