China Evergrande Group warned that its real estate department recorded a loss in the first half for the first time since 2009.
According to the Wall Street Journal, the company’s property business incurred losses of about $ 618 million. The parent company is a global most in debt developer with about $ 300 billion in liabilities and about $ 7.4 billion in bonds due next year.
Evergrande began giving discounts on apartments in its developments last spring, hoping to sell more apartments. Some were discounted by 25 percent.
The broader conglomerate continued to post profit of $ 1.4 billion to $ 1.6 billion in the first half, thanks to the gains from the sale of shares in Hong Kong-listed HengTen Networks Group and the value of the remaining stake in the company.
However, since the beginning of the year, Evergrande’s shares have dropped about 70 percent.
The company’s financial troubles made it something of a poster for the indebted Chinese real estate sector. The Chinese government has passed a series of regulations designed to lift the sector from the brink of a bubble.
Earlier this month government banned private equity funds from investing in real estate, cutting off the main source of financing for builders.
The electric vehicles division of China Evergrande New Energy Vehicle Group also lost the equivalent of $ 741 million. The EV valuation was estimated at $ 80 billion earlier this year and is now around $ 6.5 billion.
[WSJ] – Dennis Lynch