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China

China Evergrande reports first-half loss of $4.5 billion ahead of creditors meetings and resumed stock trading

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Bloomberg
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August 27, 2023, 6:21 PM ET
Aerial photo shows a residential area of Evergrande in Nanjing, East China's Jiangsu province, Aug 18, 2023.
Aerial photo shows a residential area of Evergrande in Nanjing, East China's Jiangsu province, Aug 18, 2023.CFOTO/Future Publishing/Getty Images
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China Evergrande Group is poised to resume stock trading on Monday, ending a 17-month halt, after the world’s most-indebted developer unveiled a $4.5 billion loss in the first half.

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The company, which is undergoing a lengthy debt restructuring process, reported a loss attributable to shareholders of 33 billion yuan ($4.5 billion) for the six months ended June 30, according to a filing to the Hong Kong stock exchange Sunday. That adds to more than 582 billion yuan of losses from the previous two years, which were the company’s first two full-year losses since its 2009 listing.

The firm has applied to resume trading in Hong Kong at 9 am on Monday, after saying this month an improved internal control system and process met its obligations under Hong Kong listing rules. The stock last traded on March 18, 2022, with the company having lost over 95% of its market capitalization from its peak in 2017.

The first-half results came ahead of creditors meetings scheduled to begin Monday. They underscore Evergrande’s struggles during the housing crisis that has rocked the world’s second-largest economy over the past two years. As China cracked down on the booming real estate industry to cut risk and make homes more affordable, many developers have been hit. Evergrande’s largest peer, Country Garden Holdings Co., is on the verge of default and expected to also post a loss for the first half.

Evergrande’s total net loss during the period amounted to 39.3 billion yuan, according to Sunday’s filing. The developer also reported aggregate liabilities of 2.39 trillion yuan as of June 60. Excluding contract liabilities of 604 billion yuan, the tally stood at 1.78 trillion yuan in the first half, up from 1.72 billion yuan in 2022.

As of end-June, Evergrande had total assets of 1.74 trillion yuan, including total cash, cash equivalents and restricted cash of 13.4 billion yuan, the company said in its statement.

The results give offshore bondholders more to digest as they consider the company’s debt restructuring proposal. The defaulted real estate giant has also asked to convene meetings for creditors to approve its offshore debt overhaul plan on Monday.

In April, the developer said investors holding 77% of its Class A bonds backed the plan, while just 30% of Class C holders endorsed it.

The financial results were reviewed by Prism, a small accounting firm named as Evergrande’s auditor in January after PricewaterhouseCoopers resigned. Prism didn’t issue a conclusion on the interim earnings report, citing multiple uncertainties.

    — With assistance by Charlie Zhu, Emma Dong, Jacob Gu, Alice Huang, Charlotte Yang, and Shiyin Chen

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