(Yicai Global) Sept. 1 -- Shares of China Evergrande Group fell after the heavily-indebted real estate giant reported a drop in first-half earnings.

Evergrande [HKG: 3333] closed down 3.2 percent today at HKD4.22 (54 US cents), with the Hang Seng Index ending up 0.6 percent. The beleaguered firm’s stock price has declined more than 70 percent so far this year.

Revenue and profit both fell in the six months ended June 30 due to the poor performance of Evergrande’s property business, it said. Meanwhile, under the pressure of huge debts, some of the Shenzhen-based firm’s projects have shut down while it is selling assets to generate funds.

First-half net profit slumped 29 percent from a year ago to CNY10.5 billion (USD1.6 billion), the firm’s earnings report showed yesterday. That was mainly due to an 11.2 percent drop in the average transaction price of property, an 8.5 percent annual decline in the area of delivered houses, and nationwide promotional events, it said. Revenue fell 16.5 percent to CNY222.7 billion (USD34.4 billion).

At the end of June, Evergrande’s liabilities stood at CNY571.8 billion (USD88.4 billion), of which CNY240 billion was to be repaid within a year. It had cash and cash equivalent of about CNY86.8 billion (USD13.4 billion), down 45 percent from a year ago.

Evergrande said some outstanding payments related to property development had led to the suspension of some projects. It is in talks with suppliers and contractors to get the projects back on track by deferring payments or offsetting arrears with property.

Evergrande vowed do its best to continue operations and strive to deliver the buildings on time. Led by founder and Chairman Xu Jiayin, the company today held a ceremony for ‘guaranteeing the delivery of properties.’

Asset Sales

The real estate titan is also continuing to sell assets to recoup funds. In the first half, it sold an 11 percent stake in HengTen Networks Group to secure about HKD1.2 billion (USD182.5 million) in cash and shed 1.9 percent of Shenjing Bank, a lender headquartered in Shenyang, Liaoning province, for about CNY1 billion (USD154.6 million).

Evergrande also sold a 7.08 percent stake in Shenzhen High-Tech Investment Group for about CNY1.04 billion along with 49 percent equity in mineral water brand Evergrande Spring, gaining about CNY2 billion.

In addition, the sale of shares in five property projects as well as other non-core assets garnered a combined CNY9.3 billion for the group.

Evergrande also said that it would continue to actively engage with potential investors to discuss the sale of some of its shares in its new energy vehicle business and Evergrande Property Services.

Evergrande Property had net profit of CNY1.93 billion in the first half, up 69 percent on the year, while Evergrande New Energy Vehicle Group lost CNY4.8 billion.

Editor: Peter Thomas