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Wednesday, April 01, 2020, 00:03
Evergrande reports 54% fall in 2019 net profit
By Pamela Lin
Wednesday, April 01, 2020, 00:03 By Pamela Lin

Chinese real estate giant Evergrande Group on Tuesday reported a fall of about 54 percent in its net profit in 2019. But the company said it hopes contract sales this year will reach 800 billion yuan ($113 billion) — despite the impact of the novel coronavirus outbreak. 

Group Chairman Hui Ka-yan, who tops the list of world billionaires in real estate, told an annual results conference, the group would fully implement a plan of “growing sales, controlling scale and reducing leverage” over the next three years.

Housing prices in China would remain stable this year as the government would launch policies to increase liquidity which may stimulate property sales 

Hui Ka-yan,

chairman of Evergrande Group

Hui expects the group to hit 1 trillion property sales in 2022.

It also aims to reduce overall land reserves with an average reduction of 30 million square meters a year from 2020 to 2022. Meanwhile, he stressed the group was determined to lower its net gearing ratio with an average reduction of 150 billion yuan per year.

Evergrande’s net gearing ratio hit 159.3 percent in 2019, 7.4 percentage points higher than that of 2018. The company has proposed a final dividend of 0.653 yuan per share.

At the end of last year, the group has total land reserves of 293 million square meters with an original value of 527.3 billion and an average cost of 1,800 yuan per sq m.

Profit attributable to shareholders declined 53.8 percent to 17.28 billion yuan in 2019.

Core business profit was 40.82 billion yuan — down 47.9 percent from the previous year.

Hui attributed the decline to lower-priced clearance stock properties at the end of last year — which drove down unit prices of property delivered in 2019.

He expects the group to record 50 billion yuan in net profit this year.

Due to the outbreak of the novel coronavirus since January, the property market was hard-hit in the first quarter as sales offices were ordered to close to contain the virus. 

In response to the pandemic, Evergrande offered a 25 percent discount for all property sales in February on its app, and the discount was narrowed to 22 percent in March.

As part of the company’s three-year strategy to boost sales, online property sales remained strong during the pandemic, Hui said.

In the first quarter, the group reported a 22.5 percent increase in contract sales to 146.5 billion yuan compared with the same period last year, and a 55.2 percent rise of unaudited cash collection in the same period.

Hui predicted housing prices in China would remain stable this year as the government would launch policies to increase liquidity which may stimulate property sales. 

pamelalin@chinadailyhk.com


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