Evergrande’s services arm posts 43% profit jump on margin lift
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CHINA Evergrande Group’s property management services unit reported a 43 per cent increase in profit in the first half, a positive development as the real estate giant edges towards one of the nation’s largest restructurings.
Evergrande Property Services recorded net income of 781 million yuan (S$145.3 million) in the first half, the company said in a Hong Kong stock exchange filing late on Thursday (Aug 24).
It generated growth across revenue, gross profit margin and area under management. It did not declare an interim dividend.
The services provider is a crucial part of Evergrande’s restructuring proposal, as the parent developer and its electric-vehicle unit posted a loss of $81 billion and $11.7 billion, respectively, over the past two years.
In March, Evergrande proposed a debt overhaul plan under which credit investors can receive new notes maturing in 10 years to 12 years, or a combination of new debt and instruments tied to the shares of Evergrande’s property-services unit, its electric-vehicle division or the builder itself.
The services provider also said it will have sufficient working capital to meet its financial obligations up to Jun 30 next year, after reaching agreements with some creditors to extend repayment terms.
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It cautioned on a transaction that sparked the ouster of several top executives and the trading suspension of Evergrande’s three Hong Kong-listed firms last year.
About 13.4 billion yuan of deposits at the unit were pledged as security for loans to the parent company, triggering an internal probe that led to the removal of Evergrande’s chief executive officer.
In February, Evergrande said it was in discussions to repay the money, including by transferring assets to the subsidiary. Recovery of the loss is under “material uncertainties”, Evergrande Services said. BLOOMBERG
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