China's biggest developer Evergrande sees sales soar thanks to nationwide discounts as rivals battle for survival amid Covid-19

By Pearl Liu pearl.liu@scmp.com / https://www.scmp.com/business/companies/article/3077804/chinas-biggest-developer-evergrande-sees-sales-soar-thanks?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp&utm_content=3077804 | April 6, 2020 10:21 AM SGT
China Evergrande, the country's biggest home builder, has raised its sales target aggressively after sales soared this year as its rivals struggled for survival amid the coronavirus outbreak.
The developer said on Tuesday its sales in the first quarter climbed by a fifth, mainly thanks to a nationwide campaign offering discounts at all its projects, via its mobile sales app.
"When all the developers cannot sell, we are the only one that can. We've done great amid such difficult times," said company chairman Hui Ka-yan, the third richest man in China.
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The company announced a new target for the year 23 per cent higher than a previous one set in January.
"Our internal target is 800 billion yuan (US$103 billion) this year and to fetch 1 trillion yuan in 2022," said Xia Haijun, the country's chief executive officer during an online annual results briefing on Tuesday.
Hui is confident that the company can meet the ambitious target after emerging as a big winner during the Covid-19 pandemic.
The company's sales have soared by 20 per cent year-on-year in the first quarter, to a record high of 146.5 billion yuan, when most developers saw their sales drop sharply as sales centres shut down to contain the virus.
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The home builder surprised the market by kicking off a one-and-a-half-month campaign on February 18 offering discounts of up to 25 per cent at all of its projects across the country, sold via its own mobile app.
By the end of February, more than 10,000 buyers had paid their deposits on a new home.
The billionaire chairman's confident remarks came as most of Evergrande's peers are taking a much more cautious stance amid dampened demand.
Yu Liang, CEO of China Vanke, the third largest developer by sales, said in March that survival has become a real issue, while Country Garden Holdings and Sunac China Holdings both warned that their sales in 2020 will be disrupted by a downturn in demand due to the Covid-19 outbreak.
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China's property sales dropped nearly 40 per cent year-on-year in the first two months of the year, according to the National Bureau of Statistics.
Credit ratings agency Moody's revised downward its forecast for the mainland property market and foresees a slight decline in sales this year.
Evergrande said it will focus on cutting land purchases and reducing debts. It aims to reduce its interest-bearing debt by 150 billion yuan per year by 2022 to keep the company profitable and less leveraged.
Evergrande reported a core profit plunge of 48 per cent to 40.8 billion yuan (US$5.7billion) for last year, according to a filing to the Hong Kong stock exchange late on Tuesday.
Core profit soared 93.3 per cent in 2018, 94.7 per cent in 2017 and 89.2 in 2016.
Revenue was 477.56 billion yuan on a contracted sales of 601 billion yuan (US$85 billion), up 9 per cent on year.
The company will pay a final dividend of 0.653 yuan per share.
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