China's Evergrande Posts Total Loss of 102 Trillion Won Over 2 Years... Debt Reaches 429 Trillion Won

Chinese real estate company Hengda Group has reportedly incurred losses totaling approximately 581.9 billion yuan (102.18 trillion KRW) over two years since 2021. This marks the first time Hengda Group has recorded a deficit since its listing in 2009.

[Image source=Reuters Yonhap News]

According to Bloomberg on the 18th, Hengda Group simultaneously released its 2021 and 2022 financial reports on the Hong Kong Stock Exchange. The reports show that Hengda Group posted losses of 476 billion yuan (83.6 trillion KRW) in 2021 and 106 billion yuan (18.6 trillion KRW) in 2022. In contrast, before falling into financial difficulties, Hengda recorded a net profit of 8.1 billion yuan (approximately 1.4 trillion KRW) in 2020.

Hengda Group explained that the losses were due to financial asset impairments, real estate depreciation, and losses incurred during the land return process. This is the first time Hengda has recorded a deficit since its 2009 listing.

Revenue in 2021 was 250 billion yuan (43.905 trillion KRW), about half of the 2020 level. Last year, revenue was even lower at 230 billion yuan. Total liabilities as of last year stood at 2.44 trillion yuan (approximately 429 trillion KRW), a 23% increase compared to 2020. Total assets decreased by 20% from 2020, amounting to 800 billion yuan.

Once considered one of China's top three real estate developers, Hengda declared default after failing to repay $20 billion (25.21 trillion KRW) in offshore bonds in 2021. The cause was the tightening of regulations on developers by the Chinese government to stabilize the real estate market, which led to a liquidity crisis. Hengda's default triggered a crisis across the Chinese real estate industry.

Currently, Hengda Group is seeking recovery by reaching a debt restructuring agreement with overseas creditors. In June last year, creditors filed a lawsuit demanding debt repayment equivalent to 143.7 billion KRW. However, in March, both parties agreed to restructure the existing debt by exchanging it for new bonds or shares of affiliated companies.

However, Hengda Group's shares listed on the Hong Kong Stock Exchange have remained suspended since March last year. Hengda has stated that this status is expected to continue. If the trading suspension lasts for 18 months, the listing may be delisted.

Regarding this, Bloomberg evaluated that "the report was released after a long delay, and the resumption of trading may be approaching."

This content was produced with the assistance of AI translation services.