Evergrande’s property service unit unruffled by parent’s liquidity crisis, in talks for refund of guarantee for developer’s loans

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Evergrande Property Service posts operating revenue of 11.8 billion yuan (US$1.7 billion), gross profit of 2.7 billion, net profit of 1.48 billion for 2022

Evergrande’s services unit says it is in talks for repayment of funds involved under guarantees issued for 13.4 billion yuan loans of the parent

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A view of the Evergrande Center building in Shanghai. Photo:AFP

Elise Makin Beijing

Published: 3:36pm, 6 Jun 2023Updated: 3:40pm, 6 Jun 2023

China Evergrande Group’s property service arm said its parent’s liquidity crisis did not have a significant impact on its revenues and it continues to chase funds that were used as pledge for loans to the debt-stricken developer and seized by creditors.

Evergrande Property Service Group reported operating revenue of 11.8 billion yuan (US$1.7 billion), gross profit of 2.7 billion yuan, and net profit of 1.48 billion yuan for 2022, according to filings on Monday evening that revealed its much delayed financial results. In 2021, it had reported losses at the gross and net levels although it had a higher revenue of 13.1 billion.

Shares of Evergrande Property Service Group have been put on trading halt since March 21, 2022 due to the delay in publishing its accounts. It said the delay was “due to the drastic changes in the operational environment of China Evergrande Group”.

Last month, China’s debt-stricken Evergrande Group unveiled a debt restructuring proposal, involving exchange of offshore debt for instruments that will be converted into shares of Evergrande Property Services, Evergrande New Energy Vehicle Group, or Evergrande itself. It said its overdue debt, unpaid bills, and payments involved in lawsuits had piled up to nearly 900 billion yuan (US$127 billion).

A woman passes by a display showing Evergrande’s China commercial projects in Beijing, China. Photo:AP

It would be mandatory for the new bonds to be exchanged into equities of the corresponding listed firms at maturity – within 24 months in the case of Evergrande Property Services.

The developer has yet to deliver its 2022 annual report, and it said in April the delay was due to major changes in the company’s operating conditions since the second half of 2021. The sector in general has been posed with financing challenges since Beijing unveiled the “three red lines” policy in 2020 to curb overborrowing by developers, which resulted in many cash crunches and defaults.