China Evergrande Narrows Loss by 40% in H1 ahead of Trading Resumption

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BEIJING, August 28 (TiPost)— China Evergrande Group, the second largest property developer by sales in the country, showcased progress in boosting its balance sheet ahead of shares’ trading resumption.

Credit：Visual China

Evergrande narrowed losses by more than 40% in the first six months of this year. It posted net loss of RMB33 billion (US$4.53 billion) from January to June, compared with a RMB66.4 billion loss in the same period last year, according to a filing with the Hong Kong Stock Exchange (HKEX) on Sunday. Operating losses in the first half of the year were RMB17.38 billion, more than 64% down from a year earlier, and Losses related to return of lands, impairment losses on financial assets and other non-operating losses narrowed 55% to RMB15.03 billion. Revenue in the first half jumped 44% year-over-year (YoY) to RMB128.18 billion, and gross profit rose 38% to RMB9.8 billion.

In the filling, Evergrande vowed to assume responsibility of self-rescue and risk resolving, ensure all the work related to home delivery well done, sustain operations of automobile, property service and other businesses, actively introduce external quality resources, and accelerate offline debt restructuring to protect creditors’ long-term interests. Evergrande filed for protection under Chapter 15 of the U.S. Bankruptcy Code earlier this month, which was deemed as the latest effort to finalize an offshore debt restructuring plan released in April.

The financial results came two days after Evergrande disclosed to apply for trading assumption. The company said on Friday that it had fulfilled the resumption guidance issued by HKEX and sought to restart trading on August 28, concluding a suspension started in March, 2022.

As of June 30, Evergrande’s debt load fell 3.5% YoY to RMB2.39 trillion, and those excluding net contract liabilities increased 10% YoY to RMB1.78 trillion. Out of the latter liabilities, borrowings amounted to RMB624.8 billion, up 6.3% YoY, trade and other payables climbed 14% to RMB1.06 trillion (including construction material payables of RMB596.17 billion), and other liabilities dropped 2.5% to RMB102.88 billion. Its assets as of June totaled RMB1.74 trillion, including total cash, cash equivalents and restricted cash of 13.4 billion yuan with a 6.3% YoY decline.

As the most indebted property developer, Evergrande first declared a default on its debt in late 2021 when the second largest property developer in China had a total of more than US$300 billion in liabilities. It triggered a cross-default of all outstanding U.S. dollar bonds on December 3, 2021, due to the failure to fulfill the guarantee responsibility related to a US$260 million private placement debt.

In a filing with HKEX in April, Evergrande officially confirmed its state of insolvency in the past two years at financial reports disclosed last month. The property company had about RMB1.84 trillion (US$255.6 billion) of assets as of the end of 2022, decreasing RMB270 billion, or 12.8%, from a year earlier. The asset value shrank by 20%, from about RMB2.30 trillion of assets as of the end of 2020. Evergrande"s liabilities reached RMB2.44 trillion as of December 31, 2022, reducing RMB140 billion from late 2021. The insolvency gap increased from RMB 473.1 billion to RMB599.1 during the year 2022.

Of the above liabilities, Evergrande"s borrowings totaled RMB612.39 billion at the end of 2022, up 0.8% RMB5.01 billion, or 0.8%, on a year-over-year basis. Some of these borrowings were secured by the company"s land, investment properties, properties under development, self-owned completed properties, cash at banks, and equity interests in subsidiaries.