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Country Garden H1 sales surges 131% to US42.5 billion

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SHUNDE, China, July 10, 2017 /PRNewswire/ -- Chinese property developer Country Garden Holdings (Stock Code: 2007.HK) announced on July 9 that, for the first half of this year, the firm achieved an estimated 288.9 billion yuan (approx. US$42.5 billion) in contracted sales, up 131 per cent year on year, and 32.26 million square meters in contracted sales gross floor area (GFA), up 106 per cent. For each of the six months, Country Garden topped the industry in terms of both of these two core indicators. Several leading banks, among them, Citi and Deutsche Bank, have given the property developer a "buy" rating. Citi said in its forecast that Country Garden would become China's industry leader for the whole of 2017, and lifted the stock price target to HK$12 (approx. US$1.54).

As the industry matures, competition between the top players is becoming more heated. Seven companies within the sector reported sales having passed the 100 billion yuan (approx. US$14.70) milestone on or before June 30th, with expectations strong that 20 will do so by year end, a substantial increase from the eight who did so last year. H1 numbers for three players, Country Garden, China Vanke and Evergrande Group, exceeded 200 billion yuan (approx. US$29.4 billion). Country Garden is currently in the lead, just 11.1 billion yuan short of the 300 billion yuan (approx. US$44.1 billion) mark at half year, 11.7 billion yuan (approx. US$1.7 billion) higher than Vanke and 44.8 billion yuan (approx. US$6.6 billion) ahead of Evergrande. "Country Garden achieved relatively steady and strong results in the first half of 2017, with sales ranking first among all players across China for six consecutive months and average monthly sales reaching more than 40 billion yuan (approx. US$5.9 billion). Undoubtedly, the company will be China's sales champion for the full year", according to a research report released by Chinese real estate services firm ehresearch.

The high-quality growth of Country Garden is actively reflected in the capital markets, with the stock price closing at HK$8.9 (approx. US$1.14) on July 7, soaring 105 per cent since the end of last year and almost seven times the growth experienced for the Hang Seng Index as a whole. Citi, in its latest research report, maintained a "buy" rating for Country Garden. The bank said in the report that the property developer posted a surprising and better than expected sales results for the first half year, with revenue jumping significantly and the degree of leverage declining. The bank also forecast Country Garden to finish out the year as China's sales champion, with its gross margin having bottomed out and the upward revaluation expected to continue. The improved outlook for the firm led Citi to raise the stock price goal to HK$12 (approx. US$1.54). Deutsche Bank said, based on Country Garden's established market positioning not only in China's fast-growing third- and fourth-tier cities but also in the well-established first- and second-tier cities, coupled with the strong sales team, efficient management and high quality of the products, the property developer can be expected to continue rolling out new development projects while maintaining strong sales performance going through the rest of the year. In addition, Goldman Sachs said it expects the company to generate substantial operating cash flow for the fiscal year.

Of note is that the developer's outstanding results for the half year were achieved based on an average selling price of 8,956 yuan (approx. US$1,317) per square meter, the lowest average sales price among China's top ten real estate developers. The company has properties in more than 500 cities and towns across China and been involved in more than 900 projects worldwide. Country Garden's rapid development from a relatively small industry player to a market leader is a result of its ongoing strategic commitment to building affordable but high quality housing for families of modest means. 

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SOURCE Country Garden Holdings

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