Chinese state-backed developers COLI, Poly Property book smaller profits as ‘three red lines’ stokes worst rout in home sales since 1998
- China Overseas Land & Investment reported a 19 per cent drop in interim earnings while Poly Property suffered a 9 per cent decline
- K Wah, controlled by casino tycoon Lui Chee-woo, bucked the trend with a 39 per cent gain in income
Earnings at China Overseas Land & Investment (COLI) shrank by 19 per cent to 16.7 billion yuan (US$2.43 billion) in the six months to June 30, the company said in an exchange filing in Hong Kong. At Poly Property Group, income fell 9.2 per cent to HK$1.51 billion (US$192 million).
Property developers have struggled with waning consumer confidence as city lockdowns close factories and unsettle businesses. China’s economy grew 0.4 per cent in the second quarter versus 4.8 per cent in the preceding three months, while the fallout from Beijing’s “three red lines” policy has triggered more than US$20 billion of debt defaults among the nation’s weakest home builders.
“Mainland China’s economy is facing the triple pressure of reduced demand, tightening supply and weakening expectations,” COLI chairman and executive director Yan Jianguo said in the earnings statement. Higher US rates, Russia’s invasion of Ukraine and soaring energy costs also added to risks, he added.
Weaker personal income and a liquidity crisis sent domestic home sales tumbling every month from July 2021 to June 2022, Yan said, the longest market rout since China reformed its domestic housing system in 1998.
