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All of a sudden! Evergrande car Liu Yongzhao was detained by criminal punishment.

2024-04-22 Update From: AutoBeta NAV: AutoBeta > News >


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Today, Evergrande issued an announcement that the company's shares will temporarily stop trading. According to the announcement, trading on the Stock Exchange of Hong Kong Limited will be temporarily suspended from 09:00 today, pending an announcement on inside information issued by the company. As soon as the announcement was issued, it immediately aroused attention both inside and outside the industry.

After the suspension of trading for half a day, Evergrande issued a notice again at noon that Evergrande Executive Director Liu Yongzhao had been criminally detained in accordance with the law on suspicion of breaking the law and committing crimes, and had applied to the Stock Exchange to resume trading shares starting from 1: 00 p.m. Today.

Relevant data show that Liu Yongzhao is the current president of Evergrande. He has joined Evergrande Group for more than 20 years and has rich work experience. During his tenure in Evergrande Group, he served as Vice President of China Evergrande Group, Chairman of Evergrande Football Club, Chairman of Evergrande Mineral Water Group, Chairman of Evergrande High-tech Group and other positions. In 2019, Evergrande announced its entry into the field of new energy vehicles, and Liu Yongzhao became the executive director and president of Evergrande the following year. In addition to serving as president of Evergrande, Liu Yongzhao also owns 0.2% of Evergrande. According to Evergrande's 2023 interim report, Liu Yongzhao owns 21.635 million Evergrande shares.

In fact, this is not the first time Evergrande has been suspended because its executives are suspected of breaking the law and committing crimes. On September 28 last year, Evergrande Group's China Evergrande, Evergrande Automobile and Evergrande property respectively issued a notice that the company's shares were briefly suspended from trading at 9: 00 a.m. on the same day. Subsequently, Evergrande announced that Mr. Xu Jiayin, the company's executive director and chairman of the board of directors, had been taken compulsory measures in accordance with the law on suspicion of breaking the law and committing crimes. The suspension will resume trading of Evergrande and Evergrande properties on October 3 last year, while Evergrande cars will resume trading on October 9 last year.

Earlier, three Evergrande companies, China Evergrande, Evergrande Automobile and Evergrande property, were suspended from trading for a long time until Evergrande first resumed trading on July 29 last year, Evergrande property resumed trading on August 3, and China Evergrande resumed trading on the Hong Kong Stock Exchange on August 28. Although all three Evergrande companies resumed trading last year, all three Evergrande companies plummeted on the day they resumed trading.

It is worth noting that Evergrande shares plummeted on the first day of 2024 as the share subscription agreement with Newton Group and the debt-for-equity swap agreement expired. Although Evergrande said that although the agreement had expired, Evergrande, Newton and other interested parties were still negotiating the key terms of these deals, and the two sides could still reach a new agreement or revise the original agreement. But the secondary market still holds a negative attitude. Evergrande closed at HK $0.45, down 11.76%, with a total market capitalization of HK $4.88 billion.

As we all know, Evergrande has been in a state of huge losses in recent years. Data show that since Evergrande announced the construction of cars, Evergrande has lost 1.43 billion yuan, 4.43 billion yuan, 7.39 billion yuan, 56.34 billion yuan and 27.66 billion yuan respectively from 2018 to 2022. The cumulative loss over the past five years is as high as 97.25 billion yuan. as of June 30, 2023, Evergrande had total assets of 42.852 billion yuan and liabilities of 75.692 billion yuan. It is not difficult to see that Evergrande's financial problems have always been very tight. In order to continue to build cars to survive, Evergrande has to take measures such as selling subsidiaries, suspending factory operations and layoffs to split costs. However, do not have their own hematopoietic capacity, no matter how to share the costs can not escape the fate of losses.

To this end, Evergrande can only focus on financing channels. In August last year, Evergrande announced that Evergrande received the first strategic investment of US $500 million from Newton Group, which is owned by the United Arab Emirates National 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.

For holding hands with Newton Group, Evergrande has said that the two holding hands can effectively solve the financial difficulties faced by Evergrande Automobile Development. Indeed, judging from the situation of Evergrande, the strategic investment of Newton Group can indeed alleviate the urgent needs of Evergrande, but it still can not pull ashore the Evergrande which is mired in financial crisis, after all, it has too much debt. Now that the cooperation agreement between the two sides has expired, there is a big question mark over whether the investment funds can be successfully received in the future.

The investment of external funds is variable, and the sales of its first model, Hengchi 5, are not ideal. At this time, it was reported that the core personnel were criminally detained in accordance with the law because of suspected crimes. For Evergrande's current situation, it is even worse. Some people in the industry have pointed out that it is very difficult for Evergrande to survive if it fails to hold hands with Newton. Today, affected by the news that Evergrande President Liu Yongzhao was arrested, Evergrande closed at 0.39 Hong Kong dollars per share, down 6.02%.

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