CHINA Evergrande Group, the country’s second-largest property developer by sales, will stay away from small cities and expensive land to sustain margins after posting the industry’s highest-ever first-half profit.

Core profit doubled to 55.01 billion yuan (US$8 billion) in the January-June period, in line with its forecast, helped by lower expenses and an increase in the number of properties delivered.

The result comes as major domestic developers such as China Vanke Co. and Country Garden Holdings Co. also post record first-half profit, after sales of apartments built on land purchased cheaply a few years ago.

Profit attributable to shareholders jumped 63.6 percent to 30.81 billion yuan, while revenue rose 59.8 percent to 300.35 billion yuan. Net profit margin improved 5.4 percentage points to 17.7 percent.

“Our future goal is expanding in core tier-one and tier-two cities, and tier-three cities with economic growth. We don’t plan to expand into tier-four cities,” vice-chairman and chief executive Xia Haijun told an earnings conference Tuesday, saying the firm would build its land bank by targeting large, cheap land.

China Evergrande’s net gearing ratio was 127.3 percent at the end of June from 184 percent at the end of 2017, with total borrowings down as much as 8 percent from the end of December at 671.13 billion yuan.

(SD-Agencies)