On August 6th, Evergrande (3333.HK) issued a positive profit forecast. The net profit after tax increased by more than 125% in the first half of 2018 compared with the same period last year. The profit of core business increased by more than 100% from the same period last year. The net debt rate dropped further sharply from 184% at the end of last year to less than 130%.

The reporter inquired that the net profit of Evergrande in the first half of last year was 23.1 billion while the profit of core business was 27.3 billion. According to this, the net profit after tax was over 52 billion in the first half of this year and the profit of core business was over 54.6 billion. In addition, the net debt ratio of Evergrande dropped by 30% in half a year.

At the beginning of this year, Xu Jiayin formally announced the arrival of “New Evergrande”, emphasizing the unswerving implementation of the “Scale + Benefit” development model and the “Three Low One High” operation model consisting of low debt, low leverage, low cost and high turnover. This time, Evergrande again gave its best half-year performance ever, further consolidating its position as the “King of Profits” and showing the forward-looking nature of its strategic decisions.

As for the continuous promotion of profitability, on the one hand it is due to the unified planning, unified bidding and unified distribution of the standardized operation mode of Evergrande, which has greatly reduced the three major costs on marketing, management and finance, thus achieving strong cost control. On the other hand, Evergrande vigorously improves the product quality and increases the added value of products, providing high quality and cost-effective housing for the common people, which is the base of its implementation of unjustified return of houses for three consecutive years.

In the first half of this year, Evergrande realized sales of 304.18 billion, with an increase of 24.6% over the same period. Many investment banks expected the annual sales of Evergrande to break through 600 billion. The strong sales provide a strong guarantee for the sustained high profit growth of Evergrande.

In addition, the increase in profit has increased the net assets of Evergrande, besides promoting further reduction of its net debt rate. In the past year, the net debt rate has fallen by nearly 70% to 130% compared with the same period last year through a number of measures such as the introduction of strategic investors, which shows that Evergrande has successfully fulfilled its commitments on debt reduction.

People in the industry believe that due to the impact of real estate regulation and financial supervision, the risk of default, escaping, bankruptcy and other risks of housing enterprises are gradually exposed. Recently, a number of enterprises are involved in debt default, more than 10 listed housing companies have been forced to suspend debt, and a large number of housing enterprises get into business difficulties. In contrast, Evergrande, with its forward-looking strategic layout, unique compact group management and super executive force of the staff, has ensured risk prevention and control, cost control and product quality, making itself one of the very few housing companies that have increased their performance against the market.

The substantial increase in profitability of the real estate industry also provides strong capital support for Evergrande to enter the hi-tech industry. At the beginning of this year, Evergrande proposed that the hi-tech industry should be actively explored, while the industrial pattern should be gradually formed with the livelihood of the people as its basis, cultural tourism and health care as its wings, and hi-tech industry as its head. In April, Evergrande signed a comprehensive cooperation agreement with the Chinese Academy of Sciences, with the plan to invest 100 billion in the next ten years to jointly expand the key areas of life science, aerospace, integrated circuits, new energy and so on.

The “New Evergrande” proposed only half a year ago has resulted in remarkable achievements, with the realization of net profit exceeding 52 billion and 30% drop of net debt rate. Xu Jiayin proposed that the “New Blueprint” of entering the world’s top 100 was likely to be realized in advance. What is more to be expected is that the successful layout of the hi-tech industry will add an important weight for Evergrande in building a century-old enterprise and forming a nation with strong technological power.