(Bloomberg) — China Evergrande Group shares fell after the embattled developer completed about 71% of its sales target in the two months through October, offering its steepest discount in history that could squeeze margins.
The shares fell as much as 2.7% after it said contracted sales were 142 billion yuan ($21 billion) between Sept. 1 and Oct. 8, according to an exchange filing Friday. It generated 173 billion yuan for the two months through October last year.
The world’s most indebted developer is trying to cut debt by bolstering sales, offering steep discounts at 800 projects across the nation during the Golden Week holiday, traditionally a popular time for home-hunters to buy. With $120 billion in debt– of which at least $5.8 billion is due in the next two months — it is under pressure from investors and regulators to curb leverage.
”The latest strong sales performance, coupled with previous settlement with most of strategic investors for its listing restructuring and its upcoming two IPOs, should be largely to ease the concern about its default or liquidity risk,” said Raymond Cheng, a property analyst at CGS-CIMB Securities.
Read more about how Evergrande skirted its cash crunch
Evergrande is planning to conduct a secondary listing of its electric vehicle unit in China and spin off its services management unit.
Evergrande could sustain its price cuts throughout the year and squeeze gross margins to 24% compared with the consensus forecast of 27%, according to