On January 7, Evergrande Group (03333.HK) announced that it registered sales of RMB 551.3 billion in 2018 with sales area of 52.44 million m2, exceeding its annual sales target of RMB 550 billion. Evergrande has set its sales target in 2019 at RMB 600 billion, seeking to realize stable growth. Besides, believing that “cash is king”, Evergrande has realized cash balance of RMB 201.2 billion by the end of 2018, which can guarantee prudent operation amid severe market situations.

Analysts pointed out that, due to sustained regulations, the sluggish real estate market in 2018 put many small and medium-sized real estate enterprises into business distress. Against such a backdrop, Evergrande has maintained strong performance as a leading industry player. Such a scene reflects that its cost-effective products, which are offered to meet rigid demand, are barely affected by regulations. Hui Ka Yan has said in many occasions that, the strength of Evergrande is best testified in a stagnant market.

The seemingly conservative RMB 600 billion sales target for 2019 is closely linked with the strategic transformation of Evergrande. In recent years, Evergrande has embraced a development model of “scale + efficiency”, and a business model of low debt, low lever, low cost, and high turnover rate. It has given priority to moderate growth based on certain scale and growth quality. Data show that in the first half of 2018, Evergrande recorded net profit of RMB 53 billion, up 129.3%, and core profit of RMB 55.01 billion, up 101.5%. In this way, Evergrande remains its position as the “king of profit” in the industry. Judging from the current stable sales growth, we are confident that Evergrande will maintain a high growth rate of profit down the road.