Interest bearing debt exceeding 1.7 trillion yuan, Evergrande has finally made a fortune! Announcement of a huge loss of 812 billion yuan in two years | Perspective | Evergrande

On the evening of July 17th, China Evergrande reissued its 2021, 2022, and 2022 interim performance announcements, with a total net loss of 812 billion yuan over the two years.

From another perspective, it is an important prerequisite for Evergrande to complete the resumption of stock trading. However, there are still many conditions to be completed before China Evergrande can truly resume trading and overcome the risk of delisting. China Evergrande announced after its performance disclosure that the company's shares will continue to be suspended for trading until further notice.

Two years net loss of 812 billion yuan

As predicted 7 days ago, the board of directors of China Evergrande completed the review and disclosed three long-awaited financial reports today.

According to the financial report, China Evergrande achieved a total net loss of 812 billion yuan in 2021 and 2022. Specifically, the total net loss in 2021 was 686.22 billion yuan, of which the profit and loss attributable to the company's shareholders was 476.035 billion yuan, and the loss from non controlling interests was 210.84 billion yuan. In 2022, China Evergrande suffered a total net loss of 125.81 billion yuan, including a loss of 105.914 billion yuan in profit and loss attributable to the company's shareholders and a loss of 19.9 billion yuan in non controlling interests.

Why can China Evergrande lose so much?

According to China Evergrande's self analysis, out of the 686.22 billion yuan loss in 2021, the operating loss for the year was 113.75 billion yuan; Deducting fair value losses of RMB 404.95 billion from developing properties, completed properties held for sale, and investment properties; The losses related to land reclamation, financial asset impairment losses, and other non operating losses amounted to RMB 180.02 billion, with an income tax deduction of RMB 12.68 billion.

Among the 125.81 billion yuan loss projects in 2022, operating losses, non operating losses, and income tax expenses accounted for 43.39 billion yuan, 69.37 billion yuan, and 13.05 billion yuan, respectively.

How many assets does China Evergrande still have?

As of the end of 2022, China Evergrande held a total asset value of RMB 1.84 trillion, with properties under development as the main project, with a total amount of RMB 1.14 trillion, and cash and cash equivalents of only RMB 4.334 billion. According to China Evergrande, as of December 31, 2022, the group has a land reserve of 210 million square meters. In addition, the group has also participated in 79 old renovation projects, including 55 in the Greater Bay Area and 24 in other cities.

China Evergrande claims that its vast and high-quality land reserves are a solid foundation for the group to ensure the delivery of buildings, gradually repay debts, and resume normal operations.

How much debt does China Evergrande still have?

As of the end of 2022, the total liabilities amounted to RMB 2.44 trillion, which was RMB 1.72 trillion after excluding contract liabilities of RMB 72.102 billion. Compared with the debt scale of RMB 1.61 trillion after excluding contract liabilities in 2021, it increased by RMB 110.59 billion year-on-year. Among them, loans amounted to 612.39 billion yuan, trade and other payables amounted to 100 trillion yuan, and other liabilities amounted to 101.74 billion yuan.

China Evergrande reviewed various business sectors in 2022 and stated that the company has actively promoted the work of guaranteed delivery of buildings to the greatest extent possible, achieving the comprehensive resumption of 732 guaranteed delivery projects and delivering a total of 301000 units of buildings throughout the year. At the same time, Evergrande Automobile has achieved mass production and delivery of the Hengchi 5 model. The company has established an independent investigation committee to investigate the forced execution of a deposit pledge of approximately 13.4 billion yuan by relevant banks for Evergrande Property, and further strengthened internal control management. At the same time, the company is steadily advancing the formulation of the overseas debt restructuring plan and has obtained approval from the Hong Kong High Court to postpone the hearing of the liquidation petition.

China Evergrande stated that looking forward to the future, the company will make every effort to ensure the steady and orderly progress of key tasks such as "ensuring delivery of buildings", do a good job in the continuous operation of new energy vehicles, property services and other sectors, explore efficient disposal and effective activation of the company's core assets, and steadily promote risk resolution.

According to the latest disclosure by China Evergrande, from January to May 2023, the group achieved a contracted sales amount of 33.767 billion yuan and a contracted sales area of 4.9258 million square meters. As of May 31, 2023, over 1000 new energy vehicles have been delivered.

Trading has been suspended for 16 months

Starting from 9:00 am on March 21, 2022, the trading of China Evergrande stocks will cease on the Hong Kong Stock Exchange. According to the listing rules, the ownership of any securities that have been suspended for 18 consecutive months will be delisted on the Hong Kong Stock Exchange. The final deadline for China Evergrande will expire on September 20, 2023.

If China Evergrande wants to resume trading, the disclosure of financial reports is a prerequisite that must be met. According to the previous disclosure by China Evergrande, the company's resumption of trading conditions must meet multiple terms, including: 1. disclosing all unpublished financial results and resolving any issues related to audit qualifications; 2. Conduct an independent investigation into the enforcement of a pledge guarantee of 13.4 billion yuan by relevant banks against Evergrande Property, publish the investigation results, and take appropriate remedial measures.

After today's financial report was disclosed, China Evergrande stated that the company's shares will continue to be suspended for trading until further notice.

One of the key reasons why China Evergrande is still unable to resume trading is that both financial reports disclosed today were issued non-standard reports by audit institutions. At the audit meeting, Bai Cheng stated that he is unable to express an opinion on the company's comprehensive financial statements, which includes two core factors:

1. Many uncertainties related to the continuous operation of China Evergrande;

2. Unable to obtain sufficient and appropriate audit vouchers for opening balances and comparative data.

The former is primarily related to debt, and the Association considers that it is unable to obtain sufficient audit evidence on the Company's ability to pay its financial liabilities as they fall due, and that such material uncertainties as to the basis of continuing operations have a significant impact on the potential cumulative impact of the consolidated financial statements to the extent that an opinion cannot be expressed.

The latter is mainly related to data acquisition. Shanghui Baicheng believes that in 2021, the company encountered liquidity difficulties, which led to some employees leaving. Personnel turnover has resulted in the company and their inability to obtain sufficient information to achieve the purpose of reviewing the initial balance. At the meeting, Bai Cheng stated that although the company's directors have taken all reasonable measures and made their best efforts to resolve the relevant matters. However, there are difficulties in obtaining complete and timely data and records related to China Evergrande's initial balance.

Among the two reasons, China Evergrande's debt issue is expected to make progress by the end of this month. In addition to disclosing three additional financial reports tonight, China Evergrande also announced the progress of overseas debt restructuring. The company's debt restructuring agreement arrangement meeting is scheduled to be held on July 24th and 25th. In March of this year, China Evergrande announced its overseas debt restructuring plan and stated that the plan has received support from some major holders.

In terms of the other two listed companies of Evergrande, Evergrande Property has reissued its 2021 annual report, 2022 semi annual report, and 2022 annual report on June 5th. Evergrande Automobile is scheduled to hold a board meeting on July 26th to approve and publish the aforementioned three financial reports