Wednesday, July 19, 2023

China Evergrande Posts Losses of $81 Billion Over Two Years
CHINESE CAPITALI$M STILL CAPITALI$M

Bloomberg News
Mon, July 17, 2023 



(Bloomberg) -- China Evergrande Group posted combined losses of more than $81 billion over two years as the world’s most-indebted developer releases its long-delayed results in a bid to resume stock trading and complete one of the country’s biggest debt restructurings.

The company reported a loss attributable to shareholders of 105.9 billion yuan ($14.8 billion) for the full year in 2022, adding to a 476 billion yuan loss the previous year, according to Hong Kong stock exchange filings late Monday.

The results underscore how much Evergrande has struggled amid a housing crisis that has rocked the world’s second-largest economy over the past two years after the government restricted borrowing by developers and consumers curbed home purchases. The earnings marked the company’s first two full-year losses since its 2009 listing.

Creditor Seeks Bankruptcy Of Evergrande Real Estate Group's Xian Unit

Evergrande’s revenue plunged by half in 2021 to about 250 billion yuan, before falling further last year to 230 billion yuan, largely missing the average estimate of six analysts surveyed by Bloomberg. While the loss narrowed last year from 2021, it represented a sharp reversal from a profit of almost 8 billion yuan in 2020.

The developers’ debt pile meanwhile has soared, with total liabilities reaching 2.58 trillion yuan at the end of 2021, or almost $360 billion. That figure fell slightly to 2.44 trillion yuan as of December last year.

The results give offshore bondholders something more to digest as they consider the company’s debt restructuring proposal. Evergrande said it seeks to convene meetings on July 24 and 25 with various classes of holders. 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.

Trading Resumption

Evergrande could be closer to resuming trading of its shares after reporting results, and there’s potential for approval of its debt-restructuring plan, according to Bloomberg Intelligence analysts Daniel Fan and Adrian Sim. The firm’s tight cash of 4.3 billion yuan as of year-end, compared with short-term debt of about 587 billion yuan, could explain its imminent need for a debt plan, they said.


The results provide a long-awaited update on the financial status of the defaulted developer, whose woes have come to symbolize the crisis afflicting China’s slumping housing industry. New-home prices started declining again in June for the first time this year, underscoring the lack of buyer interest.

The financial results were audited by Prism, a small accounting firm named as Evergrande’s auditor in January after the resignation by PricewaterhouseCoopers. After working as Evergrande’s auditor since its 2009 Hong Kong listing, PwC resigned months after it was put under investigation by Hong Kong’s accounting regulator for its work on Evergrande and its services arm.

Prism added a disclaimer of opinion to Evergrande’s accounts, saying it’s unable to obtain sufficient and appropriate audit evidence.

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