China Evergrande, country’s biggest developer by sales, says coronavirus, discounts to blame for expected 46 per cent decline in first-half profit

China Evergrande, the country’s biggest property developer by sales, said its net profit for the first half of 2020 is expected to decline by about 46 per cent to 14.7 billion yuan (US$2.1 billion) because of the coronavirus pandemic and discounts offered to buyers.

The setback is mainly due to the effects of the Covid-19 pandemic and discounts on selling prices, an increase in marketing expenses, foreign-exchange losses caused and investment in new-energy vehicles by a subsidiary, which led to consolidated statement losses, chairman Hui Ka Yan said in a filing to the Hong Kong stock exchange on Sunday.

China Evergrande’s core profit for the six-month period likely fell by 37 per cent to 19.3 billion yuan from a year ago. Last year, it reported a net profit of 27.06 billion yuan and core earnings of 30.35 billion yuan for the same period.

The Shenzhen-based group defines core profit as earnings excluding fair-value changes in investment properties and financial instruments, currency-translation effect, donations and certain non-property development businesses losses.

Also this month, Evergrande Health Industry Group, China Evergrande’s loss-making new-energy vehicle unit, unveiled six models under its Hengchi brand and said it was on track to start mass production next year, as planned.