Unexpected announcement from Chinese real estate developer Country Garden

On April 2nd, China Evergrande released an announcement stating that trading would be suspended on the Hong Kong Stock Exchange starting from 9 am today. This move is aimed at preparing for the upcoming release of the 2023 annual performance.

According to the announcement issued by Evergrande on April 2nd, the company issued an insider information announcement on March 28, 2024, regarding the delay in publishing the group’s 2023 annual report. At the company’s request, trading of the company’s shares will be suspended on the Hong Kong Stock Exchange starting from 9 am on April 2, 2024, awaiting the publication of the 2023 annual performance. The company will issue another announcement at the appropriate time to inform its shareholders and potential investors of any significant developments regarding the above matters.

According to an announcement released by Evergrande on March 28, the company stated that the publication of the 2023 annual report may be delayed, the board meeting may be postponed, and the trading of the company’s shares may be suspended. According to relevant regulations of the listing rules, if the company fails to announce its 2023 annual performance by March 31, 2024, it is expected that the company’s shares will be suspended from trading on the Hong Kong Stock Exchange starting from 9 am on April 2nd, awaiting the announcement of the 2023 annual performance. The board of directors of Evergrande Group believes that the trading suspension will not have a substantial impact on the company’s operations.

Evergrande stated that the company needs more time to collect relevant information for prudent financial assessment, demonstrating the company’s pragmatic and responsible attitude. According to the relevant listing rules of the Hong Kong Stock Exchange, if the company fails to publish its annual report as scheduled, it is expected that the company’s shares will be temporarily suspended from trading. The trading suspension will not have a substantial impact on the company’s operations, including delivery, production, operation, and debt restructuring.

Evergrande also stated that due to the continued volatility in the industry and the increasingly complex operating environment faced by Evergrande, the company needs to gather more information to make appropriate accounting estimates and judgments to reflect industry and company changes reasonably in the group’s consolidated financial statements as of December 31, 2023. At the same time, Evergrande’s debt restructuring work is still in progress. Given the large number and widespread distribution of the group’s projects, the due diligence involved is large and complex, requiring more time to collect relevant financial information for careful evaluation of the group’s current and future financial resources and obligations. Evergrande expects to take longer to prepare the consolidated financial statements for the year ended December 31, 2023, and may not be able to comply with the relevant listing rules to publish the 2023 annual performance by March 31, 2024.

Evergrande’s announcement stated that the group is working with financial advisors and legal advisors to assess the group’s situation and is working closely with various creditors to develop practical solutions as soon as possible. In addition, Evergrande’s board of directors and management are actively engaged in continuing negotiations with creditors regarding debt restructuring issues and will continue to work closely with auditors RSM Hong Kong to announce the 2023 annual performance and distribute the 2023 annual report as soon as possible.

Delivery Exceeds 600,000 Sets in 2023

According to Evergrande’s latest financial report, for the six months ended June 30, 2023, the company achieved total revenue of approximately RMB 226.31 billion, an increase of 39.4% year-on-year; the company’s core net loss attributable to shareholders was approximately RMB 45.35 billion. In terms of operations, as of the six months ended June 30, 2023, the Group had signed or delisted a total of 3,103 projects in mainland China, with total saleable resources of approximately RMB 780.16 billion. During the period, the Group, together with its joint ventures and associates, realized contract sales amounting to approximately RMB 128.76 billion attributable to shareholders of the Company. Due to the weak market expectations and sluggish demand, sales performance remained under pressure.

In addition, according to Evergrande’s disclosed delivery data, in the full year of 2023, Evergrande delivered over 600,000 sets of housing, with a cumulative delivery area of 71.62 million square meters, involving 249 cities in 31 provinces across the country.

On January 15, Evergrande Group held its 2024 annual work conference. Yang Huiyan, Chairman of Evergrande Group’s Board of Directors, stated at the meeting that the company is expected to deliver more than 480,000 sets in 2024.

According to Evergrande’s latest sales data, the company and its subsidiaries, together with its joint ventures and associates, achieved a total contract sales amount attributable to shareholders of the Company of approximately RMB 3.72 billion in February 2024, with a total contract sales area attributable to shareholders of the Company of approximately 370,000 square meters.

Evergrande stated that the domestic delivery work and overseas debt restructuring work of the company are progressing in an orderly manner, and relevant work has received strong support from stakeholders including local governments and overseas creditors.

As of March 15, a total of 272 projects under Evergrande have been included in the “white list,” distributed in 25 provinces (autonomous regions, municipalities directly under the central government), and have received financing support totaling RMB 1.732 billion. Other projects included in the “white list” are gradually securing financing. Among them, on March 15, Evergrande’s Guangzhou Nanpu Village project, one of the first real estate coordination mechanism “white list” projects in Guangzhou, successfully obtained an initial loan support of RMB 50 million from Minsheng Bank, with an expected annual loan of RMB 400 million to RMB 450 million.