Comparison of Half-year Performance: Evergrande Achieved Outstanding Results in the Adverse Market, while R&F's Prospect Caused Concern

BEIJING, Aug. 5 /PRNewswire-Asia/ -- As China's two leading real estate enterprises among the "Five Tigers of Guangdong," Evergrande and R&F are experiencing varied degrees of success. An original report from Sina Leju assesses the situation as follows:

As the first developer publicly announcing price reductions this year, Evergrande Real Estate (3333.HK) reached sales of 21 billion yuan in the first half of the year with a year-on-year increase of 105%; Evergrande even announced a strong increase to its annual target to 40 billion yuan, becoming one of a very few listed real estate enterprises daring to increase the target in the "adverse market". In contrast, the sales amount of R&F Properties was 12.516 billion yuan with a year-on-year decline of 2%. Compared to the target set at the beginning of the year, the rate of completion only was 41.7%, and it's almost impossible to reach the target.

As domestic first-line real estate enterprises in Guangzhou, though both Evergrande and R&F survived the critical economic trouble in the cold winter of 2008, they fared differently in 2010.

Evergrande's Price Reduction Initiative

When the property market turned cold, Evergrande's reaction was more sensitive than that of R&F, so as to successfully gain the lead in the market.

In early May, Evergrande took the lead in announcing its 15%-discount promotion on all its buildings, which immediately became the hottest event in the property sector this year. Evergrande's sales performance in May and June was extremely bright; the data showed that Evergrande achieved contracted sales of 4.05 billion yuan in May with respective month-on-month increase of 328.6%, and the sales in June even reached 4.8 billion yuan, setting the highest record for a single month this year.

In contrast, the sales data of R&F Properties in May and June was rather unsatisfactory; the data showed that the sales of R&F in May totaled about 1.253 billion yuan, with a month-on-month decline up to 48%, becoming one of the listed real estate enterprises having the largest decline in sales performance in May; although the sales recovered by 31% to 1.636 billion yuan in June, the decline still reached 31% compared with the same period last year.

According to the statistics of Gao Hua Securities, almost 85% of the expected contract sales revenue of R&F Properties in 2010 was from Beijing, Shanghai, Guangzhou and other "excessively hot" cities, while those of Evergrande in these areas were very low.

R&F's Target of 30 Billion Yuan Almost Broken

From the view of the target of this year, by the end of June 2010, Evergrande Real Estate achieved sales of 20.98 billion yuan with a year-on- year growth of 104.9%, and the total contracted sales area was 333,900 square meters with a year-on-year growth of 54.7%, which has become 58.3% of the target of 36 billion yuan of the year; the rate of completion even exceeded Vanke and CSCL.

For this reason, Evergrande announced a strong increase in the annual total contract sales target for 2010 to 40 billion yuan, increasing by about 30% compared with the total contracted sales of 2009, and 20% higher than the initial target at the beginning of the year; therefore, Evergrande became one of a few listed real estate enterprises daring to increase the target in the "adverse market".

In contrast, the sales of R&F Properties was 12.516 billion yuan with a year-on-year decline of 2%; the sales area was 1,050,000 square meters with a year-on-year decline of 22%; compared with the annual sales target of 30 billion yuan set at the beginning of the year, the rate of completion only was 41.7%; although the performance of R&F appeared to sharply rebound in July, the rate of completion only was 51%, far behind target.

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SOURCE Sina Leju