Evergrande sets sights on US$127.4b annual sales by 2020
Country’s third-largest developer plans to ratchet up sales push, after prioritising profit and cutting debt in 2017
China Evergrande, the Guangzhou-based developer, is aiming to ratchet up its annual sales to 800 billion yuan (US$127.4 billion) by 2020, from 550 billion yuan in projected sales for this year.
The country’s third-largest developer by sales value shifted its goalposts early last year more towards profitability and cutting debt.
“We are striving for annual sales of 800 billion yuan and total assets of 3 trillion yuan by 2020,” its chairman Hui Ka-Yan told a media briefing on Monday.
He said contracted sales in 2017 still grew 34.2 per cent to 501 billion yuan, but that was still much slower than its main rival Country Garden, which recorded 78 per cent expansion.
“That 800 billion yuan [in sales] could be possible this year, but it is unnecessary because we have said we prefer to be profitable,” added chief executive Xia Haijun.
The company’s gross margins in 2017 jumped 8 percentage points to 36.1 per cent, while net margins increased 3.2 percentage points to 13 per cent, according to its latest figures.
Evergrande sits on China’s largest land bank with 312 million square metres in reserve.
Xia said those saleable resources had grown in value to 1.02 trillion yuan, which supports that future sale target.
The company’s 2017 earnings missed analysts’ revenue estimates, growing 47.1 per cent to 311 billion yuan, against expectations of 362 billion yuan. Net profit attributable to shareholders soared 379 per cent to 24.4 billion yuan, but again they missing a previous profit estimate which suggested they would quadruple. Earnings per share were 1.83 yuan, compared with a 2.4 yuan estimate.
But core profit – which measures performance adjusted for property revaluations, foreign-exchange losses and the fair value of financial assets – jumped 95 per cent to 40.5 billion yuan, beating estimates of 31.7 billion yuan.
Commenting on the company’s much anticipated back-door listing on a domestic stock exchange, Xia said “good communications with the China securities regulator” had taken place, and if successful, they could lead to it paying out a special dividend to share holders.
Evergrande has been widely reported to be planning a back-door listing of its property arm Hengda Real Estate, most likely on the Shenzhen Stock Exchange, where stocks generally trade much higher than in Hong Kong.