On March 31, Evergrande Group (3333.HK) of China released its 2020 performance report. The outstanding performance and significantly reduced liability amount reveals that Evergrande's development strategy of "high growth, scale control, and liability reduction" has been implemented successfully. The completion of the "multi-industry and digital technology" transformation also indicates the arrival of the "New Evergrande".

Net Profit Reaches RMB 31.4 Billion and Liability Decreases by RMB 200 Billion

According to data, the annual sales volume of Evergrande in 2020 has reached RMB 723.2 billion, with RMB 653.2 billion of sales collection, RMB 507.2 billion of turnover, and RMB 31.4 billion of net profit. All of its core indicators continue to rank among the top in the industry.

While the performance continues to grow, Evergrande has also realized prominent improvement in liability reduction: Since the new development strategy launched at the end of last March, Evergrande's liability with interest has been significantly cut by RMB 200 billion. Also, it has increased its business interest by HKD 88.8 billion through methods such as introducing strategic investment and conducting spin-off and listing of high-quality assets, optimizing its liability structure and achieving steady development.    

At the performance report meeting, Evergrande has also announced its liability reduction target in the next three years. To be specific, it will cut the liability with interest to less than RMB 590 billion by June 30, 2021, less than RMB 450 billion by June 30, 2022, and less than RMB 350 billion by June 30, 2023. As for the three critical problems (red lines), it plans to cut the net gearing to less than 100% by June 30, 2021, increase the short-term liability coverage ratio of cash to more than 1 point by December 31, 2021, and reduce the asset-liability ratio to below 70% by December 31, 2022, thus meeting the regulatory requirement in a comprehensive manner.

New Evergrande — Multi-industry and Digital Technology

The climax of the report meeting arrives when Hui Ka Yan, Chairman of the Board of Directors of Evergrande Group, announced the arrival of the "New Evergrande".

After 25 years of development, Evergrande has completed the transformation from real estate to "multi-industry and digital technology". With the new industrial ecosystem, its businesses have covered diversified industries such as basic necessities of clothing, food, housing, transportation, cultural tourism and healthcare, to build a digital closed-loop of science and technology and provide a full range of services to hundreds of millions of customers, showing a robust momentum of development.    

Evergrande Automotive has achieved synchronous R&D and design of 14 vehicle models, and nine models of them have had their debut. Equipped with H-SMART OS top intelligent network system, aerospace-level intelligent cockpit, and the strongest computing platform in the industry, they can create an intelligent networking mobile space of "car-house integration". Ten major vehicle manufacturing bases will be built worldwide, among which Tianjin, Shanghai, and Guangzhou bases have started trial production and commissioning. Evergrande has invested RMB 47.4 billion in the new energy auto industry to build the world's largest and strongest new energy auto group.

HengTen Networks has finished its transformation to a streaming media platform, aiming to provide its users with the personalized perfect experience with high-quality original content. The number of members of Pumpkin Film has witnessed a geometric increase in recent years. By the end of February 2021, there were 38.61 million registered members and 8.41 million paid subscription users.

Evergrande Property Services builds a fixed space technology service platform through standardized operation and intelligent management. It was listed successfully last December. Evergrande Property Services has a contract area of about 679 million square meters and a total area under the management of over 413 million square meters, and these numbers are expected to achieve 800 million and 600 million respectively by the end of 2021.

FCB Group innovatively adopts technologies to establish a whole channel trade and comprehensive service platform of real estate and vehicles both online and offline. With 21.29 million members who serve as agents nationwide and more than 43,000 stores, its transaction volume is estimated to exceed RMB 2 trillion in 2021. It has successfully introduced strategic investors such as Hony Capital, CITIC Capital, ZRT, Chow Tai Fook, etc., with a total investment of HKD 16.35 billion, and plans to be listed by the end of 2021 or at the beginning of 2022.

Evergrande Fairyland is the first of its kind in the world to provide full-indoor, all-weather and all-season services by creating an innovative model of "offline amusement and online entertainment", thus building an influential and competitive interactive entertainment platform in the world.

Evergrande Spring is committed to precisely providing green and healthy food for its customers' needs and establishing a new platform for consumption and services. It is under the preparation of being listed.

It can be expected that a "New Evergrande", which is full of vigor, will move closer to the world-class science and technology enterprise target as the strategy of "high growth, scale control, and liability reduction" is further implemented and the ecosystem of diversified industries empowered by digital technologies keeps enlarging.