Vanke, the mainland's largest property developer, has adjusted its new construction targets downward for the second half to cope with a market correction.

The move comes after the Shenzhen-listed company posted a 23 percent jump in its first-half net profits.

Vanke will uphold its strategy of "cash is king" as it aims to accelerate the disposal of inventories on sale and adjust the plan for newly commenced construction to avoid stocking of new inventories, according to its chairman, Wang Shi.

"Our plan has been adjusted according to the market conditions," said Wang, who is also the company's founder. "There are still many uncertainties in the second half, including the increasing impact of the international oil price on the mainland."

The area of newly commenced construction will decrease by 19.5 percent to 6.83 million sq m, and the completed area will decrease by 14.9 percent to 5.86 million sq m from the planned targets at the beginning of the year.

Vanke's revenue jumped 57.02 percent to 16.25 billion yuan while net profits increased 23.6 percent to 2.06 million yuan as booked area surged 69.7 percent to 2.08 million sq m, with sales revenue amounted to 24.13 billion yuan.

Sales areas amounted to 2.66 million sq m with sales revenue of 24.1 billion yuan in the first half. Contracted sales amounted to 28.64 billion yuan, of which 26.45 billion receipts in advance with 3.2 million sq m sold.

The company's market share by sales revenue further increased to 2.7 percent from 2.1 percent by the end of 2007. Meanwhile, gross margin dropped to 29.2 percent from the 30.3 percent by the end of 2007 and is expected to drop further in the second half.

"As the market is still under correction, the property prices of our products will have downward pressure in the second half of the year, although the prices are still higher than our peers," said Wang, declining to give a figure on the forecast of property prices.

Wang said that he is still positive about the mainland property market in the long run, as the urbanization trend will not change. Yet, more short-term adjustment may be needed while players adopt a wait-and-see attitude.

Peal River Delta, Yangtze River Delta and Bohai-rim regions accounted for 28.3 percent, 34.5 percent and 23.5 percent of the company's total area sold, respectively.

The company's net gearing ratio was 37.1 percent, with strong cash balance of 15.3 billion yuan.

(HK Edition 08/05/2008 page2)