Source: New Express at http://www.ycwb.com/

Evergrande Real Estate Group, as the third largest giant of real estate in area sold in the first half of the year, speeds up its steps toward going public again. On July 10th, Xu Jiayin, Chairman of Evergrande, met more than 100 domestic media including us in the newly-opened hotel of Evergrande and talked freely in high profile about the experience since the failure in going public in last March and his future planning.  Xu expressed that the reserved land of Evergrande has exceeded 46 million square meters in area and the goal for sales in the whole year is set at 30 billion Yuan this year. And he further added that the group may go public in Hong Kong once the requirements of capital market are satisfied.

Considering not to Buy Highly Expensive Land in Short Term

The amount of sales of Evergrande in the first half of year is 12.7 billion Yuan, as said by Xu Jiayin, and the reserved land of Evergrande is about 46 million square meters in area and the as-built area is 10.06 million square meters, which is the highest in its history and makes it the only enterprise of real estate that has not gone public but exceeds 10 billion Yuan in sales in China.  Xu showed his insight for purchase of land. “We have been practicing economy in purchase of land, so we will consider not to buy highly expensive lands in Beijing or Shanghai. The reason why Evergrande grows from a small company in Guangzhou to a national giant in merely several years is that we scrupulously abide by the principle of making maximum output out of minimum input. If we invest 10 billion Yuan in Beijing for development, we may only deal with three projects. Thus we will not grow to the current size, “said Xu Jiayin.

“We are able to maintain the sales for six years even if we buy no more lands. However, new reservation of lands is still on our schedule for the development of the group”，said Xu Jiayin. He expressed that his goal in purchase is still the lands, with potential increase in value, in the provincial capitals, where the traffic is convenient and the unit area shall be over 500 thousand square meters.

Relaunch of Going Public will Succeed when the Conditions are Ripe

In March 2008, Evergrande failed in going public in Hong Kong for the raising of capital by floating shares was not satisfactory. Xu Jiayin made his painful decision to cease the effort for going public. However, the market of real estate and the financial market has changed dramatically now and the financial status of Evergrande has improved a lot. Thus Evergrande further firms its goal of going public.

Xu said that the efforts of Evergrande for going public broke right into the sudden bankruptcy of Bear Stearns Companies Inc., the fifth largest investment bank of USA, and encountered the subsequent breaking out of global financial crisis. The unsuccessful efforts of Evergrande in going public caused the capital gap of 10 billion Yuan. Luckily the USD 600 million raised from international financial market saved them from the extreme urgency.

Evergrande finally survives the crisis with the good turn in the market of real estate and the opening for sales on more than 10 projects through out the country.  Up to June 30th, the asset-liability ratio of Evergrande is 71% as indicated in the data supplied by Evergrande, which is relatively low in the industry of real estate.  The cash balance is 4.8 billion Yuan and the sum for sales that is not received is 3.3 billion Yuan. That means the capital of Evergrande will reach 8.1 billion in total through collection of the capital.
”We bought 3333 as our stock code from Hong Kong Exchanges and Clearing Limited at the cost of 1 million Yuan last year. They still ask us for 1 million Yuan when a year has passed,” said Xu. “IPO is not an issue decided by us but by the international capital market. It is only a matter of time if the conditions of the capital market are ripe,” said Xu when asked about the relaunch of going public in the second half of this year.

Low Possibility of Soaring Prices of Real Estate

“The goal in the second half of this year is 18 billion Yuan in sales and 5 million square meters in new building area. That will realize our goal of the whole year: over 30 billion Yuan in sales and 15 million square meters in building area,” said happily by Xu Jiayin referring to the goal of the second half of year.

“Even in the financial crisis, the people’s housing needs are still there. There is low possibility of soaring prices of real estate. However, it will not fall for sure. The products of Evergrande are of high performance to price ratio and we will set the prices according to the conditions of market. We make full consideration for our fellows in sales. But we will not offer high prices in the same market conditions,” said Xu.

He expressed that Evergrande will consider the quality of their products ever in the toughest market conditions. They did not release the immature products to the public and won public praise for that.  Xu disclosed that they plan to complete a world-class project of luxurious residence. However, “Evergrande sticks to the strategy of extreme quality, but it is not equal to luxurious residence. Most of the products of Evergrande are high-and-medium end products, of which the medium end products account for 60%,”emphasized Xu.

“In one of the design departments of Evergrande, there are only more than 20 staff, 12 of which earn more than 80000 Yuan per month,” said Xu Jiayin. They emphasize a lot in the quality of products. They once punished more than 20 staff for the bad design of .model apartments. Now the institute of Evergrande has made more than 1000 articles of standards to ensure the quality. Standardized operation is one of the core competencies of Evergrande.