Home News China property developers, Evergrande, can’t release earnings on time

China property developers, Evergrande, can’t release earnings on time

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On September 24, 2021, the state of Changqing Community, an evergrande group in Wuhan City, Hubei Province, China.

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Many Chinese real estate developers have said this week that they either are unable to announce their financial results on time or have not yet set up a board of directors for them.

Some of them are problematic real estate developers Evergrande Last year, it shook the investment market as a result of the debt crisis.

The developers have given various reasons why they cannot do so.

Evergrande said in a submission to the Hong Kong Stock Exchange on Tuesday that it has added “a number of additional audit procedures” this year due to “significant changes” in the business environment since the second half of last year.

Coupled with the “impact of the Covid-19 outbreak,” Evergrande said in a filing that it would not be able to publish its results by the end of March of the year ending December 31, 2021.

After the audit is completed, the audit results will be announced “as soon as possible”.

Other developers said the resignation of the auditors, according to Japanese bank Nomura, meant they were unable to generate revenue for their fiscal year (FY) 2021 on time.

When developers change auditors ahead of the year-round result season, they usually give a warning signal about potential audit issues, which should lead to serious market concerns …

Developer Ron Shine said Monday that PricewaterhouseCoopers (PwC) had resigned because he didn’t have enough time to audit and Covid’s resurgence in China.

In the last two months, developers such as Aoyuan, Shanghai Shimao and Hopson have also announced changes to their auditors.

In a note on Monday, Nomura said, “When a developer changes auditors prior to the full-year closing season, it usually gives a warning signal about potential audit issues and serious market concerns about the reliability of financial figures. Should lead to. “

Decrease in profit margin and decrease in expected profit

As of Monday, nine real estate developers have not yet announced the dates for the 2021 board meeting, Nomura said.

Given that listed companies need to announce the date of the board at least 7 business days before the actual result date, it is more likely that more developers will not be able to announce the results on time, Nomura said. He said. latest.

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“Even if developers are able to announce their 21st performance on time, in the next two weeks they will have good opinion and weak performance in this sector (lower profit margins, lower profits, dividends in 21-22). It is expected that payments will decrease. Mr. Nomura expects to lower the stock price of the sector. “

According to Nomura’s data, real estate sales by top developers continued to plummet this year as well. Evergrande sales were down more than 90% year-on-year in the first two months of the year, Shimao was down 60% and Sunac was down 26% over the same period.

Property outlook

Investor confidence increased in mid-March China has expressed support for Chinese stocks, And the authorities have shown their efforts to stabilize the struggling real estate sector. As a result, the Hong Kong market surged last week, including real estate stocks.

But since then, real estate stocks have been swaying between profits and losses, struggling for direction.

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