China Evergrande first-half net loss narrows to $4.5 billion

By Clare Jim

HONG KONG (Reuters) – China Evergrande (HK:) Group, the world’s most-indebted property developer, on Sunday reported a narrower net loss for the first half of the year, thanks to a rise in revenue.

Evergrande said its January-June loss was 33 billion yuan ($4.53 billion) versus a 66.4 billion yuan loss in the same period a year earlier.

The developer is at the centre of a crisis in China’s property sector that since late 2021 has seen a string of debt defaults, unfinished homes and unpaid suppliers, shattering consumer confidence in the world’s second-largest economy.

This month, missed U.S. dollar coupon payments by China’s largest private developer, Country Garden, fanned concern of contagion in an economy already weakened by tepid domestic and foreign demand, faltering factory activity and rising unemployment.

In a filing on Sunday, Evergrande said first-half revenue rose 44% from a year earlier to 128.2 billion yuan, as it “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”. Cash fell by 6.3% to 13.4 billion yuan.

Liabilities slightly dropped to 2.39 trillion yuan from 2.44 trillion yuan at the end of 2022, while total assets also shrank to 1.74 trillion yuan from 1.84 trillion yuan.

The developer posted a combined net loss of $81 billion for 2021 and 2022 in a long-overdue earnings report last month, versus an 8.1 billion yuan profit in 2020.

As with Evergrande’s previous two annual financial statements, auditor Prism Hong Kong and Shanghai has not issued a conclusion on this report, citing multiple uncertainties relating to the business as a going concern, including future cashflow.

Evergrande said its ability to continue will depend on a successful implementation of an offshore debt restructuring plan, and successful negotiations with the rest of the lenders on repayment extensions.

On Friday, Evergrande said it had “adequately” fulfilled exchange guidance for trading of its Hong Kong-listed stock to resume and had applied for resumption on Aug. 28.

Trading of the stock has been halted since March last year pending the 2021 and 2022 results and the outcome of matters including an investigation into 13.4 billion yuan of deposits seized from a subsidiary.

Evergrande filed for U.S. bankruptcy protection earlier this month as part of one of the world’s biggest debt restructuring operations.

Courts in Hong Kong and the Cayman Islands will decide in early September whether to approve an offshore debt restructuring plan involving $31.7 billion worth of instruments including bonds, collateral and repurchase obligations. Creditors voted on the plan last week and the developer has yet to disclose the result.

($1 = 7.2890 renminbi)

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