China Securities Journal 2010-8-10 Lin Zhe

On August 9, Evergrande Real Estate (3333 HK) released the latest sales performance. In July, Evergrande achieved the contracted sales of 5.08 billion yuan, increasing by 172.4% over the same period of the previous year, and the contracted sales area was 861,000 square meters, increasing by 124.3% over the same period of the previous year, setting another single-month sales record since 2010. From January to July, the Company achieved the total contracted sales of 26.06 billion yuan, increasing by 115.3% over the same period of the previous year, and the contracted sales area of 4,200,000 square meters, increasing by 65.2% over the same period of the previous year. The Company has fulfilled 65% of the adjusted full-year sales target in seven months.

The average price increased on the basis of stability
        In May and June, affected by the strategy of “15% off allowing more profits to promotion” and the reduce on high-price properties launched into the market, the average contracted sales price of Evergrande Real Estate declined on month-on-month basis. In July, driven by the continuous growth of the sales volume, the average contracted sales price of Evergrande Real Estate recovered stably.
        According to the data, the average contracted sales price of Evergrande’s property was 5900 yuan per square meter in July, increasing by 21.5% compared with that in the same period of 2009 which was 4875 yuan per square meter, which basically broke even on month-on-month basis in June. From January to July, the average contracted sales price of Evergrande’s property was 6204 yuan per square meter, increasing by 30.3% compared with that in the same period of 2009 which was 4760 yuan per square meter.

More Interested in Second- and Third-tier Cities
        During the period of policy adjusting control, Evergrande Real Estate entered Jinan market, and started, constructed and consecutively lauched two projects, contributing more than 20% to the sales performance for the Company. According to Xia Haijun, the president of Evergrande Real Estate, the achievements of rapid development and continuous hot sales in the second- and third-tier cities, on one hand, was benefited from the high turnover and the high-quality strategy of the Company; on the other hand, it was also resulted from the constant demands on residential houses in the second- and third-tier cities.
        Xia Haijun said, except for the individual projects involved with government regulation planning, legal proceedings and other problems, 90% of the land reserves of the Company had been started for construction at present. The Company adheres to the principle that it takes less than six months from the land acquisition to the launching.
        In Jinan, Evergrande Oasis Project only took 5 months in total from land acquisition to launching. In July this year, the contracted sales volume on the day when the property was launched was 896 suits, setting the daily sales volume record of the local property market, with the total turnover value of 740 million yuan of that month. The project of Evergrande Metropolis took five and a half months from land acquisition tolaunching, and the contracted sales volume in July on the day when the property was launched was 428 suits, with the total turnover value of 360 million yuan of that month.