Sat. Jan 22nd, 2022

Real estate giant insists that government order to demolish 39 buildings on resort island will not affect the rest of the project there.

China Evergrande Group’s shares rose as much as 10 percent in resumed trading after the developer said a government order to demolish 39 buildings on the resort island of Hainan would not affect the rest of its project there.

The firm, struggles to repay more than $ 300 billion in liabilities, also said that its contracted sales for 2021 fell by 39 percent from the previous year to 443 billion Chinese yuan ($ 69.5 billion).

Its shares rose 4.4 percent to 1.66 Hong Kong dollars on Tuesday at 05:32 GMT, in line with the broader Chinese real estate sector.

Evergrande’s shares were suspended from trading Monday and Tuesday morning, pending the release of inside information.

JP Morgan said in a report earlier this week that most developers missed their 2021 sales targets, although sales still averaged 3 percent growth on a year-over-year basis.

The investment bank expected annual sales growth to continue to shrink in the first quarter due to a very high base and weak market sentiment.

“Solve the problem properly”

Evergrande confirmed on Monday that authorities in the city of Danzhou, Hainan Province on December 30 ordered 39 buildings at Ocean Flower Island, a huge integrated resort development where Evergrande spent 81 billion yuan ($ 13 billion) on more than 60 000 houses to build.

It did not disclose the reason for the demolition order and the Reuters news agency could not reach Hainan provincial authorities for comment.

The order did not involve other pieces of land in the project, Evergrande said Tuesday.

“The company will actively communicate with the authority in accordance with the guidance of the decision letter and resolve the issue properly,” it added in the filing.

Regarding its liquidity status in general, the firm said it will continue to maintain active communication with creditors.

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