Home builders

China homebuilders and suppliers issue series of profit warnings as Evergrande woes bite

Rrepeats Friday’s story with no text changes

SHANGHAI, January 28 (Reuters)A growing number of Chinese construction and decoration companies are writing off assets or issuing profit warnings as debt problems at China Evergrande Group and other property developers weaken their suppliers.

More such disclosures are expected in the upcoming earnings season, prompting Chinese authorities to do more to limit contagion from the developer financial crisis and avoid job losses.

Guangzhou Holike Creative Home Co 603898.SSa furniture maker, became the latest company to disclose losses linked to Evergrande, which has racked up more than $300 billion in debt, including 200 billion yuan ($31.44 billion) owed to suppliers via commercial paper.

Holike said in an exchange filing on Wednesday that it expects 2021 net profit to fall 60% from a year earlier, hurt by claims on Evergrande that are unlikely to be collected.

Additionally, a slowing Chinese property market reduced the value of a business it acquired in 2020, leading to impairments, Holike said, adding that it had reduced its business with Evergrande and was seeking claims.

Beijing Jiayu Door, Window and Curtain Wall Co 300117.SZ also flagged risks this week, saying it posted a loss of up to 1.4 billion yuan last year, thanks to Evergrande’s receivables at risk of deterioration.

Earlier this month, Guangdong Pak Corp 300625.SZ, a light fixture maker, said it expects its profits to fall 85% to 90% in 2021, thanks to increased impairments related to Evergrande. And Shenzhen Wenke Landscape Co 002775.SZ said he fell into the red last year due to Evergrande’s flaws.

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

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

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

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

World’s most indebted developer Evergrande seeks debt restructuring as it struggles to pay creditors, suppliers and investors in wealth management products.

Shanghai Trendzone Holdings Group 603030.SSa home decorating company, recently said it filed 333 lawsuits against Evergrande and its subsidiaries, and the impact on earnings is unclear until court rulings.

($1 = 6.3558 Chinese yuan renminbi)

($1 = 6.3613 Chinese yuan renminbi)

(Reporting by Samuel Shen and Andrew Galbraith; Editing by Kim Coghill)

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