China Evergrande stays upbeat on home sales target amid margin squeeze, losses in electric car venture

Vice-chairman Xia is confident developer can achieve its 650 billion yuan sales target even as margins suffer

Group is also pouring billions of yuan into electric car venture to overtake Tesla and rule the global market in three to five years

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View of the residential project called The Vertex, developed by China Evergrande, in Cheung Sha Wan, Hong Kong. Photo: Edmond So

Published: 8:29pm, 31 Aug 2020Updated: 8:29pm, 31 Aug 2020

China Evergrande, the country’s biggest property developer by sales, is confident of achieving its sales target even as the group faces its biggest financial challenge after profit slumped on impact from the Covid-19 outbreak. It will focus on paring its debt burden.

The developer posted a 24 per cent gain in contracted sales to 348.8 billion yuan (US$50.9 billion) this year through June, according to data published on Monday, along with an interim report showing a 56 per cent year on year slump in earnings to 6.54 billion yuan while margins shrank.

While the group has set a 650 billion yuan sales target this year, its internal goal is a more ambitious 800 billion yuan under its Eighth Major Strategic Direction. The plan also calls for a reduction in its land area every year, and its interest-bearing debt by 150 billion yuan annually through 2022.

“It should be no problem for us to meet this target as we have already achieved 54 per cent of the target in the first half,” vice-chairman James Xia Haijun said in a post-results media briefing. “We set an even higher internal target for this year if we can speed up sales.”

Hui Ka-yan, chairman of China Evergrande and the nation’s third richest tycoon. Photo: Nora Tam

“After we focused on online sales, nearly 85 per cent of the sales in the first half this year came from those [internet-based] purchases,” Xia added.