China Evergrande shares briefly pop in reopen after developer says contracted sales dropped 38.7% in 2021

An exterior view of China Evergrande Centre in Hong Kong, China March 26, 2018.

Bobby Yip | Reuters

BEIJING — Indebted property developer China Evergrande‘s contracted sales plunged last year as the real estate giant struggled to repay creditors.

A filing Tuesday showed the company’s contracted sales of properties totaled 443.02 billion yuan ($69.22 billion) last year, down 38.7% from the 723.25 billion yuan in contracted sales reported for 2020.

Evergrande shares reopened higher in Hong Kong on Tuesday afternoon, with shares trying to hold gains of about 3% before turning lower.

Trading was halted as of 9 a.m. Monday, with shares at 1.59 Hong Kong dollars (20 cents) each. That’s just above the all-time intraday low of 1.42 Hong Kong dollars per share set on Dec. 24, according to FactSet.

The company added it “will continue to actively maintain communication with creditors, strive to resolve risks and safeguard the legitimate rights and interests of all parties.”

Read more about China from CNBC Pro

Evergrande shares have plunged more than 88% over the last 250 trading days. The company missed payments to creditors in December, Fitch Ratings said, sending the developer into default.

Evergrande is the largest Chinese real estate developer by issuance of offshore, U.S. dollar-denominated debt, which stood at $19 billion last year. The developer had a total of $300 billion in liabilities as of last year.

The company was China’s second largest developer by sales in 2020.

Like other Chinese real estate developers, Evergrande’s business model relies heavily on sales of apartments to customers before the units are completed. S&P Global Ratings said in November that an Evergrande default “is highly likely” since the company is no longer able to sell new homes.

Evergrande added that a demolition order for its Ocean Flower Island project only applied to 39 buildings, according to Tuesday’s filing with the Hong Kong stock exchange.

This is breaking news. Please check back for updates.

Leave a Reply

Your email address will not be published. Required fields are marked *