By Clare Jim
HONG KONG (Reuters) -Shares of Evergrande Property Services Group shed 50% of their value on Thursday when trading resumed after 16 months, following the release of its financial results and the end of an investigation into misused funds involving its parent.
The property services firm was dragged into financial troubles after its parent, China Evergrande Group, the world’s most indebted property developer, became embroiled in a debt crisis in mid-2021 that later spread across the sector.
Shares of Evergrande Services had been suspended since March 21, 2022. Its sister company, China Evergrande New Energy Vehicle Group, resumed trading last week after a 16-month halt, sinking as much as 69% on the first day of trade. The parent’s shares, however, remain suspended.
The resumption of trading in all three companies is crucial for Evergrande Group, because its offshore debt restructuring plan includes swapping part of the debt into equity-linked instruments backed by the parent and the two subsidiaries.
Evergrande Services said on Wednesday it had sufficient assets for its business operations and expected to maintain a level of revenue and net profit growth comparable to that of property service industry leaders.
The company said it had carried out remedial measures such as internal control reviews and staff training regarding 13.4 billion yuan ($1.86 billion) of seized deposits used as collateral for pledge guarantees by its parent.
Evergrande Services said it believed that was sufficient to address the issues and prevent similar incidents in the future, adding that all of the directors involved in the pledge guarantee had resigned so there were no regulatory concerns.
The company said it was actively taking various actions to recover its losses, including negotiation with Evergrande Group on a repayment proposal, as well as considering the feasibility of litigation.
Evergrande Services in June posted its long-overdue financial results, reporting a 46.4% plunge in its fiscal 2022 profit when compared with fiscal 2020.
($1 = 7.1865 yuan)
(Reporting by Clare Jim; Editing by Himani Sarkar and Jamie Freed)
