What is the Solution to China Evergrande's Debt Dilemma of 2.4 trillion RMB
2023-07-20
China Evergrande, which has been in a liquidity crisis for a long time, has finally revealed its "financial strength" to the market. On the late night of July 17th, China Evergrande issued three performance and financial reports in one go for 2021, the first half of 2022, and 2022. Currently, it is in a state of "insolvent" with a net asset of approximately -599.1 billion yuan. The external auditor Shanghui Bacheng Certified Public Accountants (hereinafter referred to as "Shanghui Bacheng"), referring to the two annual reports, said that because of "the uncertainty of the future cash flow of China Evergrande has great doubts about the Group's ability to continue Going concern", it was unable to express opinions on the annual report. According to the latest disclosure, China Evergrande is about to hold multiple restructuring debt holder meetings from July 24th to 25th, and the overseas debt restructuring may usher in a clear outcome. The net loss for two years exceeded 800 billion yuan. According to the announcement released late on July 17th, China Evergrande's revenue for 2021 was 2501 billion yuan (RMB, the same below), with a gross loss of 18.45 billion yuan; During the year, there was an operating loss of 113.75 billion yuan, excluding fair value losses of 404.95 billion yuan for developing properties, completed properties held for sale, and investment properties. Losses related to land reclamation, financial asset impairment losses, and other non operating losses amounted to 180.2 billion yuan, and income tax credits amounted to 12.68 billion yuan, resulting in a total net loss of 686.22 billion yuan. In 2022, China Evergrande's revenue was 230.07 billion yuan, with a gross profit of 24.99 billion yuan; During the year, operating losses amounted to 43.39 billion yuan, losses related to land reclamation, financial asset impairment losses, and other non operating losses amounted to 69.37 billion yuan, income tax expenses amounted to 13.05 billion yuan, and a total net loss of 125.81 billion yuan. In 2021 and 2022, the total net loss of China Evergrande was approximately 812.03 billion yuan. In terms of liabilities, as of the end of 2022, China Evergrande's total liabilities amounted to 243741 billion yuan, with 1716.39 billion yuan excluding contract liabilities of 72.102 billion yuan; Among them, loans amounted to 612.39 billion yuan, trade accounts payable and other payables amounted to approximately 1002.26 billion yuan (including engineering materials payable of 596.16 billion yuan), and other liabilities amounted to 101.74 billion yuan. In terms of cash, China Evergrande's total cash and cash equivalents, as well as restricted cash, is 14.31 billion yuan. In addition, 36.43 billion yuan of cash has been included in government designated accounts for unified supervision and included in other receivables. Three financial reports officially declared Evergrande's "insolvent" status. According to the financial report, in 2021, China Evergrande's total assets were approximately 2107.1 billion yuan, while its total liabilities were 258.2 billion yuan and its net assets were approximately -473.1 billion yuan; In 2022, China Evergrande's total assets were approximately 1838.3 billion yuan, total liabilities were approximately 2437.4 billion yuan, and net assets were approximately -599.1 billion yuan. Xie Yifeng, President of the China Urban Real Estate Research Institute, pointed out that Evergrande's "insolvency" is not only related to the stagnation of its own liquidity, but also to factors such as the cooling of housing sales and the sudden increase in destocking pressure on debt real estate projects. This is a vicious cycle. Yan Yuejin, Chief research officer of E-House Research Institute, said that Evergrande's own questions
Edit：Hou Wenzhe Responsible editor：WeiZe
Source：BeiJIng Business Daily
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