Chinese property giant Evergrande, which faced a severe crisis, recently disclosed its financial results for 2021 and 2022, revealing a combined loss of 581.9 billion yuan (approximately USD 81 billion). The company, which defaulted on its debts in late 2021, shared its long-overdue earnings report with investors in Hong Kong.
In the filing to the Hong Kong Stock Exchange, the company stated that it suffered losses of 476 billion yuan in 2021 and 105.9 billion yuan in 2022. This decline in financial performance was primarily attributed to the decreasing value of properties and other assets, as well as higher borrowing costs.
The staggering losses highlight the significant impact of the property market crisis on the world's second-largest economy, which it has been struggling with approximately USD 300 billion in debts.
As a result of these financial troubles, trading of Evergrande shares has been suspended since March of the previous year.
The firm, once a leading property developer in China, now faces significant challenges in its attempts to recover and stabilise its financial situation.
In 2020, China's real estate sector faced significant upheaval with the implementation of new regulations that aimed to limit the borrowing capacity of major real estate firms. The following year, Evergrande missed a crucial deadline and failed to repay approximately an interest amount of USD 1.2 billion of its international loans.
The financial turmoil experienced by Evergrande had far-reaching effects on the entire Chinese property industry, leading to other developers defaulting on their debts and leaving numerous unfinished building projects scattered across the country.
To address its mounting financial challenges, Evergrande put forth plans earlier this year to restructure about USD 20 billion in overseas debt.
However, the company's debt had surpassed USD 300 billion as it embarked on an ambitious expansion spree, transforming itself into one of China's largest conglomerates over the past fifteen years. This expansion encompassed various industries, such as sports, entertainment, and electric car manufacturing.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.