New World China cuts sales target after net profit inches up 0.5pc

New World China Land, the mainland property arm of New World Development, said it cut its sales target for the current financial year by 15 per cent given the downturn in the sector as it reported net profit last year rose marginally, although it came in slightly above market expectations.

"Although over 40 mainland cities have relaxed the restrictions in buying homes, the inventory in third- and fourth-tier cities remains high," said Lynda Ngan Man-ying, executive director at New World China.

"Property prices will be under pressure. End-users have still adopted a wait-and-see attitude. Unless the economy has stabilised and property loan [requirements] are relaxed, property sales would remain weak in the second half," she said.

The company has cut its contracted sales target to 12.5 billion yuan (HK$15.79 billion) for the fiscal year ending in June 2015. David Ng, a property analyst at Macquarie Equities Research, believes the outlook is not as dire and has already turned positive.

"The mainland government began to relax the measures since June and it will continue. The impact in the property market remains limited because the government relaxed the measures gradually."

Ng said property sales and prices will rebound after Lunar New Year in February next year, but admitted the market was still challenging. "Developers' performance would depend on whether they can offer the types of flats to meet the needs of buyers. Not every developer would benefit from the improving market sentiment," he said.