Chinese homebuilders and suppliers issue series of profit warnings due to Evergrande’s struggles


More such disclosures are expected in the next earnings season, putting pressure on Chinese authorities to do more to limit the contagion of the financial crisis from promoters and avoid job losses. .

Guangzhou Holike Creative Home Co, a furniture maker, has become the latest company to reveal losses linked to Evergrande, which has racked up more than $300 billion in debt, including 200 billion yuan ($31.44 billion) owed to suppliers through treasury notes.

Holike said in a stock market filing on Wednesday that it expects 2021 net profit to fall 60% from a year earlier, due to receivables from Evergrande that are unlikely to be collected.

In addition, the slowdown in China’s real estate market reduced the value of a company acquired in 2020, which led to impairments, Holike said, adding that it had reduced its activities with Evergrande and was looking for get compensation.

Beijing Jiayu Door, Window and Curtain Wall Co also signaled risks this week, saying it posted a loss of 1.4 billion yuan last year, thanks to claims on Evergrande that are at risk of deterioration.

Earlier this month, Guangdong Pak Corp, a light fixture maker, said it expected an 85-90% drop in profits in 2021, due to an increase in Evergrande-related impairments. And Shenzhen Wenke Landscape Co said it fell into the red last year due to failures at Evergrande.

Most companies listed in China will start reporting their annual results next month, and more such disclosures are expected as dozens of Chinese suppliers have disclosed debts owed by promoters like Evergrande. Some have already made provisions.

And despite some government easing measures to ease developer liquidity stress and support the cooling economy, recent data suggests the problem will get worse.

Units of Shimao Group Holdings, Kaisa Group Holdings and Greenland Group were named this month to a list of Chinese companies “constantly late” on commercial paper payments.

And the total number of such overdue companies jumped 26% in December from the previous month, according to the compiler of the list, the Shanghai Commercial Paper Exchange. [L1N2TS06Q]

Evergrande, the world’s most indebted developer, is seeking to restructure its debt as it struggles to pay its creditors, suppliers and wealth management product investors.

Shanghai Trendzone Holdings Group, a home decoration company, recently said it had filed 333 lawsuits against Evergrande and its subsidiaries, and the impact on profits is unclear until court rulings.

($1 = 6.3558 Chinese yuan renminbi)

($1 = 6.3613 Chinese yuan renminbi)



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