Developer Evergrande delivers whopping 101 per cent rise in first-half profit
China’s third largest property developer sees home sales soar nearly 25pc, despite Beijing’s continued efforts to cool the rampant market
China Evergrande, the country’s third largest property developer by sales, posted a thumping 101.5 per cent surge in first-half core profit on Tuesday, and officials said they expected it to easily top its annual sales targets, despite Beijing’s measures to cool the still-overheating national housing market.
Interim core profit came in at 55.01 billion yuan (US$8.07 billion), while revenue rose 59.8 per cent to 300.35 billion yuan on the same period last year.
Contracted sales in the first six months of the year jumped 24.6 per cent year-on-year to 304.18 billion yuan, accounting for more than half the company’s annual sales target.
“There will be no problem meeting our [annual] targets,” said Xia Haijun, Evergrande’s CEO, while predicting that industry consolidation is likely to continue.
“Larger fish will eat the small ones – that’s the future direction of the property market in China. We will see most smaller developers continue retreating.”
He expects too, that over the next three to five years, the country’s top 10 developers will account for 40 per cent of the whole market while the top three (Country Garden, Vanke and Evergrande) will reap around a fifth of all sales.
Evergrande’s gross margins in the period edged 0.4 percentage points ahead year-on-year to 36.2 per cent, while net margins increased 5.4 percentage points to 17.7 per cent, according to the latest figures.
The company did not, however, declare any dividend for the half year.
Evergrande paid the highest amount per square foot (HK$8,300, or US$1,057) ever recorded for a site in Hong Kong in January, in Tuen Mun, which is expected to be developed into 1,982 units.
The property major has also moved forward in diversifying its business, following chairman Hui Ka-yan’s promise to strengthen its presence, particularly in the hi-tech sector.
Its Hong Kong-listed unit, Evergrande Health Industry Group, paid HK$6.7 billion in June for a 45 per cent stake in Faraday Future, becoming the biggest shareholder in the struggling electric car maker.
Faraday was founded by Jia Yueting in 2014 in Los Angeles to build electric vehicles in the hope of challenging market leader Tesla. But its operations in Nevada were shut late last year, as Jia struggled to keep afloat his cash-strapped business empire, LeEco. Jia missed an end-of-year deadline issued by securities regulators to return to China to address his debts.
Separately, Hong Kong-listed Shimao Property reported core profit attributed to shareholders of 4.4 billion yuan (US$646.9 million) for the six months ended June 30, a 20.2 per cent rise.
According to a filing to the Hong Kong stock exchange, revenue for the Shanghai-based developer jumped 18.8 per cent to 42.57 billion yuan in the half year. The company will deliver an interim dividend of HK50 cents to shareholders.
In early May, the C.H.M.T Peaceful Development Asia Property group – led by Shimao Property’s founder and chairman Hui Wing Mau – completed the takeover of Li Ka-shing’s The Center building in Central, which became the world’s biggest ever real estate transaction. Hui’s firm still owns nine floors of the 73-storey building.