(Yicai Global) March 29 -- Property developer Sunac China Holdings has expanded its net profit by focusing on the lucrative markets of China's first and second-tier cities.
Sunac and its affiliates increased net profit by one-half to CNY17.5 billion (USD2.6 billion), the Tianjin-based firm's earnings report that was published today shows.
The company boosted its sales 27 percent to CNY460.8 billion, ranking fourth among Chinese real estate developers. The firm nearly doubled its operating income to CNY124.8 billion.
Sunac expects to make 20 percent more, or CNY550 billion, in sales this year, its Chairman Sun Hongbin said during an earnings meeting.
The company continued to bet on big cities. Its land reserves span across 256 million square meters, corresponding to CNY3.6 trillion worth of housing, and most of the land has been acquired through mergers and acquisitions. Some 85 percent of the areas are in first and second-tier cities.
Sunac warned about the rocky road ahead. "We should not be too optimistic about 2019, we must be prudent," Sun said. The core pursuit for the central government is to stabilize housing prices, so it won't relax macroeconomic regulations much, he said.
Rivals, such as Evergrande Group, have diversified into other sectors such as new energy vehicles, but Sun still thinks that it is real estate that pays off. This will be the main business for the firm for the next few years, and small investments toward new businesses may return a profit in five to 10 years, Sun added.
Sunac's stock price [HKG: 1918] has risen 3.7 percent today to HKD39.10 (USD5).
Editor: Emmi Laine