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Abu Dhabi, UAEFriday 21 September 2018

Chinese developer Evergrande posts 250 per cent rise in profits

Surge in earnings comes as property prices and sales soar

China Evergrande has reported rocketing profits. Bobby Yip/Reuters
China Evergrande has reported rocketing profits. Bobby Yip/Reuters

China Evergrande Group, the developer controlled by the billionaire Hui Ka Yan, reported a 250 per cent jump in core first-half profit as property sales soared and prices climbed.

Core profit was 27.3 billion yuan (Dh15.06bn), the company said in a filing to Hong Kong’s stock exchange Monday. Revenue gained 114.8 per cent to 188bn yuan. Evergrande cited higher selling prices and a jump in sales - and said it expected to beat a 450bn yuan sales target for the year. Core profit excludes one-time items.

The company, targeted by short sellers this year for its high debt levels, pledged a switch to low levels of debt, leverage and costs. It targets net gearing of 70 per cent from 2020, compared with about 240 per cent now, it said.

Evergrande’s share price has climbed more than 370 per cent this year, dealing a blow to short-sellers who wagered against the company after its debt soared during an acquisition spree. The gains have been fuelled by share buybacks and the firm’s plans for a backdoor listing on the mainland.

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Separately, China will allow participants in its interbank bond market to trade government debt ahead of its issuance, its foreign exchange market operator said on Monday.

The introduction of so-called "when-issued" trading for Chinese treasuries will have benefits for price discovery and strengthening of the government bond yield curve, the China Foreign Exchange Trade System (CFETS) said in a statement on its website.

When-issued debt refers to debt that has been announced but not yet issued.

All participants in China's interbank bond market will be able to conduct when-issued trading on Chinese government bonds from four working days before their issue date until one working day before, the statement said.

CFETS will issue announcements five working days before each government debt issuance, the statement said.

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