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Evergrande’s sale of 66.97 billion RMB in the first quarter leads its industry resulting in intensified differentiation

 Date:2016.04.04   Publisher:Evergrande Group

On March 31, 2016, the research center of CRIC released an authoritative list of “TOP100 China’s real estate enterprises in line with sales in the first quarter, 2016”: in respect of sales, Vanke and Evergrande with 72.5 billion RMB and 67 billion RMB, respectively, occupied the first two positions; but, in regard of sale areas, Evergrande won the first position with 7.56 million RMB m2. It is noteworthy that, Evergrande has narrowed the gap with Vanke dramatically, and both of them have done better performance than that of peers, and expanded the gaps with the third housing enterprise, etc..

The report shows that Evergrande has increased its sales by 119% year-on-year in the first quarter, much higher than the sales growth 57% of Vanke in the same period. In terms of sales, the gap between Evergrande and Vanke has been significantly reduced from 15.6 billion RMB in the first quarter of last year to 5.5 billion RMB, which means that in recent years by maintaining a high growth momentum, Evergrande has rapidly narrowed the gap with Vanke.

“The property market in the first quarter of its traditional off-seasons apparently reflects the competition as per the absolute strength among housing enterprises.” The insider analyzed that, by taking a panoramic view of the list, the most eye-catching enterprises were Vanke and Evergrande. It is possible that the latter as a newly coming giant is able to surpass the former-the old hegemony at any time.

The annual performance of 2015 just released by Evergrande shows that, the total assets is 757.04 billion RMB, in which the cash balance reaches a new high of 164.02 billion RMB, and the two mentioned indicators are ahead of Vanke. Last June, the sales of Evergrande are 24.8 billion RMB, while the sales of Vanke are 25.1 billion RMB, which indicate that the two giants are almost the same, horse and horse.

It is worth noting that in the past few years Evergrande has achieved remarkable results on adjusting its strategic layout. In the contract sales of 201.34 billion RMB last year, the sales in the first-tier cities is 14.31 billion RMB, accounting for 7.1%; the sales in the second-tier cities is 105.38 billion RMB, accounting for 52.3%; so the total sales in the first and second tier cities accounts for 59.4%, with an increase of 3.9 percentage points. Moreover, in the 82 new projects last year, 51 projects are located in the first and second tier cities, accounting for 62%, and the increased investment into the project land in the first and second tier cities accounts for more than 75%. With the completion of its layout of “the third tier cities enclosing the first and second tier cities”, the enterprise will achieve a faster increase of performance.

Seen from the perspective of operation, the analyst of Haitong Securities in the real estate industry, Tu Lilei, believes that, Evergrande has such internal control measures as strong cost control capacity, and the capacities of accurate market positioning and the rapid development on a large-scale, etc., which will help itself continue to ensure its strong competitive advantages.

“With Evergrande’s constant improvement of its business layout and continuous sales of its key projects, it is highly probable that the existing first housing enterprise will be substituted, which is not only to change the competitive landscape, but also to remodel the future trend in such an industry.” The above analyst pointed out.

The report shows that, the threshold for the housing enterprises to rank in the TOP10 in the first quarter of this year is 19.5 billion RMB, representing an increase of 8.5 billion RMB over the same period in 2015, with a year-on-year growth of 77%. But, the sales of Greenland, Country Garden, Poly, COHL and Wanda are 47.55 billion RMB, 46.5 billion RMB, 43.89 billion RMB, 38.13 billion RMB, 15.7 billion RMB, respectively, which are lower than that of Evergrande and Vanke by more than 20 billion RMB. Therefore, the first “Army Group” has been already gradually divided into two sets.

The Matthew Effect has increasingly appeared in the leading housing enterprises. By means of scale and brand advantages, the enterprise’s market share has been continuously enhanced. The report also shows that in the first quarter of 2016, the concentration ratio of TOP10 housing enterprises is 23.39%, with an increase of 3.57 percentage points compared with last year. The law that “the strong will be always strong” will be reflected completely in 2016.

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