Evergrande’s Aggressive Plan to Cut Debt Met With Skepticism

China Evergrande Group’s pledge to remake itself as a leaner company with a focus on controlled growth has been met with skepticism, with analysts concerned margins will suffer and others saying investors need more clarity, Bloomberg News reported. China’s most indebted developer unveiled a three-year plan on Tuesday titled ‘Growing Sales, Controlled Scale & Reduced Leverage’. The aggressive strategy includes cutting total debt load by 50%, boosting sales and trimming its land bank. Evergrande also Tuesday reported its first fall in annual profit in four years. Evergrande’s new strategy “should fail to deliver sustainable quality growth,” Bloomberg Intelligence analysts Kristy Hung and Patrick Wong said. “Margins will likely suffer at the expense of volume, as an absence of housing stimulus and weak demand in low-tier cities sustains the need for price cuts.” Read more

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