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Evergrande will not give up even though with 20 billion HKD in cash in hand, Overall 15% Discount to expand market share

 Date:2010.05.06   Publisher:Evergrande Group

On May 5, Evergrande Real Estate Group released April sales in Hong Kong. The report stated that Evergrande achieved sales amount of around 3.74 billion RMB in April and sales area of 578,000 square meters. Up to April 30, the Group cash balance reached 20.99 billion HKD. Meanwhile, Evergrande announced that to support the central new deal, all the items under Evergrande will be sold with 15% discount from now on!

Satisfactory Performance with More Than 20 Billion Cash Balance

April sales report which was released by Evergrande in Hong Kong a few days ago is the continuance of its good performance achieved in the first quarter. The report shows that total sales of Evergrande this month reached 3.74 billion RMB, 55.9% increase compared with the same period of last year; sales area reached 578,000 square meters, 17.8% increase compared with the same period of last year.

In April 2010, Evergrande submitted the first annual report after listing. It rocks the industry with highlights of 30.3 billion contract sales amount achieved in 2009 and it shows the rapid development of the group with 8.39 billion contract sales amount in first quarter of 2010.

Evergrande insists stable operation strategies and forecasts that monetary will be tightened in mainland China in a new year with unique and accurate vision, thus maintaining sufficient cash flow will become a fundamental for enterprise high-speed operation. The items under Evergrande are on continuous hot sales, and strongly absorbed cash; the group also successful issued preferential bill in January and April and raised a fund of total 1.35 billion US dollars.

From January to April, 2010, Evergrande has successfully achieved contract sales amount of 12.13 billion RMB. Up to April 30, Evergrande has total cash balance of 20.99 billion HKD.

Responding to the New Policy, Selling all Products at a 15% Discount

Government has paid high attention to the over investment in real estate and the bubble expansion. Especially in the first-tier cities of Beijing and Shanghai, the State Council issued New Deal regulation twice within 3 days in April, which fully embodies the firm determination of the state to curb soaring house prices in parts of areas.

Over the years, Evergrande Real Estate Group develops has stable development as its operation guideline, lays emphasis on second and third tier cities for distribution and development and avoid competition with other developers in first tier city to push up the house price. Therefore, the current round of New Deal regulation for property market has less impact on the items under Evergrande and it can maintain the desired sales status. But as a "corporate citizen", Evergrande still decided to take the lead in response to policies and sold its item all over China with 15% discount to express its support to the central government policies and its determination to stabilize the development of real estate industry as a leading enterprise.

Seizing Market and Ensuring Stable Operation

Report shows that the areas with contract sales amount ranked top three in Evergrande in April are the second and third-tier cities such as Shijiazhuang, Chongqing, and Changsha The nationalized layout and multi-region outstanding sales performance further enhances the ability of Evergrande responding to market changes.

April 18 is the second day after the release of the New Deal, Shijiazhuang Evergrande city under the group was officially opened. Contract sales amount of that day reached about 6.3 billion and contract sales areas reached 68,000 square meters, which refreshed the local property market records. The fact proved that the success of Evergrande in the new region followed its own unique boutique development model of "Virtual Garden + standard house + fine decoration" with high-quality products and brand popularity to further consolidate its leading position as boutique real estate leader of the China Standardization operation.

Meanwhile, the Group takes this occasion to promote its products with discount and hopes to occupy more market share in the new round of hot sales before other enterprises take any action, so their brand will go deep into real estate market in all regions with price advantage and product advantage.

Cash is King, Good for Merger and Acquisition

Real estate industry is capital-intensive industry. All the impacts from "new country 10 rules" will lead to integration of resources within the real estate industry. For those small-scale developers of financial speculation but shortage of funds, it is a difficult situation; for those large-scale developer with capability to sustain a substantial risk, there exists a good opportunity for merge and acquisition.

Evergrande believes "cash is king." The 2009 performance released in Hong Kong results shows that, at the end of 2009, Evergrande development is in net cash state. Meanwhile, the group raised a fund of 1.35 billion US dollars through issuing preferential bill twice earlier this year. According to the latest April sales report, up to April 30, the cash balance of Evergrande reached 20.99 billion HKD.

Sound financial condition is good for Evergrande to accumulate acquisition fund in the next round of Real Estate Company shuffling. Meanwhile, the development strategy of "cash is king" will increase business operating capital at hands and the enterprises will have more room for initiative and rotation in the new round of policy regulation towards in-depth development.

Maintaining a Reasonable Profit and Building Houses of an Affordable Price

Evergrande is one of the first large-scale developers which develop in the second and third tier cities. It has rapid development, rapid sales to reduce the cost of all aspects, enhance the product value through boutique development model, maintain cost performance of Evergrande products at high level, and earn desired profits similarly. Contrary to the practice of accumulation of land for appreciation and making money, the development concept of Evergrande is "building the houses at an affordable price."

Over years of development, Evergrande has brought its own unique standardization operating into fuller play throughout the entire real estate development process to reduce the capital cost and time costs of all processes, ensure a reasonable price and also to obtain satisfactory profits. This is the reason that Evergrande can sell the property at large discount.

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