- There's a lot working against China's most indebted property firm. China Evergrande Group is sitting on US$113.7 billion in debt and its core profit fell 45 per cent in the first half of the year. Real-estate growth is slowing, with banks under orders to curb home loans. President Xi Jinping's refrain that houses are for living in, not speculation, has been cropping up more frequently.
Investors are voting on this folly with their feet. The company's shares have fallen 30 per cent this year, making Evergrande the worst performer among Hong Kong-listed Chinese developers. The property firm's borrowing costs are among the highest in the offshore dollar market and its bonds are tumbling.
Crucially, Evergrande has China's largest land reserve, with 276 million square metres of gross floor area, according to Citigroup. While the developer has a lot of exposure to China's smaller cities, where growth is slowing rapidly, it also dominates redevelopment in big, rich cities such as Shenzhen, where profit margins are robust.