March 26, 2019 / 9:58 AM / 3 months ago

UPDATE 1-China Evergrande 2018 core profit nearly doubles as property sales rise

(Adds details of results, background)

HONG KONG, March 26 (Reuters) - China Evergrande Group , the country’s third-largest property developer by sales, said its 2018 core profit jumped 93.3 percent from a year earlier to a record high as it delivered more properties and slashed costs.

Its core profit, which excludes revaluation gains and non-recurring items, came in at 78.32 billion yuan ($11.67 billion).

Net profit rose 53.4 percent to 37.4 billion yuan, while revenue increased 49.9 percent to 466.2 billion yuan.

“The board firmly believes the new economy and consumption upgrading in China will create benefits both at home and abroad in a more extensive sense. The stable and sustainable development of China’s economy will enable steady and sound development of the real estate industry,” the company said in a statement.

The group’s net assets rose 27.4 percent to 308.63 billion yuan at the end of 2018 from a year earlier. Its net gearing ratio fell 31.8 percentage points to 151.9 percent, while total loan levels fell by 59.5 billion yuan, or 8.1 percent.

In August 2017, the developer, with one of the highest debt ratios in the industry and also one of the highest debt piles in China at the time, pledged to cut its net gearing ratio to about 70 percent by June 2020 from 240 percent in June 2017.

Its record annual result comes as major Chinese developers such as China Vanke and Country Garden Holdings also posted all-time high annual profits.

Analysts, however, say profit growth for the sector may slow from the second half as more expensive land costs eat into margins on the back of slowing national sales.

China’s property sales by floor area fell 3.6 percent year-on-year in the first two months of 2019, while new home prices grew at their slowest pace in 10 months in February in sign of slackening demand as the economy cools further. ($1 = 6.7137 Chinese yuan) (Reporting by Clare Jim and Twinnie Siu; Editing by James Pomfret and Gopakumar Warrier)

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