China Evergrande Group rose sharply today and continued to refresh the record high for listing. As of the close, China Evergrande Group rose 13.88% to HK $23.80, with a turnover of HK $4.016 billion, a turnover of 181 million shares, and a market capitalization of more than HK $300 billion, reaching HK $311.628 billion.
Xu Jiayin, chairman of Evergrande Real Estate Group, is worth $31.6 billion, surpassing Wang Jianlin to become the richest man in real estate, according to the Forbes real-time rich list.
Professor Xu's soaring fortune is mainly due to the soaring share price of China Evergrande Group. Since the beginning of this year, China Evergrande Group has become one of the biggest gainers in Hong Kong stocks, up more than 330 per cent year-to-date. According to last year's annual report that Xu Jiayin held 10.162 billion shares, the market value of his holdings has soared from HK $49 billion at the beginning of the year to more than HK $221 billion, an average increase of nearly HK $800m a day.
Higher-than-expected performance led to a sharp rise in stock prices
In fact, despite China Evergrande Group's recent upsurge, its share price experienced a round of consolidation in June. Cen Zhiyong, a senior strategist at Hong Kong South China Financial Group, said in an interview that it was clear that Evergrande's share price rose mainly because it had recently released a very good profit forecast, which also led to a substantial inflow of money into Evergrande.
China Evergrande Group issued a positive results announcement on 25 July, in which it is expected that the unaudited net profit of the Group for the half year ended June 30, 2017 is about three times that of the same period last year. China Evergrande Group's interim results in 2016 showed that Evergrande made a net profit of HK $7.127 billion for the current period. As a result, Evergrande's net profit in the first half of this year will exceed 21.3 billion Hong Kong dollars, already exceeding China Evergrande Group's annual net profit in 2016.
In terms of sales, China Evergrande Group announced on July 3 that China Evergrande Group sold 61.12 billion yuan in June, 244.09 billion yuan in contract sales from January to June, and the average sales price was 9862 yuan per square meter.
How far is it from the richest man?
Evergrande has been even crazier this year, with a cumulative increase of 332.71%. The market value of Xu Jiayin's holdings also soared, from HK $49 billion at the beginning of the year to more than HK $212 billion, an average daily increase of HK $793 million.
It is worth noting that Evergrande's current valuation still has room for improvement, which means that Xu Jiayin's wealth can continue to grow.
Based on a net profit of HK $21.3 billion in the first half, Evergrande trades at just 6.08 times this year's earnings, still significantly lower than the price-to-earnings ratios of Vanke An and Poly Real Estate. 22 institutions forecast that Vanke An is expected to make a net profit of 24.9 billion yuan this year, or 10.15 times earnings, while 17 institutions forecast that Poly Real Estate is expected to make a net profit of 14.6 billion yuan this year, or 8.42 times earnings.
At the exchange rate of one Hong Kong dollar to US $0.128, Xu Jiayin is worth US $27.186 billion in a stock of China Evergrande Group, not far from the richest man.
Based on his stake in China Evergrande Group, as long as the stock rises by another 4.73 yuan (that is, the current price rises by about 22.8%), Xu Jiayin will overtake Jack Ma to become the new richest man if the other richest people remain the same. As China Evergrande Group's valuation is still relatively low, the above increase is still more likely to be achieved.
If Evergrande can reach Vanke Poly's average price-to-earnings ratio of more than 9 times, Evergrande's market capitalization still has more than 50% room to rise, and Xu Jiayin's fortune will rise by more than 10 billion US dollars, which is expected to surpass the top three on the rich list and become the new richest man in China.
Evergrande Real Estate An is still in progress.
On the evening of July 13, Shen Fang An again issued an announcement on the planning of major asset restructuring and postponement of trading, saying that the restructuring plan still needs further discussion, demonstration and improvement, and is not expected to disclose the relevant information such as the major asset restructuring plan or report before July 14. Shares will be suspended for no more than one month from July 14, 2017.
This is the eighth postponement of trading resumption announcement since the announcement of the reorganization of Shenfang and Evergrande, so the announcement of its restructuring plan with Evergrande has been postponed again.
However, although the plan has been repeatedly postponed, other work is still moving forward. Evergrande has successively announced the introduction of two rounds of 20 strategic investors on January 2 and June 1, with a total strategic investment of 70 billion, and all the funds have been received on June 2, and completed capital verification and industrial and commercial change registration.
In addition, in order to successfully complete the restructuring with Shen Fang, Evergrande spun off its real estate business to the Hong Kong Stock Exchange and obtained approval, and transferred Jiakai City, which Evergrande had previously acquired, to Kailong Real Estate, the controlling shareholder.
Multi-party funds plus inner housing stocks
Driven by the good news, foreign investment banks also began to actively buy Evergrande. Cen Zhiyong pointed out that, in fact, since Evergrande issued its profit forecast, most of the buyers of Evergrande have been foreign investors, such as Morgan Stanley, Citic Lyon, and Credit Suisse. In comparison, southward funds such as Capital Bank are not so prominent in the past two days.
Guotai Junan real estate analyst Hou Like previously pointed out that the company is expected to rely on high-quality land storage and mergers and acquisitions and old projects to maintain real estate business growth. With the gradual increase in the proportion of southward funds in the shareholder structure, the increase in the concentration of leaders in the post-cyclical era and the promotion of the process of returning to A, valuation still has room for upside.
Cen Zhiyong stressed that, in fact, from the broader industry plate point of view, the mainland real estate stocks as a whole is a relatively strong plate, worthy of attention. Their overall performance is good, and according to the data in recent months, the sales data of many companies have risen in both volume and price. But the risk also needs to pay attention, mainly from some policy factors, such as purchase restrictions and other measures will be increased, these are investors need to pay attention to.