The heavily indebted Chinese construction giant Evergrande is faltering. Long-awaited balance sheet data shows a net loss of the equivalent of 72 billion euros.
According to its own balance sheet data, the former largest construction company in China has made a loss of 72 billion euros in the past two years. Overall, Evergrande’s debts amount to 2.4 trillion yuan (equivalent to 300 billion euros) – no other real estate company in the world has accumulated a higher mountain of debt.
That’s according to the long-delayed balance sheet data for the past two years that the company filed with the Hong Kong Stock Exchange yesterday. Accountants warn that Evergrande’s survival is not assured. The numbers in the books are only partially understandable. Even if Evergrande has already sold some of its subsidiaries, the increase in debt shows the group’s difficulty in paying off its debts.
Exclusion of the shares from stock exchange trading
The property group’s shares were suspended from trading on the Hong Kong Stock Exchange in March this year. Earlier it was announced that the company could not present the figures for 2021 on time and that there was a risk of payment defaults. If the shares remain suspended for the next year and a half, the company is threatened with being removed from the stock exchange.
A bankruptcy of the construction giant would have far-reaching economic consequences. However, the annual report goes on to say that the downward spiral on the Chinese real estate market has stopped: in 2022, construction on more than 700 projects has resumed, more than 1,200 have been fully or partially completed and are for sale.
Authorities take action against debt crisis
Evergrande got into trouble after the real estate sector in China went into crisis. This is still not over. Large real estate developers fail to complete housing projects. The sector is overindebted, and the Chinese authorities are taking rigorous action.
The Chinese construction sector has been affected by many corporate failures since 2021 due to the debt crisis. Evergrande had already proposed debt restructuring to creditors at home and abroad in March, but negotiations are still ongoing.