(Bloomberg) -- China Evergrande Group looks like a company with no shortage of good news as earnings soar and the board prepares to unveil a special dividend Monday. But bearish bets on the developer are at a two-year high.

Skepticism about Evergrande’s debt-fueled business model and wider concerns about the property industry and China’s slowing economy may be driving the shorts, said Nigel Stevenson, an analyst in Hong Kong at GMT Research Ltd. A small free float, limiting the scope for more price-boosting buybacks under stock exchange rules, may also lure bears, he said.

“It’s hugely risky to bet against Evergrande,” said Stevenson.

The bulls’ case for billionaire Hui Ka Yan’s firm, which just became the biggest Chinese developer by market value, ranges from an estimated doubling of core profit in the first half to the special dividend that may be as much as $4.5 billion. Sales have remained robust this year and leverage is down from past levels. The company’s first-half result is due Aug. 28.

Evergrande’s stock more than quintupled last year, earning the title of the world’s most painful short, before sliding in 2018. It’s down 0.6 percent since January. In evidence of ongoing volatility, the shares surged as much as 27.5 percent during a single day this month, after a profit alert.

In the past, share purchases by Evergrande and ally Chinese Estates Holdings Ltd. have helped to fend off short sellers. The increase in short interest as a proportion of the firm’s free float, which rose last week to the highest since March 2016 and has jumped 31 percent by volume since July, partly results from buybacks shrinking the pool of shares.

To contact the reporter on this story: Emma Dong in Shanghai at edong10@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Paul Panckhurst

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