NewChina's Evergrande aims for 30pc annual growth, defends debt-driven expansion

Shrugging off investors' concerns over its debt level, Evergrande Real Estate Group on Monday vowed to maintain a 30 per cent annual growth rate in the coming years despite a dwindling housing demand.

The mainland Chinese developer controlled by Hui Ka-yan reported a 40 per cent increase in net profit in the first six months from a year earlier to 13.3 billion yuan. It made a fair value gain of 2.48 billion yuan from sales of its stakes in two mainland Chinese banks.

Hui, also company chairman, told reporters that high growth was a must and to ease investors' concerns, Evergrande would hold sufficient cash and quicken turnover. He also said the company would sell off retail stores and car parks worth more than 100 billion yuan to reduce debt.

"China will continue to have a big housing demand despite economic ups and downs, although the aggregate amount will fall," Hui said. "I believe our company's market share will increase [from about 2 per cent now]."

Sales of commercial space in the first half helped increase the Guangzhou-based developer's average selling price by 8.2 per cent in the first half to 7,656 yuan per square metre. Its core profit margin picked up 2.8 percentage points to 13.1, bucking the industry trend.

Borrowings totalled 185.29 billion yuan as of the end of June, from 156.06 billion yuan six months earlier, as the company acquired 35 new projects during the period. These included 22 in tier-1 and major tier-2 cities. Costly perpetual capital instruments, a major concern for investors, fell 486 million yuan during the period to 52.4 billion yuan by the end of June.