Evergrande net plunges 53pc as gearing ratio rises

Business | Kevin Xu 1 Apr 2020

China Evergrande (3333) said net profit fell 53 percent year-on-year to 17.28 billion yuan (HK$18.89 billion), and pledged to reduce interest-bearing liabilities by 150 billion yuan each year between 2020 and 2022.

This came as the developer saw its net gearing ratio rise to 392 percent in 2019, compared to 353 percent a year before.

Revenue rose by 2.4 percent to 477.56 billion yuan last year. Core business profit was 40.82 billion yuan for the year. Basic earnings per share were 1.315 yuan, and a final dividend of 0.653 yuan per share was declared.

The gross profit margin fell by about 8.4 percentage points to 27.8 percent last year. Chief executive Xia Haijun said he expects the margin to remain at around 30 percent in the future, even in the worst case scenario.

The company reported on the earnings call that contracted sales in the first quarter this year rose 22.5 percent year-on-year to 146.5 billion yuan after recording a year-on-year increase of 9 percent in full-year contracted sales last year.

Evergrande set a sales target of 650 billion yuan for this year and a target of 1 trillion yuan in 2022.

Chairman Hui Ka-yan said the company aims to reduce land reserves by 30 million square meters on average per year between 2020 and 2022.

Xia said the good old days are gone for property developers, and estimates property prices will remain flat this year amid increasing liquidity in the financial market and the mainland government's curbing of speculative activities in the real estate sector.

Xia added that there will be a surge in mergers and acquisitions activities, and small and medium developers are facing more pressure.

Meanwhile, Kaisa (1638) said net profit rose by 67.05 percent year-on-year to 4.59 billion yuan last year. Revenue rose 24.1 percent to 48 billion yuan. Basic earnings per share were 75.6 fen and a final dividend of 10 HK cents was declared.

In other news, Fantasia (1777) said net profit rose 28.6 percent year-on-year to 1.5 billion yuan last year. Revenue rose 36.4 percent to 19 billion yuan. Basic earnings per share were 15.15 fen and a final dividend of 5 fen per share was declared.

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