Evergrande Reports Largest Monthly Sales Jump in Jan Since 2018

The world’s most indebted property developer Evergrande Group reported strong January sales at CNY 58.1bn ($9bn), a jump of 43% from the same period last year. This was their largest monthly increase since 2018, based on Bloomberg data. The company is targeting CNY 750bn ($116bn) in contracted sales for 2021, which would translate to a 3.6% rise over 2020. Bloomberg notes that they have resorted to price cuts to enhance sales and meet its targets – for example in September 2020, the company cut prices by 30% on residential real estate, the heaviest base discount Evergrande has ever offered since it began a signature promotion twice a year in 2011. The developer currently is finding ways to boost sales and reduce its debt, which stands at over $120bn especially since its current metrics breach the regulators’ three-red lines thresholds. Its liability-to-assets excluding advanced proceeds are at 85.3%, net debt-to-equity at 219.5% and cash-to-short-term debt at 0.19x against thresholds of less than 70%, less than 100% and greater than 1x respectively. Their dollar bonds were flat with the 8.75% 2025s at 82.2.

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