China Evergrande, the second largest Chinese property developer by sales, announced a dividend payment on Thursday that is equivalent to half of its accumulated profits for 2016 and 2017.
The developer owned by Chinese top tycoon Hui Ka-yan withheld a two-year dividend in preparation for a return to an A-share listing despite having not yet set a date for such plan.
The dividend will be huge. China Evergrande reported a net profit of 24.37 billion yuan (US$3.56 billion) in 2017, following a 5.09 billion yuan net profit in 2016, according to a filing to the Hong Kong stock exchange that declared an accumulated net profit of 29.46 billion yuan in 2016 and 2017.
Half of which amounts to 14.7 billion yuan (US$2.15 billion), making it one of the largest payouts by a property developer in history.
Big beneficiaries will be Chinese Estates owner Joseph Lau and his wife Kimbie Chan, whose eight percent of shares in China Evergrande will earn them a payout of 1.17 billion yuan (US$170.69 million).
The announcement led to China Evergrande rebounding to close to prices at the beginning of the year, before developers were hit by fears that Beijing might put a damper on the booming property market. The the high financial gearing of many property companies was another source of pessimism that affected industry stock prices.
Positive results for the Guangdong-based company continue to roll in. Earlier this week, China Evergrande issued a positive profit alert, saying it expected to double its half-year profit, thanks to increased property sales.
As such, China Evergrande will clock in a profit above 52 billion yuan (US$7.58 billion) in the first half of this year, which means it is poised to enjoy a record profit year.
Thanks to strong cash flow, the company’s net gearing ratio is also set to drop, from 184% at the end of last year, to below 130%.