Evergrande’s Hui Ka Yan, a member of the 13th National Committee of the Chinese People’s Political Consultative Conference (CPPCC), attends a panel discussion of the annual CPPCC on March 4, 2018 in Beijing, China. (Photo: VCG/VCG via Getty Images)
China Evergrande Group, controlled by China’s third-wealthiest person Hui Ka Yan, has lowered its sales target for 2019 to the lowest level in the past five years. The real estate giant is targeting 600 billion yuan ($87.8 billion) in contracted sales this year, an increase of only about 8.8% from the previous period, according to a filing to the Hong Kong stock exchange on Monday.
Last year, Evergrande’s contracted sales grew by 10% to reach 551 billion yuan, considerably lower than the 85% and 34% the company saw in 2016 and 2017, respectively.
Real estate companies in China have seen their sales slow considerably over the previous months amid the government’s cooling measures, which has included tightening credit lines for developers.
Signs have been emerging that the property sector, a major pillar of China’s economy, is slowing down. There was a sharp rise in the number of land plots that didn’t sell last year, as opposed to past auctions that saw developers willing to aggressively bid up prices.
Faced with what it characterized as “an extremely complex environment both at home and abroad,” Evergrande said it was shifting its development model to one that involved “low debt, low leverage, low cost and high turnover.” Previously, Evergrande’s debt-fueled business model saw its net leverage rise to 184% at the end of 2017.
In 2017, Hui Ka Yan had been ranked the richest person in China, but an $11.7 billion plunge in his net worth saw him fall to number three last year. Hui’s loss was the biggest decline in dollar terms among the 400 people appearing on the China Rich List. The bulk of his wealth currently estimated at $32.5 billion is derived from his stake in Evergrande, which has seen its shares slump 26% over the past year.
Hui, who also goes by the name Xu Jiayin, started Evergrande in Guangzhou in 1996, and began acquiring low price properties in small markets. Evergrande’s total land reserves was comprised of 822 projects located in 228 cities across China, according to the company’s latest interim report.