Evergrande Real Estate Group Ltd., the Chinese real estate developer that has embarked on a buying spree since last year, said it will keep expanding mainly through mergers and joint ventures, and will also seek to acquire listed companies. Mergers and acquisitions will become the “major†means of expansion in land reserves as a “cost-effective†approach, the company said in a filing to the Hong Kong stock exchange Tuesday accompanying its annual results. While contracted sales jumped to a record high last year, net profit attributable to shareholders dropped to 10.5 billion yuan ($1.6 billion) from 12.6 billion yuan a year earlier. Cash and cash equivalents jumped 176 percent to 164 billion yuan, helped by strong sales and relaxed onshore bond sales, the firm said. Evergrande, majority-owned by billionaire chairman Hui Ka Yan, was the most active buyer among listed developers last year after accounting for more than one-quarter of $25 billion in transactions, including paying a record price for the Mass Mutual Tower in Hong Kong, according to data compiled by Bloomberg. The strong acquisitive appetite, largely funded by debt, prompted ratings firm Moody’s Investors Service to cut its rating by one notch in January to B2. The Guangzhou-based developer’s debt increased, partly due to land acquisitions, Chief Financial Officer Tse Wai Wah said in Hong Kong Tuesday. The firm almost doubled its borrowings to 297 billion yuan at the end of last year, according to Evergrande’s statement. Evergrande also reported on Tuesday that foreign exchange losses from borrowings rose to 2.84 billion yuan in 2015.
Source: Bloomberg.comEvergrande to Expand Mainly Through Mergers After Buying Spree
Industry: Realty 2016-03-30
