China Evergrande, the country's biggest property developer by sales, said its net profit for the first half of 2020 is expected to decline by about 46 per cent to 14.7 billion yuan (US$2.1 billion) because of the coronavirus pandemic and discounts offered to buyers.
The setback is mainly due to the effects of the Covid-19 pandemic and discounts on selling prices, an increase in marketing expenses, foreign-exchange losses caused and investment in new-energy vehicles by a subsidiary, which led to consolidated statement losses, chairman Hui Ka Yan said in a filing to the Hong Kong stock exchange on Sunday.
China Evergrande's core profit for the six-month period likely fell by 37 per cent to 19.3 billion yuan from a year ago. Last year, it reported a net profit of 27.06 billion yuan and core earnings of 30.35 billion yuan for the same period.
The Shenzhen-based group defines core profit as earnings excluding fair-value changes in investment properties and financial instruments, currency-translation effect, donations and certain non-property development businesses losses.
Also this month, Evergrande Health Industry Group, China Evergrande's loss-making new-energy vehicle unit, unveiled six models under its Hengchi brand and said it was on track to start mass production next year, as planned.
The Hengchi 1 to Hengchi 6 models, which range from sport utility vehicles and crossovers to sedans, were launched in Guangzhou and Shanghai, but Evergrande Health did not provide any further details about pricing or availability.
Sunday's announcement comes two months after the group put 223 commercial properties up for sale to tackle its leverage.
The developer's borrowings had grown 19 per cent to 800 billion yuan as of December 31 last year, of which about 47 per cent are to be repaid in 2020, and about a quarter by the end of 2021. Its cash reserve stood at 229 billion yuan, according to its latest annual report.
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