HONG KONG, Sept 1 (Reuters) - China Evergrande Group's
shares and bonds extended declines on Wednesday, a day
after the debt-laden developer warned of default risks and
legal action from creditors as it scrambles to repair its
Evergrande, which has more than $300 billion in total
liabilities, has been scrambling to raise the funds it needs to
pay its many lenders and suppliers, with regulators and
financial markets worried that any crisis could ripple through
China's banking system.
Reporting first-half earnings on Tuesday, Evergrande said it
would implement measures to improve cashflow, including
adjusting project development timetables, renewing borrowings
and disposing of equity interests and assets. But it cautioned
that if it was not successful, it could default on borrowings
and could see more litigation.
While net profit jumped on asset sales, its income that
includes non-controlling interests slid 29%. In addition, its
gross profit margin tumbled 12.9% in the first half from 25% a
year ago due to a drop in sales prices and delivered area.
Citi analyst Griffin Chan said in a report he expects a loss
in Evergrande's core property business for the full-year, and
cut its earnings per share estimate for the next two years by
59% and 60% due to lower margin assumptions.
He also slashed its target price to HK$4 from HK$13.5.
Shares of the country's No. 2 developer fell as much as 2.5%
in Tuesday morning trade to HK$4.25. The stock has lost more
than 70% of its value this year.
The mid-price of Evergrande's 7.5% June 2023 dollar bond
was last quoted at 36.92 cents by financial data
provider Duration Finance, down nearly 2 cents.
Its 6.98% July 22 exchange-traded puttable bond
was the third-biggest loser among corporate bonds
on Wednesday, according to the Shanghai Stock Exchange, falling
0.15% to 66.7 yuan.
($1 = 6.4633 Chinese yuan)
(Reporting by Donny Kwok and Clare Jim in Hong Kong, Andrew
Galbraith in Shanghai; Editing by Anne Marie Roantree and Edwina