Home » Annual Report Observation | Xu Jiayin Lifeboat Evergrande Property Belated Annual Report- Viewpoint.com

Annual Report Observation | Xu Jiayin Lifeboat Evergrande Property Belated Annual Report- Viewpoint.com

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Viewpoint Network Evergrande Property finally reissued the annual performance report for the year ending December 31, 2021 and the year ending December 31, 2022, marking a step closer to the resumption of trading.

Prior to this, Evergrande Property had been suspended for more than one year.

It is expected to resume its listing status within a few months. What kind of stock price trend this former leading property management company will face depends on its performance and future development prospects, which will affect the perception of investors in the capital market.

More importantly, Evergrande Property, as the only remaining listed platform under the “Evergrande Group” with normal business operations, is currently the key bargaining chip for Xu Jiayin to promote the overseas debt restructuring of China Evergrande Group.

It is understood that Evergrande Group is negotiating with creditors on overseas debts with a total principal of more than 19.1 billion U.S. dollars. One of the options offered is to convert the original debts into mandatory bonds linked to Evergrande Property, Evergrande Auto, and China Evergrande stocks. Exchangeable bonds and notes.

But despite the subsidiary relationship formed by holding shares, the company has deepened the rift with the parent company due to the controversial case of “13.4 billion yuan of deposits being taken up”.

This may be an opportunity for Evergrande Property to seek independence.


Observing the 2022 annual report, the data shows that the operating income of Evergrande Property is about 11.809 billion yuan, a year-on-year decrease of 10.5%;

The good news is that Evergrande Property has turned losses into profits during the year, and its revenue has not fallen sharply, and the decline is within a controllable range. This is mainly affected by two factors: first, the parent company China Evergrande has laid a solid foundation for Evergrande Property management area; About 2.576 billion yuan of impairment losses on financial assets have been withdrawn, and at the same time, 594 million yuan of goodwill impairments have been withdrawn. By 2022, the above two figures will be 109 million yuan and 3.791 million yuan.

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China Evergrande’s liquidity crisis began in September 2021. Before that, it was China‘s largest real estate developer. In the second half of 2020, Evergrande Property was listed. In August, a round of strategic investment of 23.5 billion Hong Kong dollars was introduced. Investors include 14 investors including CITIC Capital, Tencent Holdings, Yunfeng Fund, and Sequoia Capital.

In December of the same year, China Evergrande introduced another 21 cornerstone investors to Evergrande Property, and finally successfully raised more than HK$14 billion in IPO. According to the plan at the time, Evergrande Property will accelerate its scale expansion after listing, which stipulates that 65% of the IPO proceeds will be used for acquisitions and mergers.

That year, the property industry ushered in the first reshuffle period. With the support of capital, leading companies have launched mergers and acquisitions of smaller peers, and Evergrande Property is no exception.

According to the data, as of the end of 2020, the area under management and contract area of ​​Evergrande Property has just reached about 300 million square meters and 565 million square meters, and by the end of 2021, it has increased to 473 million square meters and 822 million square meters.

But by the second half of 2021, Evergrande’s property expansion journey has come to a screeching halt after losing Evergrande’s driving force.

According to the financial report, within one year in 2022, the area under management of Evergrande Properties will only increase by 2.7 million square meters to 500 million square meters, and the contract area will even drop slightly to 819 million square meters.

However, only in terms of rigid scale, Evergrande Property Management is still one of the top 5 companies in the property management industry. In terms of area under management, it ranks only behind Country Garden Services, which has an area under management of 869 million square meters, and Wanwu, which has an area under management of 840 million square meters. Cloud and 576 million square meters under the management area of ​​Poly Property.

The impact of China Evergrande’s whale fall is reflected in Evergrande’s property statements, including the impact on the latter’s multiple businesses.

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For example, due to the loss of normal operating capacity of China Evergrande, the community value-added services that Evergrande Property originally intended to carry out such as home decoration, house rental and sales were hindered, resulting in a 5 percentage point drop in the gross profit margin of this business.

In terms of property management services, the pace of revenue recognition has been adjusted due to related party businesses that are uncertain about part of the repayment, and the gross profit margin has also decreased by about 7.8 percentage points from 26.9% in 2021 to 19.1%.

As for the value-added service business for non-proprietors, it used to be one of the main channels for China Evergrande to transfer resources to Evergrande Property from its main real estate business. By providing field services and maintenance services to the parent company, Evergrande Property earned 1.803 billion yuan in 2021, but this business will shrink by more than 95% in 2022, and its revenue will drop to 88.1 million yuan.


Evergrande Property is willingly or unwillingly embarking on the road of real independence.

Before and after listing, Evergrande Property has tried its best to expand the third-party area and business. According to the data, the proportion of income from independent third parties in 2017 was 55.8%, which increased to 64.1% in March 2020, and further increased to 78.6% in 2021.

However, there is always a suspicious “ambiguous” relationship between Evergrande Property and its parent company, China Evergrande.

The most obvious manifestation is the case of “13.4 billion yuan of deposits being occupied”: Evergrande Property’s deposits of about 13.4 billion yuan will be enforced by relevant banks as a guarantee for providing pledges to third parties during the period from 2020 to 2021. However, the loan was transferred back to Evergrande Group through a third-party transfer and used for general operations.

The relevant violations were exposed in March 2022, which eventually led to the resignation of China Evergrande Executive Director and Chief Executive Officer Xia Haijun, Executive Director and Chief Financial Officer Pan Darong, and Evergrande Group Executive President Ke Peng. The incident caused an uproar in the market, and Evergrande Property and China Evergrande were identified as having serious potential internal control problems.

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Now that Evergrande Real Estate has collapsed, Evergrande Real Estate has quickly cut the risk of the parent company.

In order to heal the wound with a one-time bone scraping, Evergrande Property also provided 2.44 billion yuan and 2.456 billion yuan in impairment of trade receivables from related parties in 2021 and 2022 respectively. The appropriation in the case of “13.4 billion yuan of deposits being occupied” was simply withdrawn and included in other receivables, so the profit performance was not weakened.

However, Evergrande Property has not given up on the recovery of the 13.4 billion yuan of compulsory enforcement funds.

It is reported that China Evergrande has previously promised to “repay debts with assets”, and the repayment plan mainly offsets related payments through the transfer of assets by the group to Evergrande Property.

In terms of specific business, according to the annual report, at the level of total income, the proportion of Evergrande’s property income from independent third parties has reached 98.8%.

In terms of scale growth, Evergrande Property may only rely on third-party expansion in the future.

According to the data, as of 2022, the proportion of the third-party project management area of ​​Evergrande Property to the total area under management has increased to about 30%, to about 148 million square meters. The announcement shows that in 2022, multiple business projects such as Wuhan Rail Transit, Chongqing Pacific Plaza, Shaoxing Famous City Scenic Area, and Taizhou Fantawild Theme Park will be successfully expanded.

According to the last disclosure of China Evergrande, as of June 30, 2021, the company still has 778 land reserve projects with a total planned construction area of ​​214 million square meters.

It’s just that it’s still unknown how much of this part of the land bank will actually be converted to Evergrande Property in the future.

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