China’s debt-ridden Evergrande Group has resumed work on more than 10 projects in six cities including Shenzhen, Dongguan and Guangdong Province. On Sunday, the embattled company announced through a post on its WeChat account that its effort to guarantee construction would shore up market confidence.
China’s second-largest property developer said that some of the projects it had resumed work on had entered the interior decoration stage and will be delivered to buyers gradually, while other buildings had recently finished construction.
On August 31, the company announced that some projects were suspended because of delays in payment to suppliers and contractors. However, Evergrande did not disclose how many of the 1.300 real estate projects across China it had to halt work on.
However, the ailing group now seems to be drawing lessons from the past few months and is reportedly considering a business realignment. Within a decade, it plans to shift business focus from real estate to electric vehicles.
As Securities Times reported, Group Chairman Hui Ka Yan announced that making such cars would become the company’s main business – despite the fact that Evergrande has yet to deliver a single-vehicle. At the same time, it would substantially downsize the real estate development and construction business.
The EV unit of the conglomerate, China Evergrande New Energy Vehicle Group, is aiming to deliver its first vehicle – “Hengchi” – early next year. However, in August the unit said that mass production may be delayed “unless it can secure more capital in the short term”.
The new direction announcement comes after Evergrande last week paid off a $83.5 million missed interest payment on an offshore dollar bond, in a move to avert formal default for another week.
However, the Chinese developer is still under pressure as the next deadline looms on October 29 when the 30-day grace period on its September 29 coupon expires. This due payment amounts to $47.5m.
Evergrande’s total liabilities of more than $300 bn is equal to around 2% of China’s Gross Domestic Product (GDP).