Evergrande, the Chinese real estate company whose financial position has been a source of ongoing concern to the Chinese economy and indeed global markets, has reported its latest financial figures and resumed trading on the Hong Kong Stock Exchange after an 18-month hiatus.
On Sunday, the company said losses for the period January to June 2023 stood at 33 bn yuan (€4.19 bn), which was an improvement on the 66.4 bn yuan loss the previous year.
Revenues were up some 44% YOY as it suggested it was actively planning the resumption of sales. It has a development, investment, management and new energy vehicle business, as well as cultural tourism and operations in the health industry.
But when shares began trading on Monday following an 18-month suspension from the Hong Kong Stock Exchange, shareholders dumped their holdings causing the share price to crash 80%. In March 2021 when it stopped trading, shares were at HK$ 1.65. On Monday they resumed at HK$ 32 cents.
The response will do nothing to alleviate fears of financial contagion, which Chinese authorities are anxious to prevent. China’s real estate sector is said to account for roughly a quarter of China’s economy.
Evergrande said its board had carefully considered the group’s expected cash flow projections for at least the next 12 months giving special attention to things giving rise to ‘material doubt as to its ability to continue as a going concern’.
‘Accordingly, the group has proactively come up with debt solutions to alleviate liquidity pressure.’
It has been seeking new financing or additional capital inflows and has been talking with creditors for months. The focus is to complete and deliver property projects to ensure stability and sustainable operation. But on Monday, there were reports of a pause on shareholder voting on various measures as stakeholders digested the latest financial postion and indeed the share price carnage.
Evergrande has stayed in the news ever since 2021 when it defaulted on its debt mountain. Its total liabilities as of December 2022 were stated at 2.43 trn yuan (€308 bn). In its update on Sunday, it said total liabilities now stood at €302 bn.
On Friday, it was able to announce how it had ‘adequately’ fulfilled guidance to resume share trading on the Hong Kong Stock Exchange.
That came just days after it sought out the protection of bankruptcy courts in the US under chapter 15 of the country’s code. Its US subsidiaries, Tianji Holding and Scenery Journey, both filed alongside the parent company.
Evergrande has approximately 1,300 projects in more than 280 Chinese cities.
But is not the only one struggling. Earlier this month, Country Garden, another of China’s largest real estate developers, warned it could be in for losses as high as $7.6 bn for H1.
Evergrande was formed in 2006 and went public on the Hong Kong Stock Exchange via an IPO in 2009.
For 2021 and 2022 it made a loss of 467 bn yuan and 105.9 bn yuan respectively.
