AutoBeta(AutoBeta.net)09/14 Report--

Today, according to an announcement by China Evergrande on the Hong Kong Stock Exchange, sales are expected to continue to decline significantly in September, resulting in the continued deterioration of the Group's sales rebates, further exerting tremendous pressure on cash flow and liquidity. At the same time, China Evergrande also said that other measures taken to alleviate liquidity problems have not achieved the desired results, and the group is actively contacting a number of potential investors to discuss the sale of some stakes in Evergrande Motor and Evergrande property, as well as the introduction of new investors.

According to the announcement: from June to August 2021, the contract sales of Evergrande property in China were 71.63 billion yuan, 43.78 billion yuan and 38.08 billion yuan respectively, showing a downward trend. September is usually the peak of sales of property contracts in the real estate industry in the PRC. However, as the continued negative news reports on the Group seriously affected the confidence of potential home buyers, the Company expects sales to continue to decline significantly in September. As a result, the Group's sales rebate continues to deteriorate, further exerting tremendous pressure on cash flow and liquidity.

Evergrande Group said in an announcement: in order to alleviate the liquidity problems of the Group, it is actively contacting potential investors to discuss the sale of the interests of its members, as well as other assets. at present, no significant progress has been made in the sale of the interests of Evergrande members. The sale of Evergrande's Hong Kong office building was not completed as expected. In addition, the two subsidiaries of China Evergrande failed to fulfill their guarantee obligations and related liquidity issues on schedule. As of the date of the announcement, the two subsidiaries of Evergrande Group failed to fulfill their guarantee obligations for the issuance of wealth management products by third parties on schedule, with a related amount of about 934 million yuan. Evergrande said it was actively negotiating with issuers and investors with a view to reaching an agreed repayment arrangement.

Or the impact of this news, China's Evergrande secondary market fell sharply. By the close of Hong Kong shares, China Evergrande shares fell below HK $2, its market capitalization fell below HK $40 billion, down 11.87 per cent to HK $2.97; Evergrande Motor fell below HK $4 and its market capitalization fell below HK $40 billion, falling 24.66 per cent to HK $3.88; in addition, Evergrande property and Hengteng Network shares tumbled more than 10 per cent; Evergrande issued a statement yesterday saying it was completely untrue of recent comments about Evergrande's bankruptcy restructuring. At present, the company has indeed encountered unprecedented difficulties, but the company is determined to fulfill its main corporate responsibility, go all out to resume work and production, guarantee the delivery of the building, do everything possible to restore normal operation, and try its best to protect the legitimate rights and interests of customers. On September 10, Evergrande Chairman Xu Jiayin made it clear at the Evergrande Wealth theme meeting that all maturing wealth products should be fully repaid as soon as possible, and not a penny should be reduced. It said that Evergrande has encountered unprecedented difficulties, but the fundamentals of Evergrande have not changed: the combat effectiveness of its workforce has not changed, the land reserves with sufficient scale and reasonable layout have not changed, and the ability to build high-quality communities has not changed. Evergrande is still the same Evergrande, with annual sales of 700 billion. Next, leading cadres at all levels of Evergrande should lead all the staff to return to work and production, protect the building, do a good job in sales, and resume normal operation, which is also the greatest guarantee for Evergrande's wealth products. In addition, Xu Jiayin also said: "I can have nothing, but investors in Evergrande Wealth cannot have nothing!"

It is worth noting that Evergrande has recently been making promises to appease investors. On September 1, Evergrande Group held a "Baojiaolou" military writ signing meeting, and Xu Jiayin took eight vice presidents of Evergrande to sign the military writ. Evergrande Group said that under the leadership of Xu Jiayin, chairman of the board of directors of Evergrande Group, all the staff of the group vowed to ensure the construction of the project with the greatest determination and efforts to complete the delivery of the property with quality and quantity. However, a series of actions by Evergrande have not dispelled investors' doubts about Evergrande. Yesterday, according to several media reports, Evergrande headquarters was besieged by investors.

Recently, Evergrande Group has not only made promises to investors, but also kept releasing good news in terms of new energy vehicles. Today, a group of Hengchi No. 5 test spy photos were exposed. On September 3, Evergrande Group announced the successful conclusion of Hengchi's summer tests of 1, 3, 5, 6 and 7. On September 1, the road test photos of Hengchi 7 were exposed online. On August 30th, Evergrande reported a net loss of 4.79 billion yuan in the first half of 2021, compared with a net loss of 2.531 billion yuan in the same period last year. As for the increase in the company's losses, Evergrande said it was mainly due to a decrease in gross profit of the health business, and that the company was in the investment stage of expanding the new energy vehicle business, resulting in an increase in marketing expenses and R & D investment in the new energy vehicle business. In addition, it also said that in terms of new energy vehicles, Hengchi 1, Hengchi 3, Hengchi 5, Hengchi 6 and Hengchi 7 are being tested in summer and are nearing completion, and Hengchi is in the stage of mass production. However, the company still faces the challenge of cash flow, and the timetable for mass production of new energy vehicles may need to be postponed due to the lack of further capital investment in the short term. The company will continue to promote the mass production of Hengchi series products and strive to continuously develop and expand the model matrix to meet the differentiated needs of different automobile markets at home and abroad as well as the broad masses of customers. To improve cash flow at this stage and deal with the problem of liquidity. Evergrande will take measures to actively solve the suppliers and project payments, with health space and living facilities to offset part of the arrears, a total amount of about 1.19 billion yuan; actively introduce investors and negotiate to provide further capital investment. It is not difficult to see that these good news are also designed to boost investor confidence in Evergrande.

On August 10, China Evergrande announced that it was in contact with several potential independent third-party investors to discuss the sale of some of the company's assets. including, but not limited to, the sale of some interests in the company's listed subsidiaries, China Evergrande New Energy Automobile Group Co., Ltd. And Evergrande property Group Co., Ltd. From the current point of view, the desired results have not been achieved. Although Evergrande said that mass production has entered the sprint stage, Evergrande Group is mired in a debt crisis, which also has a certain impact on Evergrande's liquidity.

At present, the mass production of Hengchi seems to be in full swing, but due to the debt crisis of Evergrande Group, the mass production of Hengchi has some variables. As to whether Hengchi can achieve mass production by the end of this year, and what disposal Evergrande will do with Evergrande's assets, it is unknown at present.

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