Evergrande sets aggressive profit target

Business | Carrie Chen 29 Mar 2017

China Evergrande (3333) aims to generate an aggregate net profit of 88.8 billion yuan (HK$100.21 billion) over three years on robust sales, chief executive and vice president Xia Haijun said yesterday.

Some analysts described as aggressive its profit target after its earnings last year fell 51 percent to HK$5.09 billion, dragged by the servicing of 112.9 billion yuan worth of perpetual loans, which grew 49 percent.

Last year, contracted sales soared 85.4 percent to 373.37 billion yuan, 73.37 billion yuan more than its target of 300 billion yuan.

This year's sales target has been set at 450 billion yuan, 500 billion yuan for next year and 550 billion yuan for 2019, Xia said.

About 75 percent of Evergrande's land bank is found in China's first- and second-tier cities and it therefore "has enough flour for bread," or ample plots for new developments, he said.

Xia fended off questions on why the developer opted not to declare any final dividend last year.

He said the move was prompted by the company's need to prepare to spin off and list in the A-share market its real estate business.

"We're unable to pay any dividend before completion of the proposed spin- off.

"But we will pay a special dividend later," said Xia.

He added that Evergrande has already reached agreements with investors on a 30 billion yuan investment that they are making based on the group's valuation of 198 billion yuan.

Chairman Hui Ka-yan brushed aside concerns that Evergrande probably lacks capital after its issuance last Friday of another US$1 billion (HK$7.8 billion) worth of seven-year bonds.

Xia said the bond issue is for refinancing purposes, aimed at repaying old debts.

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