Debt-ridden Evergrande urges investor 'caution' as audit result delayed

[HONG KONG] Debt-ridden Chinese property developer giant Evergrande on Tuesday (Mar 22) warned investors to "exercise caution" as the group announced it would delay the release of the results of a 2021 audit a day after halting trade in Hong Kong.

Beijing's drive to curb excessive debt in the real estate sector has embroiled Evergrande, one of the country's largest developers, which has struggled after racking up US$300 billion in liabilities.

On Tuesday, a day after the company announced a halt in trading, it said it would not be able to publish its 2021 audited results by the end of the March as Hong Kong's listing rules require.

"Due to the drastic changes in the operational environment of the company since the second half of last year... coupled with the effect caused by the Covid-19 outbreak... the company will not be able to complete the audit procedures on time," it said in an announcement posted on Hong Kong Stock Exchange.

Suspension of its shares' trading will remain in force until the financial information is published, according to the market's rules.

The suspension is the second this year, and it comes ahead of an expected US$2 billion repayment obligation on Wednesday and another next month of US$1.4 billion.

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In a separate announcement Tuesday, Evergrande urged investors to exercise caution "in view of the operational and financial challenges the group is facing and in particular the debt pressure it is experiencing".

The company's subsidiary Evergrande Property Services also halted trading on Monday after announcing that banks had enforced deposits of approximately 13.4 billion yuan (S$2.9 billion) as security for third party pledge guarantees.

The company has repeatedly said it will finish its projects and deliver them to buyers in a desperate bid to salvage its debts.

Earlier struggles to pay suppliers and contractors due to the crisis led to protests from homebuyers and investors at the group's Shenzhen headquarters in September.

Evergrande's woes have had knock-on effects throughout China's property sector, with some smaller firms also defaulting on loans and others struggling to find enough cash.

The International Monetary Fund warned in late January that the property funding crisis could have spillover effects on the broader economy and global markets. AFP