(Yicai) March 17 -- Shares of troubled Chinese real estate developer CIFI Holdings Group surged today, after revealing that it returned to profit last year following a lengthy period of losses, thanks to income of CNY40 billion (USD5.8 billion) from its debt restructuring.

CIFI [HKG: 0884] closed up 5.7 percent at 7.6 HK cents (0.97 US cents), having surged as much as 13.9 percent during trading. Its market capitalization is still only HKD1.4 billion (USD178.7 million), down about 70 percent from the same period last year.

After three consecutive years of losses, CIFI estimated that it made a net profit last year of CNY17 billion to CNY19 billion (USD2.5 billion to USD2.8 billion). This was thanks to a one-off gain of CNY40 billion from completing its overseas debt restructuring at the end of last year, the company said in its earnings forecast released yesterday.

The Shanghai-based developer had reported net losses of CNY13 billion, CNY9 billion and CNY7.1 billion from 2022 to 2024.

Excluding the one-off gain, CIFI was still in the red last year, with a loss of CNY7.5 billion to CNY9 billion, mainly because of a decrease in its revenue caused by fewer completed real estate projects and a drop in gross margin due to the market downturn, its earnings forecast said.

CIFI announced on Dec. 29 that its overseas debt restructuring plan had taken effect, and that coupled with the domestic debt restructuring plan approved by creditors in September, it had finally finished the three-year debt restructuring plan.

The firm had revealed that the total scale of domestic and overseas debts involved in the restructuring were CNY66.8 billion (USD9.7 billion), including overseas debt of CNY56.7 billion of which CNY38 billion was reduced through debt-to-equity swaps and principal write-offs. The domestic debts had reached CNY10.1 billion, and were reduced by over CNY5 billion.

With the completion of the domestic and overseas debt restructuring, CIFI’s total interest-bearing liabilities are expected to drop from CNY84.2 billion in the middle of last year to around CNY50 billion, allowing its interest-bearing liabilities and net debt ratio to fall back to the level of 2017, the company said.

Chinese real estate developers have been accelerating efforts to extricate themselves from financial distress since 2022. Major real estate companies Sunac China Holdings and Country Garden Holdings also recently announced the completion of their domestic and overseas debt restructuring plans.

Editors: Dou Shicong, Tom Litting