Property sales continue to rise despite curb

Leading mainland developer Evergrande Real Estate Group announced first-half revenue of 41.95 billion yuan (HK$53.16 billion) yesterday, topping the 40.63 billion yuan reported by China Vanke last month.

Evergrande's net profit grew 10.4 per cent year on year to 6.24 billion yuan, beating Vanke's 4.56 billion yuan and second only to China Overseas Land & Investment's 11.03 billion yuan.

A 13.3 per cent increase in revenue helped to bring down Evergrande's net debt ratio to 58.4 per cent, from 96.1 per cent at the end of June last year and 84.2 per cent at the end of last year.

Despite the central government's measures to cool the market, Evergrande had 44.61 billion yuan in total contracted sales in the first half, up 27.3 per cent year on year. Sales from second- and third-tier cities contributed the majority, with first-tier cities accounting for just 0.9 per cent.

Gross profit margin declined by 1.3 percentage points to 28.6 per cent.

"We at Evergrande do not believe in high profit margin," chief executive Xia Haijun said. "We want housing to be affordable and real estate to be more like the manufacturing industry."

The group's net profit margin on its core businesses grew slightly to 11.1 per cent, with Xia saying 15 per cent would be ideal.