China Evergrande Group (formerly: Evergrande Real Estate Group) (3333.HK)

[cyclone]

Evergrande Founder's $1 Billion Bet on Firm's Bonds Pays Off
> Company’s 2022, 2023 bonds beat real estate peers in returns
> Hui’s net worth increased by 10.9% this year to $35.7 billion

Bloomberg News
March 28, 2019, 4:30 AM GMT+7 Updated on March 28, 2019, 9:15 AM GMT+7

It might have seemed like a bold move when the billionaire founder of China Evergrande Group spent $1 billion of his own money buying the company’s bonds five months ago. Now his bets are handing him handsome returns that beat many asset classes.

Hui Ka Yan, who is chairman at Evergrande, bought more than half of the company’s $1.8 billion bond offering in October, signifying his "support to and confidence in the Group" when some of its dollar notes had plunged to unprecedented lows due to concern over its debt.

The purchase, unusual for an owner of a Chinese property developer, proved to be rather lucrative. The 2022 and 2023 notes have surged to 110 and 111 cents on the dollar respectively after Hui purchased $500 million of them each at par. Hui’s gained more than 17 percent on each tranche, according to Bloomberg-compiled data.

By comparison, high-yield dollar bonds from the country’s real estate sector have returned 13 percent over the same period, according to an ICE BofAML index. The dividend yield on Evergrande shares was less than 5 percent in the past 12 months. Hui said he hasn’t sold any of the $1 billion bonds he bought in October when asked by Bloomberg News in an earnings presser in Hong Kong on Tuesday.

Evergrande’s dollar bonds, along with its peers’, benefited from a return of investor confidence at the beginning of this year on their cheap valuations and the stimulus measures from Chinese authorities. Cities in the country have introduced various easing measures including relaxing price curbs since late last year to boost property markets.

More details in https://www.bloomberg.com/news/articles/...s-pays-off

[cyclone]

China Evergrande first major mainland developer to report profit decline as cooling measures hit sales
* The country’s third-largest property developer reports its first profit decline since H1 2016
* Sales ease 7.4 per cent in the first half as cooling measures bite

Pearl Liu  
Published: 6:56pm, 28 Aug, 2019

China Evergrande, the country’s third largest property developer by sales, posted a 45 per cent plunge in first-half core profit on Wednesday, becoming the first among the mainland’s top developers to report a decline in earnings.

The sharp fall in core earnings – its first drop since the first half of 2016 – came after the central government rolled out a slew of cooling measures to curb property price growth earlier this year.

Interim core profit came in at 30.35 billion yuan (US$4.2 billion), while revenue dropped 24.4 per cent to 226.98 billion yuan in the comparable period.

No interim dividend was recommended.

Contracted sales in the first six months eased 7.4 per cent year on year to 281.81 billion yuan, accounting for less than half the company’s 600 billion yuan annual sales target. For the six months to June, it said average selling price increased to a historical high of 10,756 yuan per square metre.

Despite the sales shortfall, the company said it was confident that it could achieve its annual sales target of 600 billion yuan.

“We can definitely meet the target as 74 million square metres will be put on sale in the next half,” said Xia Haijun, vice-chairman and president of China Evergrande. “If we manage to sell 40 per cent of this area, the sales target will be met.”

Evergrande’s net gearing ratio, a measure of equity to debt, stood at 152.1 per cent, up from 151.9 per cent at the end of 2018, up 24 percentage points from six months earlier, according to a company filing to the Hong Kong stock exchange.

Xia had pledged last year to cut the net gearing ratio to 100 per cent by the end of 2019 and to 70 per cent by 2020.

More details in https://www.scmp.com/business/article/30...it-decline

[BlueKelah]

FALL FROM GRACE :

https://asia.nikkei.com/Business/Markets...ell-assets

Finally the debt bubble in china has possibly begun its popping, will Gov step in and bail out? Definitely one to watch as it could be the black swan that trigger the next GFC...

Japan 2.0 for real this time?!?!?!

Stock price taken a battering from $20+ to 3.6HKD now..

[specuvestor]

Personally I think the backer for Evergrande goes all the way up cause it was not purged even with Foshan, HNA, Wanda etc and it had openly say for years that they even take loans from WMP and had been extremely leveraged

Coincidentally it's woes coincides with the stepping back of Wang Qishan as Vice President without portfolio; which was what an exiled billionaire been claiming

Frankly evergrande is a high risk bet. It could easily be another kaisa

Gaudente swam with sharks and emerged victorious but i wouldn't encourage doing this on a consistent basis

[Wildreamz]

China Hires Its Own Evergrande Advisers as Restructuring Looms
https://www.bloomberg.com/news/articles/...ring-looms

With more than $300 billion in liabilities, Evergrande has become the biggest test yet of President Xi Jinping’s willingness to let overindebted companies fail as he tries to wring the excesses out of China’s $54 trillion financial system.

---

Evergrande's debt crisis could be nothing could be everything, as it's >US$300 bil in debt, if defaulted, could potentially take down the Chinese (hence, Global) financial system with it.

[BlueKelah]

China Hires Its Own Evergrande Advisers as Restructuring Looms
https://www.bloomberg.com/news/articles/...ring-looms

With more than $300 billion in liabilities, Evergrande has become the biggest test yet of President Xi Jinping’s willingness to let overindebted companies fail as he tries to wring the excesses out of China’s $54 trillion financial system.

---

Evergrande's debt crisis could be nothing could be everything, as it's >US$300 bil in debt, if defaulted, could potentially take down the Chinese (hence, Global) financial system with it.

IIRC HNA GROUP defaulted on $186Bio USD worth but it didnt destabilise the system much.. Evergrande is almost double and is linked up directly to residential property sectors as well so may / may not affect chinese system that much, but potential as black swan contagion event is there. We shall see how Beijing tackles this, things just getting interesting i reckon

[Behappyalways]

For the past year, china has been kinda preparing for these events while US continues to inflate with us$120b QE. More likely that US will blow up sooner than China with tapering. A U-turn in tapering is expected once the stock market declines significantly.

'21.09.14【豐富│東南西北龍鳳配】Pt.1「恆大」將成為「有體無魂」的企業活屍！
https://m.youtube.com/watch?v=Wc7PxiHSvmw&t=24s

[BlueKelah]

For the past year, china has been kinda preparing for these events while US continues to inflate with us$120b QE. More likely that US will blow up sooner than China with tapering. A U-turn in tapering is expected once the stock market declines significantly.

'21.09.14【豐富│東南西北龍鳳配】Pt.1「恆大」將成為「有體無魂」的企業活屍！
https://m.youtube.com/watch?v=Wc7PxiHSvmw&t=24s

Actually China has just been trying to "flatten hte curve" for their ever rising debt levels. Whilst USA debt has gone parabolic, china's debt has also grown but at a slower pace now. 

This is a good article to get a rough idea. You will see is the internal debt to GDP is sky high 270% of GDP(some say not important as PBOC can control the internal markets)

but external debt by chinese companies is also pretty high in the trillions. 2.4trillions USD which is more than double the mother country's ownership of almost 1.1triilions USD treasuries. We can assume most of this external debt is directly linked to Beijing as most chinese companies borrowing globally would state owned or have many links to Beijing in some way or another.

>5.6trillion USD is owed to china, mostly by poor developing nations with corrupt govs, lots in africa, china has been trying to gain influence via extending loans. Should there be another GFC type event, much of that will have to be written off. 

Evergrande may be a manageable internal shock/disturbance. But with these kind of things what may look controllable could very quickly spiral out of hand, especially if compounded by some unforseen external event like fed tapering or another energy oil crisis etc... 

https://www.scmp.com/economy/china-econo...big-it-now

[weijian]

Looking at its debt, most of us have already guessed that China Evergrande is not just illiquid, it is probably insolvent. The next question now is whether the wind-down is orderly enough OR will cascade 2nd order effects affecting other sectors like the banks and other non traditional financing firms (eg. YZJ has a huge portfolio of financial assets), and also to the upstream/downstream players (eg. steel, coal, property management etc)

INSIDE INFORMATION

Since September 2021, the Group has been diligently reviewing its capital structure and liquidity condition with the help of its financial and legal advisors, evaluating all available strategic options, and maintaining ongoing dialogue with offshore creditors. In light of the current liquidity status of the Group, there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations. The Group is taking a comprehensive view in assessing its overall financial
condition, considering the interests of all stakeholders, upholding the principles of fairness and legality, and plans to actively engage with offshore creditors to formulate a viable restructuring plan of the Company’s offshore indebtedness for the benefit of all stakeholders.

https://links.sgx.com/FileOpen/E03333-an...eID=693247

[Behappyalways]

Old news but who is the real devil ....who is fanning the inflation that is causing distress in many underdeveloped countries....


US Secretary of State Antony Blinken urged the Chinese government to 'act responsibly' when handling the Evergrande crisis
https://www.google.com/amp/s/www.busines...1-10%3famp


The stock market slide is unlikely to budge the Fed from tightening
https://www.cnbc.com/2022/01/24/the-stoc...ening.html