China Evergrande vows to build 600,000 homes in 2022 and fully restore operations as it tries to sell its way out of its debt

Evergrande has about 220 billion yuan of funds in hand and contracted cash, Hui Ka-yan said during a Sunday meeting, according to a person familiar with the matter
The Guangzhou-based developer aims to fully restore construction operations and resume selling as soon as possible, Hui said

China Evergrande Group

Chad Bray

Published: 9:09pm, 9 Feb 2022

Why you can trust SCMP

China Evergrande Group has set the target of building 600,000 homes in 2022, as the embattled developer leans on its construction operation to lift it out of its debt quagmire.

Evergrande plans to fully restore its construction operations this month, the Guangzhou-based developer’s chairman Hui Ka-yan said during an internal meeting on Sunday, according to a person familiar with the matter. Property sales will resume as soon as possible to help resolve the company’s debts, Hui said.

The developer has about 50 billion yuan (US$7.9 billion) of funds in hand from pre-sold apartments, 170 billion yuan of contracted cash awaiting collection, and assets that can be sold, Hui said in the meeting, according to the person.

Evergrande’s spokespeople declined to comment. The developer, facing more than US$300 billion in liabilities, had been selling assets in its portfolio and under the personal holdings of Hui – once the wealthiest man in China – to pay its banks, suppliers, onshore bondholders and international investors.

01:29

New Evergrande protests amid reports troubled Chinese property giant ordered to raze development

The company’s shares rose 1.2 per cent to close at HK$1.67 in Hong Kong on Wednesday.

“Quickening the pace of construction and sales can technically generate cash, but it will not entirely help Evergrande overcome the financial woes,” said Wang Feng, chairman of Shanghai-based financial service company Ye Lang Capital. “Hui’s remarks are more likely a message to some local governments that Evergrande will do its best to keep the projects alive.”

Is Evergrande too big to fail?

The company has been trying to offload its assets, including its 26-storey China Evergrande Centre headquarters in Hong Kong and dozens of projects on the mainland since last year when the company’s debt repayment issues started to mount, but has had little success in selling those assets.

Fitch and S&P Global Ratings declared the developer in default after it missed bond interest payments in December.

Evergrande Chairman Hui Ka-yan at the company’s 2018 annual results announcement in Hong Kong in March 2019. Photo: Nora Tam

Evergrande told investors and creditors last month that it intends to roll out a debt restructuring plan within six months and would “continue to listen carefully to the opinions and suggestions of the creditors”.

However, some offshore creditors have already moved to seize company assets because of its mounting liabilities.

Asset manager Oaktree Capital seized a Palace of Versailles-like project in Yuen Long in January and appointed receivers for the property, which was used as collateral as part of Evergrande’s efforts to restructure its debt.

Evergrande has said it “is seeking legal advice to protect the legal rights of the company” regarding the project.

Additional reporting by Pearl Liu in Hong Kong and Daniel Ren in Shanghai