October 26, 2017 / 10:36 AM / a month ago

China Vanke Q3 core profit climbs 25.9 pct on improved margins

HONG KONG, Oct 26 (Reuters) - China Vanke , the nation’s No. 2 property developer, said on Thursday third-quarter core profit rose 25.9 percent as its margins improved.

Property sales in China dropped for the first time in more than two-and-a-half-years in September and housing starts slowed sharply, reinforcing expectations that robust growth in the world’s second-largest economy is starting to cool.

But Vanke’s sales in the third quarter rose 63 percent from a year ago. Large developers usually do better than the industry average because most of their business is in major cities.

Core profit, which excludes revaluation gains, climbed to 3.5 billion yuan ($527.78 million) in the July-September quarter. Net profit rose 30.1 percent to 3.8 billion yuan.

Gross margin for the property business grew 5.43 percentage points from a year earlier to 23.35 percent.

“Increased industry tightening and change in market environment have speeded up the polarization of companies; developers with (large) brand have further demonstrated competitive edge,” the company said.

After a long and high profile battle for boardroom control - rare among listed firms in China - Vanke has come under the control of state-owned Shenzhen Metro Group.

Vanke expressed interest this week in bidding for a 65 percent stake in a Shenzhen Metro unit that owns property above the metro facilities in Shenzhen, according to a local media report.

In response to the report, Vanke said it was willing to actively participate in any good investment opportunities in the market.

As part of efforts to fend off hostile shareholders, Vanke had planned last year to buy the whole unit for $6.9 billion via a share swap that would have made Shenzhen Metro its largest shareholder. While that particular deal fell through, Shenzhen Metro did ultimately gain control of Vanke. ($1 = 6.6315 Chinese yuan renminbi) (Reporting by Clare Jim; Editing by Edwina Gibbs and Muralikumar Anantharaman)

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