Evergrande shares plunge 80% on first day of trading in 17 months – Kommersant
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Today, August 28, shares of the Chinese developer Evergrande Group fell by 80% in the trading day on the Hong Kong stock exchange. Now they are worth $0.04, and the company itself has lost about $2 billion in market capitalization. August 28 was the first trading day for Evergrande after a 17-month hiatus. Company suspended trading in their shares on March 21, 2022.
The collapse of Evergrande’s share price followed the publication of financial statements for the first half of 2023 (.pdf). The company reported a loss of 39.25 billion yuan ($5.38 billion), more than half the loss for the same period last year (86.17 billion yuan). Revenue rose to 128.81 billion yuan ($17.64 billion) from 89.28 billion yuan a year ago.
At the same time, the decrease in losses is primarily due to the absence of write-offs on investments accounted for under the equity method (they amounted to 18 billion yuan a year earlier), and the reduction in write-offs on financial assets from 8.2 billion yuan to 0.6 billion yuan. The volume of the debt burden on Evergrande has not changed since the end of last year and remained at the level of 2.4 billion yuan ($328 million), which exceeds the value of all the developer’s assets – 1.74 billion yuan.
In addition, the company announced today, August 28, the postponement of investor voting on the debt restructuring plan for a month – September 25-26 (.pdf). Back in April Evergrande informed on an agreement with a group of foreign creditors on debt restructuring. However, some offshore bondholders refused to support this plan, and a vote on the new terms was scheduled for today, August 28th. All these factors led to the collapse of the company’s stock prices.
Evergrande has been in financial trouble since September 2021. In December of that year, the company suffered a technical default after two consecutive loan defaults. Then its debt was estimated at $ 305 billion, and the developer had to sell some assets due to the threat of bankruptcy. The company also did not publish financial statements for a long time, having done so only in April of this year. Then it turned out that the losses of the Chinese developer in 2021-2022 amounted to $ 81 billion. And in mid-August, Evergrande filed application for protection of creditors under bankruptcy law in the United States.
About how the success of the developer Evergrande turned into potential problems for the Chinese economy, “Kommersant” wrote in the material “Great Pyramid of China”.
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