August 21, 2018 / 5:24 AM / a month ago

UPDATE 2-China's Country Garden to slow development pace after safety incidents

* Core profit jumps 80 pct to record 13 bln yuan

* Measures to enhance construction safety (Adds company comment, Longfor results)

By Clare Jim

HONG KONG, Aug 21 (Reuters) - Country Garden, China’s top property developer by sales, said on Tuesday it will slow the pace of new projects to focus on safety and quality, as core profit in the first six months hit a record high on stronger revenue and margins.

Responding to safety concerns after a series of incidents at its building sites, Country Garden’s president and CEO Mo Bin said the company will concentrate improving controls and management at existing projects.

“Safety and quality is our first priority,” Mo told a conference call with reporters.

Major Chinese developers including Country Garden, Longfor Group and state-backed China Resources Land reported record profits for the first six months of the year on Tuesday.

Country Garden said its core profit, which excluded revaluation gains and non-recurring items, rose 80 percent to 13 billion yuan ($1.9 billion), a record first-half.

The company said it would “overhaul” its management systems, boost supervision and training, and increase the use of technology to reduce manual labour at its project sites.

The developer halted all projects in China for a few days last month to conduct inspections following the deaths of six people at a site in eastern Anhui province. The halt had no impact on the company’s full-year new-start and completion targets for its projects.

Shares in Country Garden ended nearly 8 percent higher on Tuesday after gaining 9 percent after the results, outperforming many of its peers.

After expanding aggressively into small cities in recent years, Country Garden has said it would more selective in the future and only expand when a market showed strong demand.

Mo said on Tuesday the company will be more prudent in land investment, and focus on land acquisitions in third and fourth-tier cities in the second half of the year.

The number of failed land auctions in the first seven months of 2018 more than doubled from the same period a year earlier, according to data from realtor Centaline, suggesting a cooling market.

Smaller rival Longfor told reporters on Tuesday it had recently purchased some parcels of land at their reserve price and saw more opportunities in the third quarter.

The Chinese government’s multi-year deleveraging drive, tighter property policies and changes in consumer confidence in various cities “have put pressure on property sales, weighing significantly both on prices and volumes,” Longfor also said in a statement. ($1 = 6.8740 Chinese yuan renminbi) (Reporting by Clare Jim Additional reporting by Trista Shi and Holly Chik Editing by Stephen Coates and Darren Schuettler)

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