(Yicai) June 26 -- China Evergrande Group’s liquidators are seeking other potential buyers for a controlling stake in the failed developer’s property services business after negotiations with a prospective buyer were ended without a deal.

The court-appointed liquidators are working with financial advisers to identify alternative buyers for a 51 percent stake in Evergrande Property Services that is owned by Guangzhou-based Evergrande and its affiliate CEG Holdings, the unit said in a statement yesterday.

Last September, the liquidators announced they would sell the stake in Evergrande Property Services. Then this April they revealed that a selected prospective buyer had signed an exclusivity agreement. Discussions continued even after the one-month exclusivity period expired, but the parties ultimately failed to reach a deal, leading to the formal end of talks yesterday.

Media reports had identified the prospective buyer as Guangdong Provincial Tourism Holdings, a local state-owned enterprise whose operations include property management services for hotel and commercial real estate assets. None of the parties involved has publicly confirmed or denied the reports.

Shares of Evergrande Property Services [HKG: 6666] closed unchanged at 78 Hong Kong cents (10 US cents) in Hong Kong today, after plunging 23.5 percent yesterday. Its market value has shrunk to HKD8.4 billion (USD1.07 billion), after falling 54 percent from a 52-week high of HKD1.70 on May 5.

Although Evergrande remains burdened by massive debt and is being wound up, Evergrande Property Services has begun to emerge from the shadow of its parent's collapse, with key performance indicators improving.

Net current assets turned positive at the end of last year, reaching CNY87.5 million (USD12.9 million), versus minus CNY969 million (USD140 million) a year earlier. Cash and cash equivalents were about CNY4.2 billion (USD620 million) as of Dec. 31, up 55 percent from a year ago. Annual revenue rose 7.2 percent to around CNY13.7 billion (USD2 billion), while net profit fell 2.2 percent to just over CNY1 billion.

If Evergrande Property Services maintains a positive net current asset position through its interim reporting period ending June 30, the auditor's warning regarding "material uncertainty related to going concern" is expected to be removed from the company's audit report, according to China Real Estate Information Corporation, a real estate data and consulting firm.

Such a development would be significant for the company's valuation recovery, business expansion, and restoration of financing capacity, CRIC said, adding that it would, in effect, mark Evergrande Property Services' transition from a period of survival risk to a new phase of stable development.

Evergrande, whose total liabilities amount to about CNY2.4 trillion (USD352.8 billion), entered liquidation proceedings after the Hong Kong High Court issued a winding-up order in January 2024.

Editor: Futura Costaglione