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Inside information! Evergrande continues to suspend its license.

2024-03-03 Update From: AutoBeta autobeta NAV: AutoBeta > News >

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AutoBeta(AutoBeta.net)10/04 Report--

At 10:00 on the 3rd of October, Evergrande Motor announced on the HKEx that, at the request of the Company, trading in the company's shares was temporarily suspended on the HKEx from 09:00 on 28 September 2023, pending the publication of an announcement of inside information by the company.

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On September 28, China Evergrande announced on the Hong Kong Stock Exchange that it had been informed by the relevant authorities that Xu Jiayin, the company's executive director and chairman of the board of directors, had been taken compulsory measures on suspicion of breaking the law and committing crimes. Early in the day, China Evergrande, Evergrande Automobile, Evergrande property three Evergrande companies issued an announcement, the company's shares will be suspended at 9: 00 a.m.

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After only two trading days of suspension, both Evergrande and Evergrande properties resumed trading on October 3. After the opening of trading, the two Evergrande stocks showed strong performance and continued to rise in intraday trading. Evergrande rose more than 40% at one point. Evergrande property once rose 14%. The stock price trend of China Evergrande surprised most people, and the capital market seemed more optimistic.

However, Evergrande, which was suspended on the same day, has not yet announced the resumption of its license. It should be noted that "trading halt" means that the securities trading of the issuer is suspended for not more than two trading days as required or ordered, pending disclosure in accordance with the listing rules of the Hong Kong Stock Exchange. Therefore, Evergrande did not announce the resumption of trading also aroused market concern, as for the reasons for not resuming trading, the official explanation is: "waiting for the company to issue an announcement about inside information."

In fact, prior to this, the above three "Evergrande departments" are in a state of long-term suspension. It was not until July-August this year that trading resumed successively. Among them, Evergrande Motor has been sending out positive signals after the resumption of license plates, and participated in the Tianjin Motor Show, which opened on September 28.

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In fact, the three Evergrande companies are in a state of long-term suspension and did not resume trading until July and August this year. Among them, Evergrande is the first "Evergrande" listed company to resume trading, but its share price plummeted on the first day of trading, closing down 61.25%. Evergrande, as a new energy car-building project under Evergrande Group, has been sending positive signals since its resumption, and even participated in the Tianjin Auto Show, which opened on September 28.

Hengchi Automobile and Hengchi 5 were unveiled at Hall 18 at the 2023 Tianjin International Auto Show on September 28th. Although Xu Jiayin was arrested, it did not seem to affect Evergrande's car sales at the auto show. "the company's sales staff are now busy selling cars at the Tianjin Auto Show, and Evergrande's internal staff are working normally and are not affected," a person close to Evergrande told the Daily Economic News.

Hengchi is a new energy car-building project under Evergrande Group, led by Xu Jiayin. Xu Jiayin, who had deep pockets at that time, summed up Evergrande's road of "changing lanes and overtaking" with "buy, cooperate, circle, big and good", hoping to become the largest and most powerful new energy automobile group in the world in 3-5 years. Xu Jiayin once said: "buy what you can afford, cooperate with what you can't buy, and have the world's top circle of car-making friends, large-scale, and automobile products with good quality, good shape and good price."

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It is understood that Evergrande's cumulative investment in car construction has reached nearly 50 billion yuan. Evergrande's "nine cars" once attracted the attention of many people in the industry at the Shanghai Auto Show in 2021. Today, however, Evergrande has only one production model of Hengchi 5, and its sales performance is very limited. As of August 6, 2022, nearly 40,000 Hengchi 5 pre-sale orders were placed, according to official figures, but Evergrande delivered only about 760 vehicles in the first half of the year.

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On August 14, Evergrande received the first strategic investment of US $500m (about RMB 3.6 billion) from Newton Group, which is owned by the United Arab Emirates sovereign fund. Newton Group will subscribe for about 27.5% of Evergrande Motor. China's Evergrande holding will be diluted to about 46.86%. Evergrande will no longer be a non-wholly-owned subsidiary of Evergrande, and its financial performance will no longer be integrated into the performance of Evergrande Group.

The industry believes that Newton's strategic investment is the only vitality of Evergrande. According to the plan, all the war investment funds obtained by Evergrande will be used in Evergrande's Tianjin factory to ensure the normal production of Hengchi 5 and the mass production of Hengchi 6 and 7 one after another, and to assist Evergrande to open up overseas markets and export 30,000 to 50,000 Evergrande cars to the Middle East market every year. Among them, Hengchi 6 will be offline at the end of this year and mass production in the first half of next year; Hengchi 7 will be offline in the first half of next year and mass production in the second half of next year.

At present, however, Evergrande has not come out of the predicament of shortage of funds and is seriously insolvent. According to the financial report, Evergrande has made huge losses for two consecutive years, with a cumulative loss of 84.008 billion yuan. As of December 31, 2022, Evergrande had a cumulative loss of 98.906 billion yuan. In addition, as of the end of 2022, Evergrande's total debt was 183.872 billion yuan, excluding 3.314 billion yuan in advance, the debt was 180.558 billion yuan, while Evergrande's total assets were 115.22 billion yuan. In other words, Evergrande is seriously insolvent.

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The latest financial report shows that Evergrande's auto revenue in the first half of this year was 155 million yuan, gross profit loss was 61 million yuan, and net loss was 6.873 billion yuan. Of these, the divestiture of real estate projects lost 1.061 billion yuan, asset disposal, asset impairment and other non-operating losses of 3.716 billion yuan, automobile operating losses of 2.096 billion yuan.

Judging from the current development situation of Evergrande Automobile, "how to solve the financial pressure" is still an urgent problem to be solved. With the arrest of Xu Jiayin, the development of Evergrande has become very difficult. How to persuade consumers to buy such a company's products is another big problem that Evergrande needs to face.

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