HONG KONG, (Reuters) – China Vanke is the No.2 country property developer in terms of sales. Chairman Yu Liang apologized to investors last year for the slump that saw profits drop by 45.7%.

Vanke posted a net profit in 2021 of 22.5 billion Yuan ($3.54 Billion), down from 41.5 Billion yuan the previous year. This was due to lower gross margins in development, decreased investment income, and provision for impairment losses.

Yu stated in the webcast at the start of the earnings conference that he would offer an “sincere apology” to 520,000 shareholders. He said, “Our financial performance in 2021 has disappointed our shareholders.”

Yu indicated that it may experience some growth in profit by 2022, as it had 710 million sales last year and has yet to book profits. It also expects contribution from businesses other than development.

Following a decline of 23% in last year’s gross margin, the company projects that it will be able to forecast the property development industry’s gross profit margin at 20% for the future.

According to developers, the Second-largest Economy in the World needs to be more aggressive at city level. This will stimulate buyers, and provide new credit to avoid more defaults.

Yu told a company gathering earlier this year that China’s real-estate market has moved into an “era of black iron” after “white gold” developers are struggling to deleverage. On Thursday, Yu said only those without high levels of debt will continue to thrive in this market.

To stabilize the market, he expects that more policies will be implemented at the local level.

Vanke shares listed in Hong Kong rose by more than 1% during early afternoon trading compared to Mainland Properties Index’s 0.5% increase.

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