[fer]

> Their total liabilities are on the order of $300 billion

~300 billion is the size of their debt (485 at the end of H1 2021). Their assets are at +2 trillion, +1 trillion in real estate alone.

Their problem is that with their current cash flow they can't pay their debt, ever, and now, they can't even keep up with the interest. But they're still in a position where selling off part of their inventory can offset the debt, and to my knowledge, that's what they've been trying to do.

That is, if their financial statements area real. That's the quid here, their position isn't particularly anomalous, but the market cap sits at 33 billion, very far from their declared assets, meaning the market doesn't believe those statements. Thats 60 to 1, where most REIT sit at around 2 to 1.

Their main problem is the large amount of unfinished homes (read: not producing any income) and you need money to fix that. My guess is that the government will step in to fix that point in particular.

[ButtSpark69]

How sure are you their assets are really worth 2T? Isn't that a lot of the question here?

[throwaway2037]

You are right to ask that question. Generally, real estate is considered a low liquidity asset. I wonder how much their real estate assets are discounted during buy-side analysis.

From Wiki (https://en.wikipedia.org/wiki/Evergrande_Group), I looked at the source for total assets: https://finance.yahoo.com/quote/3333.HK/balance-sheet?p=3333...

At end of 2020: Total assets: 2.3T CNY -> 359B USD (@ 6.40 CNY/USD) Total debt : 0.7T CNY -> 109B USD (@ 6.40 CNY/USD)

[oarabbus_]

Well, we can be reasonably confident their assets will not be worth $2T if they have to fire sale them

[chalst]

Are you giving the book value of their assets? That tends to collapse when the asset holder is forced to sell in a hurry.