Evergrande boss Xu Jiayin recommended people buy more real estate on same day company announced slipping profits
China’s most indebted developer dug itself in even deeper today, and investors punished the company’s stock today after core profit slid nine percent. Plus, Carlyle raises money to for an Asian acquisition drive and that big developer with the falling profits say now is the right time to buy more real estate. Read on for all the details.
Evergrande Shares Follow Profits Southward After Deal Spree
Evergrande Real Estate Group Ltd. shares dropped as the Chinese developer said its debt mounted last year to fund acquisitions, raising concerns it will be able to maintain sustainable growth.
Evergrande, majority-owned by billionaire chairman Hui Ka Yan, was the most active buyer among listed developers last year after accounting for more than one-quarter of $25 billion in transactions, including paying a record price for the Mass Mutual Tower in Hong Kong. Read more>>
Carlyle Targets China Deals with $1 Bil Asia Fund
Carlyle Group LP is seeking to raise around $1 billion for a new private-equity fund to invest in Asian growth companies, joining a number of private-equity firms that have raised fresh funds to cut deals across the region, according to people familiar with the situation.
The new fund will be Carlyle’s fifth fund targeting smaller, fast-growing companies across Asia. It is roughly the same size as the firm’s previous fund raised in 2008, at $1.04 billion. That fund has achieved an 8% net internal rate of return for investors through the end of last year. Carlyle also manages Asia buyout funds targeting bigger deals. Read more>>
Shanghai and Shenzhen Transactions Fall After Govt Clampdown
Home transactions in Shanghai and Shenzhen fell sharply over the weekend as the cold winds of tighter policy measures buffeted buyer sentiment.
Shanghai home sales measured by floor area fell to 59,200 square metres overnight on Saturday, a day after new local government cooling policies were announced, according to data complied by consultant China Real Estate Information Corporation. On Sunday, the sales volume fell further to 41,500 sq metres. Read more>>
Sunac China’s Core Profit Fell 9.5% in 2015
Core profit at Sunac China (1918) slipped 9.5 percent last year to 3.377 billion yuan (HK$4.02 billion), dragged by a decline of housing prices. A final dividend of 19.4 fen per share was proposed. Net profit rose marginally by 2 percent to 3.298 billion yuan.
But revenue from property sales fell 9 percent to 2.2 billion yuan. The developer said the selling price of its flats fell 17 percent to 12,430 yuan per square meter. Read more>>
Developer Shimao Says Core Profit Fell 22% Last Year
Shanghai-based Shimao Property said its annual core profit fell 21.5 per cent to 7.91 billion yuan (HK$9.47 billion), as the company struggled to lower its inventory of lower margin properties in smaller Chinese cities.
Revenue increased by 2.9 per cent to 57.7 billion yuan, while its gross profit margin declined to 28.5 per cent, from 32.5 per cent a year ago. Read more>>
As Profits Slip, Developers Suggest That You Buy More Real Estate
The pace of house price inflation in China’s biggest cities is unlikely to cool significantly, even as the government intensifies tightening policies, according to the country’s leading developers.
“Prices will still rise in first-tier cities,” Evergrande Real Estate Chairman Hui Kayan said. “Home buying demand is very large, and they have strong purchasing power as the economy is robust.” Read more>>
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