China Evergrande's resumption of trading fell nearly 80% on its first day, 17 months away from China | Evergrande | China Evergrande's resumption of trading

On August 28th, China Evergrande, which had been suspended from trading for more than 17 months, officially resumed trading. After resuming trading, its stock price fell by over 80% at one point.

As of the close on the 28th, the stock price of China Evergrande was HKD 0.35 per share, a decrease of 78.79%, with a total market value of HKD 4.622 billion. Looking back at the suspension of trading on March 21, 2022, the stock price of China Evergrande was HKD 1.65 per share, with a market value of HKD 21.787 billion.

Screenshot of the stock price trend of China Evergrande.

Resumption of trading after 17 months

On the evening of August 25th, China Evergrande announced that it will resume trading on August 28th. Evergrande stated that the company has fulfilled various resumption guidelines, including disclosing all unpublished financial results required by the listing rules and resolving any issues related to audit reservations.

Public information shows that China Evergrande has been suspended from trading for over 17 months since March 21, 2022. According to the relevant regulations of the Hong Kong Stock Exchange, if it is suspended for 18 months, it will face the risk of delisting.

After determining the resumption time, China Evergrande released its 2023 semi annual report on August 27. The group's revenue for the six months ended June 30, 2023 was 128.2 billion yuan, a year-on-year increase of 44%; During the period, operating losses amounted to 17.38 billion yuan, non operating losses amounted to 15.03 billion yuan, income tax expenses amounted to 6.84 billion yuan, and a total net loss of 39.25 billion yuan.

In terms of revenue, the revenue from China Evergrande's real estate development business in the first half of the year was 120.7 billion yuan; The gross profit was 9.80 billion yuan, a year-on-year increase of 38%, with a gross profit margin of approximately 7.64%. During the reporting period, the net loss was approximately 39.25 billion yuan, which narrowed compared to the net loss of over 86 billion yuan in the same period last year.

In terms of liabilities, as of June 30, China Evergrande's total liabilities amounted to 2388.2 billion yuan, excluding contract liabilities of 603.98 billion yuan, which amounted to 1784.22 billion yuan. Among them, loans amounted to 624.77 billion yuan, trade and other payables amounted to 1056.57 billion yuan, and other liabilities amounted to 102.88 billion yuan.

According to the financial report data previously reissued by China Evergrande, the group suffered consecutive losses in 2021 and 2022, with losses of 686.22 billion yuan and 125.81 billion yuan respectively, totaling a net loss of over 812 billion yuan. As of December 31, 2022, the total liabilities of the group amounted to RMB 2437.41 billion.

According to China Evergrande, since encountering operational difficulties in September 2021, the company has promoted the comprehensive resumption of work and guaranteed delivery of nearly 700 projects. In addition, as of June 30, 2023, China Evergrande has a land reserve of 190 million square meters. In addition, the group has also participated in 78 old renovation projects, including 55 in the Greater Bay Area and 23 in other cities.

On the afternoon of August 28th, China Evergrande announced that the company had decided to extend the deadline for Evergrande's arrangement creditors to consider, understand, and evaluate the terms of the Evergrande agreement, and to give Evergrande's arrangement creditors more time to consider the recent development of the group. Therefore, the Evergrande arrangement meeting will be postponed for 29 days to September 26th. In order to align the schedules of the Evergrande, Jingcheng, and Space-based agreements as much as possible, the Jingcheng and Space-based agreement arrangements meetings will be postponed for 28 days until September 25th.

Screenshot of China Evergrande's 2023 interim report.

All three listed companies in the Evergrande series have resumed trading

China Evergrande officially resumed trading its shares, which also means that three listed companies in the "Evergrande series", namely Evergrande Automobile, Evergrande Property, and China Evergrande, have resumed trading one after another.

After reissuing all previously failed performance reports on June 5th, Evergrande Property resumed trading on August 3rd, 2022, after being suspended from trading on March 21st.

Evergrande Property is currently the only profitable listed company in the Evergrande series. According to disclosure, as of the end of 2022, Evergrande Property achieved operating income of approximately 11.809 billion yuan, gross profit of approximately 2.719 billion yuan, and net profit of approximately 1.479 billion yuan.

On August 24th, Evergrande Property released its 2023 interim report, which showed that it achieved a revenue of 6.145 billion yuan in the first half of the year, an increase of 6.2% from 5.788 billion yuan in the same period of 2022, with revenue from non related parties accounting for approximately 98.9%; The net profit is 790 million yuan, with a net profit margin of approximately 12.9%.

Earlier on July 28th, Evergrande Automobile became the first "Evergrande Series" listed company to resume trading. The semi annual report released on August 25th showed that Evergrande Automobile suffered a loss of 6.87 billion yuan in the first half of the year, of which 1.06 billion yuan was due to losses in the original real estate business, 3.72 billion yuan was due to non operating losses such as asset disposal and impairment, and the true operating losses in the automotive business were only 2.09 billion yuan.

According to the announcement released by Evergrande Automobile on May 12, 2023, it has completed the divestment of its real estate business. After the transaction is completed, it will continue to operate the existing main business of the new energy vehicle division and hold one residential and property development project in Tianjin and Nanning respectively, concentrating resources to fully ensure the research and production of Evergrande.

It is worth mentioning that on the evening of August 14th, Evergrande Automobile announced that it had received the first $500 million strategic investment from Newton Group, a listed company held by the UAE National Sovereign Fund, and an additional RMB 600 million in transitional funds will be gradually received within 5 working days after the announcement.