AutoBeta(AutoBeta.net)03/20 Report--

On March 18, Evergrande Real Estate issued a notice that it had received administrative penalties from the China Securities Regulatory Commission and that the market was banned.

Officials pointed out in the notice that the CSRC intends to decide to ban Xu Jiayin and Xia Haijun from entering the securities market for life. At the same time, Evergrande Xu Jiayin was given a warning and fined 47 million yuan. Or affected by the news, Evergrande shares fell 6.06% in intraday trading today. At the close, it closed at HK $0.33 per share, with a total market capitalization of HK $3.578 billion.

In September last year, China Evergrande issued an announcement and the company was informed by the relevant departments that Mr. Xu Jiayin, the 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. After that, there is very little news about Xu Jiayin in the market, and the official notice released to the outside world will naturally affect the secondary market of Evergrande.

It is worth noting that the matter of Xu Jiayin has not been solved yet. In January, Evergrande was once again reported to be suspected of breaking the law and committing crimes. On January 8, Evergrande issued a notice saying that Liu Yongzhao, executive director of Evergrande Motor, had been criminally detained in accordance with the law on suspicion of breaking the law and committing a crime. At that time, affected by the news, Evergrande closed down 6.02% on January 8, with a total market capitalization of HK $4.229 billion, which has now fallen by more than HK $650 million compared with January.

As we all know, Evergrande has always been regarded as a lifesaver for Evergrande Group, but Evergrande's sense of presence in the market has also been affected after Evergrande executives were frequently exposed negative news. Evergrande currently sells only the Hengchi 5, which goes on sale in August 2022 at a price of 179000 yuan.

As the first production car of Evergrande New Energy, Evergrande also attaches great importance to Evergrande. Liu Yongzhao once praised Hengchi 5 as the best pure electric SUV within 300000, including Bosch, mainland, Amboft, Ningde era and many other well-known supply chain enterprises participated in the production process of Hengchi 5, while saying that "Hengchi big sale has become a foregone conclusion". However, as the first production car of Evergrande New Energy, Hengchi 5's market performance is not good. Terminal sales data show that Hengchi 5 sold 937 vehicles from January to November last year.

Sales are poor, and the share subscription agreement with the big financier Newton Group expired at the end of last year. On January 1, Evergrande announced that the share subscription agreement with Newton Group and the debt-for-equity swap agreement, originally scheduled to expire on December 31, 2023, have expired. But officials said that although the agreement had lapsed, Evergrande, Newton and other parties were still negotiating key terms of the deals, suggesting that a new agreement or revision of the original agreement could still be reached. However, more than two months have passed since January, there is no further information on the incident, or it means that there are uncertainties in the cooperation between the two sides.

Without the injection of external capital, the future situation of Evergrande is also worrying. After all, Evergrande has been in a state of huge losses since its inception. Data show that Evergrande 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.

In order to survive, Evergrande has also taken measures such as selling its subsidiaries, suspending factory operations and laying off staff to split costs. However, if the sales volume does not go up, no matter how much the cost is shared, it will not change the tight financial situation. At present, the competition in the new energy vehicle industry is so fierce that there may not be much time left for Evergrande.

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