Source: Guangzhou Daily Author: Yuefei Jiang

Recently Jiayin Xu, chairman of the board of directors of Evergrande Real Estate Group, disclosed in the Meeting for Communication of Evergrande’s Partners that the amount of sales reached 12.7 billion Yuan in the first half of this year and they planned to realize the yearly goal of 30 billion Yuan. IPO longed for by them is waiting for appropriate international market conditions. Once they succeed in the relaunch of IPO, Evergrande will enter the markets of Beijing and Shanghai at the right time.

Entering Markets of Shanghai and Beijing after Going Public

At the opening of Evergrande’s first super five-star hotel, Jiayin Xu announced that the amount of sales of Evergrande in the first half of year was 12.7 billion yuan and the as-built area is 10.06 million square meters, which makes it the only enterprise of real estate that had not gone public but exceeded 10 billion Yuan in sales in China.

As the domestic capital market gradually booms and the IPO in A Share is restarted again, when will Evergrande restart their efforts for IPO? “It is not an issued decided by us but by the international money markets,” said Xu. They have fully prepared for going public and will restart it once the conditions are ripe. As indicated in the minutes of an internal meeting of Evergrande on April 5th, they plans to fulfill their goal of going public overseas within three years, i.e. in 2011.

The journalist has found that in March 2008, as indicated in the prospectus of Evergrande, 2.85 billion of the 2.961 billion shares were new shares and the price for each share was 3.5 to 5.6 HKD, which meant that the maximum capital raised was 16.576 billion HKD.The unsuccessful efforts of Evergrande in going public caused the interruption of 12 to 15 billion Yuan, planned to be financed. Luckily Jiayin Xu went to HK and successfully raise 600 million USD.
Xu said that they will consider entering the real estate markets of Beijing and Shanghai after going public. But currently Evergrande is committing itself to “making maximum output out of minimum input.” The lands of Being and Shanghai are a lit bit more expensive for them.

More Interested in Second-line and Third-line Cities

Jiayin Xu said that the current reserved lands of Evergrande are 46 million square meters. The average land price, excluding some Land Kings, is much cheaper that the current auction price of the lands. Xu said they would rather buy lands in the secondary market but not in the auction markets for the following reasons: Firstly, the lands bought from secondary markets may be put into use once they are bought thus are of high efficiency; Secondly,. The land prices in the secondary markets are relatively more reasonable thus containing more business opportunities and the lands of Evergrande disperse more in the suburbs of second-line and third-line cities.

Will Evergrande purchase more lands in the hot land markets? Xu responded that they will not buy many lands this year. However, they plan to prepare 50 million square meters of reserved lands at the end of this year, which will suffice the sustainable development for six years. They plan to increase the newly as-built area by 5 million square meters and sell for 18 billion Yuan to fulfill their yearly goal of 30 billion Yuan.

Prices of Real Estate will Go a Little Higher

As for the high prices of real estate, Xu personally holds optimistic views for the market. He believes that the prices will neither go down in large scales nor soar to the sky, but the prices will go a little higher. Evergrande “will not make an increase by 60% in one time like some projects.” They will set prices of high performance and price ratio for the products in the same market, location and standard.