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As the Most Profitable Chinese Real Estate Enterprise, Evergrande is Well Regarded by Many International Investment Banks

 

BEIJING, Aug. 31, 2011 /PRNewswire-Asia/ -- In spite of constantly introduced deflation policies in the real estate market, Evergrande still had brilliant achievements in the first half year. Yesterday, Evergrande released the sales performance of the first half year in Hong Kong. According to the data, in the first half year, the Company achieved the business volume of 32.06 billion yuan, with an increase of 57.4% on a year-on-year basis; the net profit of 5.82 billion yuan, with an increase of 132.8% on a year-on-year basis, ranking in the first place among all the Chinese listed real estate enterprises; the profit attributable to shareholders of 5.7 billion yuan, with a great increase of 144.6% on a year-on-year basis; and the core business profit of 4.81 billion yuan, with an increase of 147.9% on a year-on-year basis. An original report from Sina Leju follows:

By comparison of Evergrande's semi-annual report with other released real estate enterprises' data, Evergrande's six indicators of the first half year including net profit, core business profit, sales area, area under construction, sales volume growth rate and business volume rank in the first place throughout the country.

In the report period, Evergrande achieved the contracted sales volume of 42.32 billion yuan, with an increase of 101.7% compared to that of the same period of last year, and the contracted sales construction area of 6.117 million square meters, with an increase of 83.2% on a year-on-year basis. By the end of June, the Group had accumulatively completed 60.5% of the full-year contracted sales volume of 70 billion yuan. In particular, in the first half year of 2011, Evergrande's sales volume has kept the double growth on a year-on-year and month-on-month basis continuously since March under the circumstance of stable sales average price.

Based on the profitable achievements, Evergrande's stock price once boosted to 4.82 yuan by 4.32%, with the amount of increase leading the Chinese mainland real estate stocks. With respect to the market, many international investment banks including Goldman Sachs, Deutsche Bank, Bank of America Merrill Lynch and Citibank have released reports successively to increase the target price of Evergrande's stock. The target price offered by Goldman Sachs is HKD 8.5, the target price offered by Deutsche Bank is HKD 8.3, and the target price offered by Bank of America Merrill Lynch and Citibank respectively is HKD 7.5.

According to Goldman Sachs, Evergrande's core profit of the first half year increased by 148% on an annual basis, 27% higher than that predicted by such bank. Thus, Goldman Sachs has increased the predicted basic earning per share of 2011~2013, affirming Evergrande's stability in sales execution and project delivery, and pointing out that current price of Evergrande represents a discount of 62% compared to the net asset value, with an average discount of 60% relative to that of other H-share enterprises.

According to Citibank, Evergrande's medium-term core profit increased to 4.81 billion yuan by 148%, the highest in the industry. Evergrande's management aims to achieve 40-60% of the sales compound annual growth rate of 2011~2015, and the high-quality land reserve is the key competitive advantage of Evergrande. According to the prediction of Citibank, Evergrande's net asset value per share of 2011 will increase from 9.47 yuan to 10.72 yuan, and the current price represents a discount of 57% compared to the net asset value, equivalent to 6.1 times of the predicted PE ratio, which is one of the most attractive shares in the same industry.

SOURCE Sina Leju

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