Evergrande expects property sales will beat target to reach 50b yuan

PUBLISHED : Thursday, 09 December, 2010, 12:00am
UPDATED : Thursday, 09 December, 2010, 12:00am

Evergrande Real Estate Group expects to achieve property sales of 50 billion yuan (HK$58.27 billion) this year, 25 per cent more than the target set at the beginning of this year.

In the first 11 months, the company's contract sales amounted to 47.72 billion yuan. Contract sales are usually a good indication of actual sales in coming months.

Vice-chairman James Xia Haijun said the company was confident in achieving 50 billion yuan, an increase of 65 per cent from the 30.3 billion yuan reached last year.

'Assuming that we can maintain such growth momentum, we will surpass 100 billion yuan in property sales in the next two years,' Xia said.

He declined to reveal the target for next year. 'The target will be far beyond the 20 per cent growth from that of this year,' said Xia, citing the fast expansion in third-tier mainland cities as a reason.

Evergrande said contract sales last month were 6.56 billion yuan, the highest monthly amount this year. The average selling price in the month was 6,745 yuan per square metre, against 6,231 yuan in October.

'End-users buy as they see a price below 7,000 yuan per square metre as an affordable level,' chief financial officer Parry Tse Wai-wah said.

Xia said the central government's austerity measures were working as the pace of growth in mainland cities had slowed.

He said the measures had forced some smaller players out of the market, giving big players such as Evergrande more business opportunities.

Looking ahead, Xia said the company hoped to increase the number of projects on sale every year but sales volume in each project to slow. 'That will help us increase the average selling price in each project. We cannot raise prices if we sell many units in one project within a year.'

Last year, the firm recorded sales of 30.3 billion yuan from 27 projects, giving an average of 1.1 billion yuan per project. This year, it expects sales of 50 billion yuan from 56 projects, or about one billion yuan per project.

Tse also said the company's net debt to gearing would be 60 per cent this year.