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Vake Earnings: China's Top Property Developer Posts Profit Rise

Tomohiro Ohsumi | Bloomberg | Getty Images

China Vanke, the country's biggest real estate developer, posted a rise in full-year profit and said it's looking to extend its foreign investment drive beyond the high-end U.S. market, as Beijing weighs new measures to cool mainland property prices.

Chinese developers, including Xinyuan Real Estate and Country Garden, are looking abroad and chasing wealthy Chinese who are buying apartments in countries with sizeable Chinese migrant communities such as Malaysia and Australia, analysts say.

Earlier this month, Vanke partnered with Tishman Speyer, the owner of New York's Rockefeller Center, to develop two high-rise residential condominium towers in San Francisco.

(Read More: China Property Curbs in Focus Ahead of Parliament Meet)

"Of course we will not only have projects in San Francisco.We will not rule out the possibility to have long-term investment elsewhere and learn from good companies in other countries," President Yu Liang told a media conference in Hong Kong after Vanke reported earnings growth of more than 30 percent.

He did not specify which foreign markets Vanke was interested in.

Vanke's foray into the United States came after its expansion into Hong Kong last year, where it acquired Hong Kong-listed Winsor Properties Holdings. It also opened a management office in the former British colony.

"They will go anywhere mainland Chinese want to go," said Jinsong Du, property analyst at Credit Suisse. "Their target customer is mainland Chinese who want to migrate overseas, or have a home outside of the country."

Vanke, which counts Wall Street bank Morgan Stanley as a shareholder, posted a 33 percent gain in second-half profit, fanned by strong sales of small and medium-sized apartments.

Rising house prices, which have pushed home affordability rates to all-time lows, have fanned speculation China will expand a three-year campaign to cool the property market by cracking down harder on investment or speculative purchases.

(Read More: China Property Controls Seen in Ping An Bank Shift)

Market sources said that the decision by mid-size lender Ping An Bank to ban its regional branches from approving mortgages on Tuesday may signal that Beijing is set to tighten controls on the property market.

Premier Wen Jiabao vowed this month to tackle speculation in the market.

Analysts said that from a long-term perspective, Vanke could benefit from Beijing's tougher real estate curbs, which would squeeze out smaller, cash-strapped players and help accelerate consolidation in China's fragmented market.

"The impact to market leaders such as Vanke will be relatively limited if compared to small- to mid-cap developers,"said Kris Li, senior analyst at SWS Research in Shanghai.

Still, tightening at home gives impetus to Vanke's forays abroad.

In another sign of Vanke's global ambition, the company is in the process of shifting its mainland-traded,foreign-currency-denominated B shares into Hong Kong-listed H shares.

(Read More: China Vanke Shares Soar on B-Share Migration to Hong Kong)

The migration, which is expected to be completed around April, will likely give Vanke easier access to international investors and strengthen its lead against smaller domestic rivals such as Poly Real Estate and Gemdale, analysts said.

Vanke's net income rose to 8.87 billion yuan ($1.43 billion)during the July-December period, compared with 6.65 billion yuan a year earlier, according to Reuters calculations based on the company's full-year results published on Wednesday.

That beat analyst forecasts of 8.37 billion yuan.

For the full year, profit rose 30 percent to 12.6 billion yuan.

Vanke shares closed 4.6 percent higher on Wednesday before earnings were announced, compared with a 0.9 percent gain in the Shanghai Composite Index . The stock has gained 12 percent this year, far outpacing the broader market.

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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