HONG KONG • Shares in China Evergrande Group shot up 4 per cent yesterday after the embattled property developer announced plans to prioritise growth of its electric vehicle (EV) business over its core real estate operations.
China Evergrande New Energy Vehicle Group stock jumped as much as 17 per cent, versus a 0.3 per cent fall in the Hang Seng Index.
Evergrande, reeling under more than US$300 billion (S$403.2 billion) in liabilities, last week appeared to avert a costly default with a last-minute bond coupon payment, buying it another week to wrestle with a looming debt crisis.
Evergrande chairman Hui Ka Yan said late on Friday that the company would aim to make its new EV venture its primary business, instead of property, within 10 years.
He added that property sales will slow to about 200 billion yuan per year by that time, compared with more than 700 billion yuan last year, the state-backed Securities Times reported.
The developer separately said on Sunday that it had resumed work on more than 10 projects in six cities, including Shenzhen. Many of its projects across the country had been halted due to payments owed to suppliers and contractors.
The company said on Aug 31 that some projects had been suspended because of delays in payment to suppliers and contractors, and it was negotiating to resume building.
On Sunday, it said in a post on its WeChat account that some of the projects it resumed had entered the interior decoration stage, while other buildings had recently finished construction.
Evergrande added that its efforts to guarantee construction would shore up market confidence and it included several photos of construction workers on different projects, stamped with the time and date. It has not disclosed how many of its 1,300 real estate projects across China have had work halted.
Also lifting general confidence, state media outlet Xinhua in an article yesterday said the spillover effect of Chinese real estate companies' debt default risks to the financial industry would be controllable.
The report follows comments from senior officials, including Vice-Premier Liu He and central bank governor Yi Gang last week, who also said property companies were facing debt default issues due to poor management and a failure to adjust to market changes.