[Securities Times] Evergrande Won the Sales Champion in the Past Half Year

Securities Times 2010-7-2 Sunwen

The reporter learned yesterday that China Real Estate Information Group and Chine Real Estate Assessment Center jointly released the Sales Rankings of China Real Estate Enterprises in the First Half of 2010. The data indicated that in the first half of 2010, 11 real estate enterprises ranked among the Ten Billion Sales Amount Club.

Among them, Evergrande and Vanke continued the previous competitive situation and respectively won the champion in terms of sales area and sales amount in the first half year. Macro-control had effect on the performance of leading enterprises. But generally speaking, large-scale real estate companies kept stable development.

The growth of the Top 20 enterprises was stable

Data in the Sales Rankings of China Real Estate Enterprises in the First Half of 2010 indicated that most large-scale real estate enterprises still maintained the good growth momentum in the first half year.

The rankings of sales amount indicated that the sales amount of 11 enterprises in total exceeded 10 billion yuan. Among them, the sales amount of Vanke, Evergrande, Poly, Greenland, and Greentown exceeded 20 billion yuan, ranking the top 5. With the sales amount of 35.5 billion yuan, Vanke became the only member in the 30 billion yuan legion. Evergrande, Poly, Greenland and Greentown formed the echelon of 20 billion yuan.

The research institutions hold the opinion that although there have been great changes in the whole situation of real estate industry due to unprecedented severe micro-control policies since Apr. 2010, there still has been obvious growth in the performance of the top 20 enterprises. According to the statistics, generally speaking, compared with sales in the second half of 2009, the sales of real estate enterprises in the first half of this year declined to some extent.

But compared with the sales of the first half of 2009, most enterprises in the rankings still realized the growth of about 30%. The performance of some enterprises such as Evergrande, Country Garden and Greenland almost doubled.

Evergrande and Vanke maintained the competition for the leading position

It is noteworthy that the rankings indicated that Evergrande and Vanke have respectively maintained the leading positions in terms of sales area and sales amount, continuing the competition for the leading position since this year. According to the statistics, the sales amount of Vanke and Evergrande in the first half year was respectively 35.5 billion and 21.1 billion yuan. Vanke was the only real estate enterprise of which the sales amount exceeded 30 billion yuan.

However, the sales area of Evergrande and Vanke was respectively 3.32 million square meters and 2.94 million square meters in the first half of this year. Evergrande was the only enterprise of which the sales area in the first half year exceeded 3 million square meters, maintaining the dominant position in sales area.

Research institutions hold the opinion that the competition between Evergrande and Vanke has been in a stalemate. According to the statistics, since the first quarter of this year, Evergrande has surpassed Vanke in terms of sales area, and Vanke has maintained the leading position in terms of sales amount. Generally speaking, in several rankings, the two leading positions of sales area and sales amount belong to Evergrande and Vanke.

Research institutions hold the opinion that Evergrande has been the leader again in terms of sales area since the first quarter of this year, and is the only enterprise hitting new highs in performance every month of which the link-relative rate of sales amount and sales area still keep growing every month in the adjustment of the real estate market in the first half of this year among all enterprises in the rankings (except February during the Spring Festival).

The number of sales areas of a single project of Evergrande is generally relatively large. The sales amount has increased by about 100% compared with that of the first half of 2009, demonstrating the posture of outshining others in the adverse situation. Sufficient land reserve, low cost and strong execution will become the driving force of Evergrande for further breakthrough.

It is hopeful that the construction volume of the enterprise can exceed the expectation of the market, which may support the sales in 2010 to continue to grow.

Gaining a decisive victory in the second- and third-tier cities

The research institutions predicted that the real estate enterprises would gain a decisive victory in the second- and third-tier cities under the background of real estate micro-control. According to the analysis, the real estate market has started to have the inflection point since April this year. Since the release of the unprecedented severe new real estate policy, the turnover in the first-tier has been affected greatly.

At the most obvious timepoint, the turnover in cities, such as Shanghai and Beijing, has even shrunk by 70-80%, but the turnover in the second- and third-tier cities with previous price growing smoothly has been relatively stable.

Affected by such situation, the sales performance in the second- and third-tier cities will become the decisive element of the real estate enterprises. In fact, according to the statistics in the first half year, the sales performance contribution rate in the second- and third-tier cities advanced obviously.

The researchers hold the opinion that such market change directly contributed to the outstanding performance on sales of the enterprises represented by Evergrande which placed its main layout in the second- and third-tier cities, reflecting the successful application of the strategy of enterprises first placing their layout in the second- and third-tier cities with high growth.

According to the analysis, in the second half of the year, the enterprise can only balance the arrangement of urban layout, reasonably control the supply rhythm and effectively formulate the response strategy, so as to help improve the anti-risk capability as well as to set a good foundation for the future development.

Evergrande strives to overtake in the corner

As a highlight in the rankings in the first half year, the enterprises, such as Evergrande, Country Garden and Greenland, which places the main layout in the second- and third-tier cities, achieve outstanding performance on sales. In particular, Evergrande is popularized throughout the country in the pattern of Real Estate McDonald .

The experts of the industry believe that Evergrande aims at overtaking in the corner by virtue of the current market situation. According to the analysis, Evergrande has implemented at least three measures to respond to the overtaking. Firstly, the frequent and severe new real estate policies have cast a shadow over the domestic real estate market since April.

Affected by such situation, most real estate enterprises enter into a weak period, and have difficulties in making breakthrough on the sales. While Evergrande took the lead in following the market in early May, promoting the project throughout the country in the strategy of 15% discount and continued to become the large-scale real estate enterprise with growing month on month in May and June.

On the other hand, Evergrande benefited from its advanced strategic layout. According to the relevant personnel of Evergrande Real Estate, Evergrande has targeted to select the second- and third-tier cities, especially the high value-added region of the city, to place its layout as early as the development all over the country. At present, Evergrande Real Estate has had dozens of project layouts in the second- and third-tier cities throughout the country.

At the same time, Evergrande gradually has high proficiency on the standardized operation, and can increase the cost performance easily and skillfully by virtue of its efforts made for the cost control and strategic alliances. It is understood that Evergrande Real Estate has signed the strategic alliance with many suppliers this year to ensure the high quality supply and logistics can be obtained at the lowest price .

According to the analysis from the research institutions, Evergrande follows strategy of product excellence, carrying out the collectivized intensive management system inside the company to strictly control the product quality, and integrating various dominant resources in a large scale outside the company, to establish cooperative alliances with the leading enterprises in relevant industries at home and abroad in terms of planning design, main construction and material equipment.

Evergrande s advantage in the scale of project construction throughout the country ensures the leading enterprises involved in the tender can provide the highest-quality service at the most reasonable price so as to realize scale benefit of Evergrande s centralized bidding and tendering.

Through such standardized operation, Evergrande Real State ensures the strategy of product excellence of high cost performance. According to the analysis from the research experts, both standardized operation capability and products of high cost performance are critical to the leading position of Evergrande.