Recently, affected by the eventful autumn, Evergrande's debt restructuring plan has made waves again. According to a recent announcement by China Evergrande, the relevant agreed arrangement meetings on the restructuring proposal, originally scheduled for September 25 and September 26, will be cancelled due to the sales situation of Evergrande Group not meeting expectations.
This news has aroused widespread concern and doubts in the market, making people more worried about the future of Evergrande Group.
Recently, Evergrande Group has been in frequent trouble, following the announcement two weeks ago that the overseas debt restructuring arrangement has been postponed, indicating that Evergrande's debt problem has not been effectively resolved, but is facing more uncertainty.
In addition, according to the public data of the half-year report, China Evergrande Group experienced a net loss of up to 39.25 billion yuan in the first half of 2023, and its total liabilities reached a staggering 2.39 trillion yuan. This huge scale of debt is not only shocking, but also highlights the huge financial pressure facing Evergrande.
In fact, the announcement of this figure is a clear indication to the outside world that Evergrande's financial situation is deteriorating. Previously, Xu Jiayin, the boss of Evergrande Group, had vowed to coexist with the company, but the current situation seems to indicate that Evergrande's financial difficulties have reached the point of exhaustion.
Faced with huge debts and financial pressures, Evergrande's future is full of uncertainty.
However, as one of the giants of China's real estate industry, Evergrande once had a glorious history and huge scale. However, in recent years, with the adjustment and downward trend of China's real estate market, Evergrande's business and financial situation have also experienced a sharp decline.
Although Mr. Xu has taken a series of steps to save the company, those efforts seem to have been unable to reverse the decline.
In this case, Evergrande's future is full of uncertainty. On the one hand, Evergrande may face stricter restructuring plans such as debt restructuring and asset sales to ease its financial pressures.
On the other hand, Evergrande's operating conditions may continue to deteriorate, and even extreme situations such as bankruptcy may occur. In addition, even if Evergrande is able to weather the current crisis, its brand image and market position may be irreversibly hit.
Previously, Xu Jiayin, the boss of Evergrande Group, had vowed to coexist with the company, but the current situation seems to indicate that Evergrande's financial difficulties have reached the point of exhaustion.
This is tantamount to declaring to creditors that Evergrande can no longer maintain its financial position and can no longer hide its financial difficulties.
The news will undoubtedly shock many creditors of Evergrande Group, especially those who have in-depth cooperation with Evergrande and have invested in Evergrande, and they are afraid that they will be extremely worried because of this.
However, for most ordinary people, the most frustrating thing should be the small ordinary people who have invested their hard-earned money in the Evergrande Group.
This huge debt figure means that Evergrande's promises to ordinary investors may not be fulfilled, and the investments of these small people may be lost.
How big is the 2.39 trillion yuan of debt?
We can make a simple comparison, this figure is equivalent to nearly 1700 yuan of debt that each Chinese needs to bear, and this is only Evergrande's debt, which is equivalent to the total GDP of 2 Xi'an, 10 listed companies on the Beijing Stock Exchange, 40 years of Moutai net profit, and 48 aircraft carriers.
Let's put it this way, if the annual income is 10 million, it takes 240,000 years to pay it off, which is really incredible.
However, Evergrande Group has come this far because of unrestrained horizontal development.
We are all well aware of Evergrande Real Estate, but Evergrande is also involved in Evergrande Health, Evergrande Life, Evergrande Auto and other fields. Take Evergrande Ice Spring, for example, burned 30 billion, but did not make money, and was even ridiculed by peers.
Evergrande also claims to smash 100 billion into it, but now it is still unknown whether this car can come out. These expanding industries require large capital investment and have very high cash flow requirements.
However, in order to pursue profits, Evergrande blindly uses high leverage regardless of risks. After the main real estate business was affected, Evergrande's leverage ratio was once as high as an astonishing 50 times.
In fact, Evergrande has fallen into a vicious circle: the decline in sales performance has led to a tight capital chain, which in turn has affected the ability to repay debts. As one of the giants of China's real estate industry, the current situation of Evergrande is really worrying.
This not only put significant pressure on its business development, but also negatively impacted its debt restructuring plans.
It is worth noting that the turmoil of China Evergrande Group continues, and with the collapse of the company's stock price, Xu Jiayin's net worth has also shrunk significantly. According to relevant data, Xu Jiayin's current net worth is only 20 billion yuan, which has shrunk by nearly 90% compared with its peak.
This data intuitively reflects Evergrande's current predicament. and the challenges and instability of China's real estate market.
China has struggled to rein in over-leveraging in the real estate market and has implemented strict real estate policies to maintain financial stability.
China Evergrande's financial woes as a key player in the market have raised concerns about the Chinese real estate market, which has also triggered regulatory scrutiny of Chinese property developers.
In fact, the regulatory policies of China's real estate industry are constantly tightening, and market competition is becoming more and more intense. In this context, Evergrande's problems are not individual cases, but a microcosm of the entire industry.
For other real estate enterprises, they should learn from Evergrande's plight and actively adjust their strategies to cope with increasingly severe market challenges.
Overall, the predicament facing Evergrande is a wake-up call for the entire industry. In the current market environment, real estate enterprises need to strengthen their internal strength and improve their ability to resist risks in order to cope with various uncertainties that may occur in the future.