China Evergrande targets modest sales growth for 2019 amid weak outlook for property market
- The property giant saw its sales grow 10 per cent last year, compared with 34 per cent and 85 per cent in 2017 and 2016 respectively
China Evergrande Group, one of the country’s biggest property developers, has set its sales growth target for 2019 at the lowest in at least five years amid weakening demand.
Evergrande is targeting 600 billion yuan (US$88 billion) in contracted sales this year, according to a filing to the Hong Kong stock exchange on Monday. That is 9 per cent higher than the 551 billion yuan of contracted sales recorded last year, the most modest goal in terms of growth since at least 2015, according to a review of its past performance.
The developer said the less ambitious target is related to the company’s strategy, which has pivoted from focusing on scale to profitability.
“The company’s core profit in the first half of 2018 surged 101.5 per cent to 55 billion yuan. Based on the current stable sales growth, Evergrande could record high growth in future profit,” it said in a statement.
Still, Evergrande, along with other large developers, has seen a huge slowdown in sales momentum in the past few months. Contracted sales in December came in at just 16.1 billion yuan, down 47.2 per cent from a year ago. For the whole of last year, sales grew 10 per cent, compared with 34.2 per cent and 85.4 per cent in 2017 and 2016 respectively.
Country Garden, China’s largest developer by sales, recorded its worst monthly performance in December, with sales tumbling 64 per cent from the previous month. China Vanke, the second largest, saw a 1.25 per cent month-on-month rise in December sales. That compared with annual growth of 14.5 per cent.
A high comparison base and a series of strict government measures designed to take the heat out of the market have dimmed the outlook for Chinese property. China International Capital Corporation expects new homes sales to slide by 10 per cent in 2019 while the average price remains flat. S&P Global Ratings sees home prices falling by as much as 5 per cent.
Separately on Monday, China Greentown Holdings, a top 20 Chinese developer, said its 2018 sales grew 6.9 per cent annually to 101.2 billion yuan. And China Overseas Grand Oceans Group said its sales totaled 50.5 billion yuan, up 36.3 per cent from a year ago.