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CHINA EVERGRANDE NEW ENERGY VEHICLE GROUP LIMITED

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China Evergrande shares, bonds suffer sell-off on cash-crunch concern

09/25/2020 | 02:52am EST
FILE PHOTO: FILE PHOTO:An exterior view of China Evergrande Centre in Hong Kong

Investors sold off China Evergrande Group shares and bonds on Friday after a leaked document showed the nation's second-biggest property developer by sales sought government help to avert a cash crunch.

The document showed Evergrande asked a local government to support a Shenzhen backdoor listing plan before Jan. 31 or else it would need to repay over 130 billion yuan ($19.05 billion) raised for the listing, which would weigh on its cash flow.

Evergrande late on Thursday said the document which had been circulating online was a fabrication and amounted to defamation, and it has reported the matter to public securities authority.

People with knowledge of the matter confirmed its authenticity to Reuters.

Analysts including those at S&P Global Ratings have said they do not expect a liquidity crunch as the firm has various fund-raising channels, including as much as 800 billion yuan in sales this year, domestic bond issuance and spin-off plans.

On Friday, at least two onshore bonds <CN155406SH=> <CN155407SH=> issued by Evergrande Real Estate Group were suspended from trade after their prices fell as much as 30%.

China Evergrande's Hong Kong-listed shares sank as much as 8.8% to a near five-month low. Subsidiaries Evergrande New Energy Vehicle Group Ltd and HengTen Networks Group Ltd tumbled 14% and 20% respectively.

The developer is under pressure to de-leverage as China's government tackles what it considers excessive borrowing in the real estate development sector with new debt ratio caps.

Evergrande's borrowings totalled 835.5 billion yuan at June-end, of which onshore trust loans and bank lending made up 41% and 29% respectively.

Credit-rating firm S&P downgraded its outlook for Evergrande to negative from stable, citing surging short-term debt partly due to active acquisitions of property projects in the first half of the year.

S&P also said it expected some of the strategic investors in the backdoor listing would not agree to extending the plan beyond Jan. 31, and that if half redeem their investments, Evergrande's sources of liquidity would cover only slightly over 80% of its liquidity use.

Raymond Cheng, CGS-CIMB Securities' head of China research, said Evergrande would likely try to renegotiate to extend the deadline for another year, as it did last year.

By Clare Jim


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CHINA EVERGRANDE GROUP -8.80% 2.28 End-of-day quote.-84.70%
CHINA EVERGRANDE NEW ENERGY VEHICLE GROUP LIMITED -20.08% 3.78 End-of-day quote.-87.48%
HENGTEN NETWORKS GROUP LIMITED -7.58% 3.17 End-of-day quote.19.62%
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Financials
Sales 2020 15 487 M 2 431 M 2 431 M
Net income 2020 -7 394 M -1 161 M -1 161 M
Net Debt 2020 62 534 M 9 817 M 9 817 M
P/E ratio 2020 -35,5x
Yield 2020 -
Capitalization 30 786 M 4 819 M 4 833 M
EV / Sales 2019 20,0x
EV / Sales 2020 18,5x
Nbr of Employees 14 493
Free-Float 26,5%
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China Evergrande New Energy Vehicle Group Limited Technical Analysis Chart | 708 | HK0000264595 | MarketScreener
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Managers and Directors
Da Rong Pan Chief Financial Officer
Shawn Siu Chairman
Shing Yim Chau Independent Non-Executive Director
Jian Wen Guo Independent Non-Executive Director
Wu Xie Independent Non-Executive Director