Tag: Corporate earnings

China Evergrande first-half net loss narrows to $4.5 billion

China Evergrande Group (3333.HK), the world’s most-indebted property developer, on Sunday reported a narrower net loss for the first half of the year, thanks to a rise in revenue.

Evergrande said its January-June loss was 33 billion yuan ($4.53 billion) versus a 66.4 billion yuan loss in the same period a year earlier.

The developer is at the centre of a crisis in China’s property sector that since late 2021 has seen a string of debt defaults, unfinished homes and unpaid suppliers, shattering consumer confidence in the world’s second-largest economy.

This month, missed U.S. dollar coupon payments by China’s largest private developer, Country Garden (2007.HK), fanned concern of contagion in an economy already weakened by tepid domestic and foreign demand, faltering factory activity and rising unemployment.

In a filing on Sunday, Evergrande said first-half revenue rose 44% from a year earlier to 128.2 billion yuan, as it “actively planned for the resumption of sales and successfully seized the short boom of the property market that emerged at the beginning of the year”. Cash fell by 6.3% to 13.4 billion yuan.

Liabilities slightly dropped to 2.39 trillion yuan from 2.44 trillion yuan at the end of 2022, while total assets also shrank to 1.74 trillion yuan from 1.84 trillion yuan.

The developer posted a combined net loss of $81 billion for 2021 and 2022 in a long-overdue earnings report last month, versus an 8.1 billion yuan profit in 2020.

A traffic light is seen near the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China, Sept. 26, 2021. REUTERS/Aly Song/File Photo Acquire Licensing Rights

As with Evergrande’s previous two annual financial statements, auditor Prism Hong Kong and Shanghai has not issued a conclusion on this report, citing multiple uncertainties relating to the business as a going concern, including future cashflow.

Evergrande said its ability to continue will depend on a successful implementation of an offshore debt restructuring plan, and successful negotiations with the rest of the lenders on repayment extensions.

Source: https://www.reuters.com/markets/asia/china-evergrande-h1-net-loss-narrows-45-bln-2023-08-27/

Q4 likely to be modest for India Inc

With prices of raw materials softening, a range of user companies are expected to post better operating margins than they did in the December 2022 quarter.

The robust GST collections in FY23 with the March mop up coming in at Rs 1.6 trillion are a sign that India Inc is doing well even of some of this can be attributed to high inflation. (IE)

Corporate profits for the March quarter are expected to be modest with the year-on-year growth in high single digits. Earnings for the Nifty 50 set of companies are estimated to increase by 9% y-o-y and 8% quarter-on-quarter, according to an estimate by Kotak Institutional Equities (KIE).

With prices of raw materials softening, a range of user companies are expected to post better operating margins than they did in the December 2022 quarter.

Net profits for a sample of 3,311 companies, banks and financials had risen by just about 5% year-on-year in the December 2022 quarter even though revenues increased by a good 17.5% y-o-y since operating margins contracted 150 bps y-o-y.

Although consumer demand is understood to have faded somewhat post the festive season, the macro environment in Q4FY23 has been reasonably good. The robust GST collections in FY23 with the March mop up coming in at Rs 1.6 trillion are a sign that India Inc is doing well even of some of this can be attributed to high inflation. The PMI for both manufacturing and services has held up although the latter slowed in March. But the recovery is clearly picking up steam going by strong air traffic numbers, hotel occupancies and demand for power. Moreover, credit flows have risen by about 16-17% y-o-y suggesting demand from consumers for homes and from businesses for working capital is buoyant.

Profits of banks, which have registered strong loan growth and will continue to provide much smaller sums for loan losses, will be exceptionally good and lead the earnings growth in Q3. Pre-provisioning profits for front-line lenders could jump by more than 22% y-o-y. Sales of automobiles in the home market have been reasonably good in the March quarter especially of passenger vehicles though exports of 2-wheelers have been weak. Some of the demand in the commercial vehicles segment has been driven by pre-buying ahead of the transition to BSVI Phase II.

On the other hand, earnings of metals producers, whose realisations have been weaker, will drag down the aggregate numbers. With rural demand yet subdued, makers of consumer staples are tipped to report mediocre numbers, much of it driven by price hikes rather than volumes. Results from most manufacturers of consumer durables too are likely to be lacklustre amid muted demand and pricing pressure. KIE expects the net profits for the portfolio of companies that it tracks to increase by just 6.5% y-o-y and 17% q-o-q.

Source: https://www.financialexpress.com/industry/q4-likely-to-be-modest-for-india-inc/3040030/

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