(Yicai) Aug. 27 -- Greentown Management Holdings’ profit and revenue growth slowed to the slowest pace in the last three years in the first six months as the sluggish real estate market takes its toll on the Chinese provider of construction and project management services.

Greentown Management’s net profit climbed 5.8 percent in the first half from a year earlier to CNY501 million (USD70.3 million), while revenue jumped 7.8 percent to CNY1.7 billion (USD238.6 million), according to the semi-annual results released by the Hangzhou-based firm yesterday. Gross profit advanced 6.7 percent to CNY860 million (USD120.7 million).

The gross floor area of Greentown Management’s newly contracted projects expanded 1 percent in the six months ended June 30 from a year earlier to 17.46 million square meters. This was a huge slowdown from the growth of over 30 percent logged during the same period last year.

While the value of newly contracted projects plunged 18 percent year on year to CNY4.2 billion (USD589.1 million), the first such decline in three years. Revenue from project management fees plummeted 27 percent to CNY1.4 billion (USD196.4 billion).

The project management industry is facing a noticeable slowdown this year and fees are tumbling, Cheng Min, vice president of Greentown Management, said at the earnings call yesterday. High-speed growth in the project management industry seems to have ended and the sector has even weakened, he added.

The bleak property market has resulted in weak demand for construction services, Cheng said. Developers are either adopting a wait-and-see stance before buying land, or they are not developing the land they have acquired.

The central government is also encouraging local governments to acquire unsold apartment blocks as government-subsidized housing, but this also reduces the need for local governments to build new housing. All these factors are putting pressure on construction companies, Cheng said.

Meanwhile, with the market downturn and rising development risks, many developers have also entered the project management industry to reduce risks as well as retain their core teams. The low fees being offered by some of the new entrants are squeezing the profit margins of other service providers.

Developers’ revenue is growing much more slowly, and gross profit margins are likely to stay narrow for over a year, said Guo Jiafeng, co-chairman of Greentown Management. However, the industry may rebound sharply, given its light assets and good historical results.

Greentown’s share price [HKG: 9979] closed flat today at HKD2.73 (USD0.35). Yesterday, the stock plunged 31.7 percent to its lowest since 2022.

Editors: Tang Shihua, Kim Taylor