SHANGHAI – China Evergrande Group slumped as much as 87 per cent in Hong Kong trading following a 17-month halt, becoming a penny stock as the country’s most-indebted developer unveiled more losses.
The decline to 35 Hong Kong cents on Monday morning shrank its market value to just HK$4.6 billion (S$795 million) from a peak of more than US$50 billion (S$67.75 billion) in 2017.
The company, which is undergoing a lengthy debt restructuring process, reported a loss attributable to shareholders of 33 billion yuan (S$6.2 billion) for the six months ended June 30, according to a filing with the Hong Kong Stock Exchange on 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 had applied to resume trading after saying in August that 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 per cent of its market capitalisation from its peak in 2017.
The first-half results came ahead of creditors meetings scheduled to begin on Monday. They underscore Evergrande’s struggles during a 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, 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 at June 6. 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 at 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 per cent of its Class A bonds backed the plan, while just 30 per cent 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 did not issue a conclusion on the interim earnings report, citing multiple uncertainties. BLOOMBERG
