China Evergrande's first-half net loss shrinks to $4.5 billion

Evergrande Group, the world's most indebted real estate developer, has announced a considerable reduction in net losses for the first half of the year, attributing it to an increase in income due to "the short boom of the property market" earlier this year.

Its stock dropped 87 percent at the outset on Monday after resuming trading after a 17-month halt.

Evergrande stated in a Sunday statement to the Hong Kong stock exchange that its loss attributable to shareholders was $4.5 billion for the January to June period, a 50 percent decrease from the $9.1 billion posted in the same period a year before. Revenue increased 44 percent year over year to $17.6 billion.

The developer is at the epicenter of a property industry crisis in China that has witnessed a spate of loan defaults, incomplete houses, and unpaid suppliers since late 2021, undermining consumer trust in the world's second-largest economy.

According to the firm, it "actively planned for the resumption of sales and successfully seized the short boom in the property market that emerged at the beginning of the year."

For many years, the Shenzhen-based firm was one of China's leading property developers in terms of sales. However, it had borrowed extensively to fuel its development and defaulted on its debt in 2021, triggering a crisis in China's real estate sector, which amounts to up to 30 percent of the country's GDP. It filed for bankruptcy in the United States earlier this month.

Furthermore, Prism Hong Kong and Shanghai, Evergrande's auditors, have not reached a conclusion on this report, citing several concerns pertaining to the firm as a going concern, including future cashflow.

Evergrande stated that its ability to continue will be dependent on the successful implementation of an offshore debt restructuring plan as well as successful repayment extension talks with the remaining lenders.

Evergrande said on Friday that it had "adequately" satisfied exchange recommendations for the resumption of trading in its Hong Kong-listed shares and had requested resumption on Aug. 28.

Furthermore, as part of one of the world's largest debt restructuring efforts, Evergrande filed for Chapter 11 bankruptcy protection in the United States earlier this month.

Courts in Hong Kong and the Cayman Islands will decide whether to approve a $31.7 billion offshore debt restructuring plan comprising bonds, collateral, and repurchase promises in early September. Last week, creditors voted on the proposal.

(Inputs from Reuters)

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