In This Article:
Evergrande Group, the world’s most indebted real estate developer, has reported a significant narrowing in its net losses for the first half of the year, thanks to a rise in revenue because of a “short boom” earlier this year.
But its stock still plunged more than 70% on Monday when it resumed trading following a 17-month suspension, even as shares in most Chinese property firms traded higher after a series of weekend announcements by officials aimed at boosting demand for property.
For years, the Shenzhen-based company was one of China’s largest property developers by sales. But it had borrowed heavily to fund its expansion and defaulted on its debt in 2021, sparking a crisis in China’s real estate sector, which once accounted for as much as 30% of the country’s economy. Earlier this month, it applied for bankruptcy in the United States.
Investors are closely watching its progress because of the key role it has played in China’s current economic woes.
Evergrande’s loss attributable to shareholders amounted to 33 billion yuan ($4.5 billion) for the January to June period, a 50% drop from the 66.4 billion yuan loss ($9.1 billion) recorded in the same period a year ago, it said in a Sunday filing to the Hong Kong stock exchange. Revenue surged 44% from a year ago, reaching 128.2 billion yuan ($17.6 billion).
The company said it had “actively planned for the resumption of sales and successfully seized the short boom of the property market that emerged at the beginning of the year.”
The Chinese economy enjoyed a strong start to the year, thanks to a post-opening recovery after the country scrapped its strict Covid-19 restrictions. But that rebound has faded since April.
Evergrande incurred a combined loss of $81 billion during 2021 and 2022, according to a long overdue financial report posted last month.
Its challenges are not over. Evergrande was still laden with liabilities worth 2.39 trillion yuan ($328 billion) at the end of June. That’s just slightly lower than the 2.44 trillion yuan ($334 billion) in total liabilities it reported at the end of last year.
Its total assets also declined to 1.74 trillion yuan ($239 billion) from 1.84 trillion yuan ($253 billion).
Evergrande is undergoing a government-guided debt restructuring, which kicked off in late 2021 shortly after it defaulted on its debt.
In March this year, it unveiled a multi-billion dollar plan to make peace with its international creditors but said it needed additional financing of $36 billion to $44 billion to complete unfinished property projects.
In Sunday’s filing, Evergrande said it had already obtained new financing for certain projects and will continue to seek additional capital.