Evergrande Motor Sold 2.66% Of Shares, And Xu Jiayin Raised More Than 10 Billion Hong Kong Dollars

Xu Jiayin, chairman of Evergrande's board of directors, has found an excellent financing method.

In the morning of May 13, 2021, China Evergrande announced on the Hong Kong stock exchange that the group had a 20% discount over the closing price of Evergrande motor on the 12th, that is, HK $40.92 per share, 260 million shares were allotted and 2.66% equity of Evergrande motor was sold, with a share allotment amount of about HK $10.6 billion.

Evergrande motor, with a market value of more than HK $400 billion, is now Xu Jiayin's most important listing platform. Since August last year, China Evergrande has raised more than HK $40 billion through Evergrande auto for three times.

This is a key and important source of funds for Evergrande, which has a tight capital chain“ After the restriction of "three red lines", China Evergrande, which has been pursuing high leverage, has encountered unprecedented debt pressure. Both investors and Evergrande's creditors are very concerned about how China Evergrande solves the debt problem. Now it seems that it has found a feasible path.

The rights issue financing can be regarded as a "cash out" of China Evergrande on Evergrande automobile. IC photo

Cash in Evergrande

This share allotment financing can be regarded as a "cash out" of China Evergrande on Evergrande automobile. If the rights issue is finally completed, China Evergrande will be able to get at least HK $10.6 billion.

China Evergrande pointed out in the announcement that the sale of shares has reduced the shareholding ratio of the top 20 shareholders of Evergrande automobile to less than 90%, meeting the necessary conditions for Evergrande motor to enter the Hong Kong stock connect in the next step. At present, China Evergrande group and its persons acting in concert hold 67.64% shares in Evergrande motor.

Yan Zhaojun, an analyst of China Thailand international strategy, told reporters in the 21st century economic report that the positive effect this has brought to Evergrande is to increase the liquidity of shares of Evergrande automobile, facilitate the participation of institutional investors, and help to be included in the Hong Kong stock connect or international index in the future. At present, the equity of Evergrande automobile is very concentrated, which leads to little correlation between shares and fundamentals.

In fact, Evergrande auto has been financing frequently since it was renamed. On January 24, 2021, Evergrande announced that it would introduce an 8% discount into the HK $26 billion war investment. At that time, most of his friends, such as the family of Liu Luan Hsiung, a wealthy Hong Kong businessman, and Chen Hua, chairman of Jingji group, helped the chairman of Evergrande's board of directors at that time.

Looking back further, in September 2020, Evergrande automobile arranged to introduce a number of well-known international investors, such as Tencent Holdings Limited, Sequoia Capital, Yunfeng fund and didi travel, in September 2020. The subscription price per share was HK $22.57, raising a total of about HK $4 billion.

Based on this calculation, Evergrande has raised HK $40.6 billion through three financing plans.

The predecessor of Evergrande automobile was Evergrande health, which was renamed as Evergrande automobile in August last year. Evergrande announced at that time that the renaming was the adjustment of the company's business focus, focusing on the field of new energy vehicles around the strategic positioning of "core technology must be world leading, product quality must be world-class".

After the change of name, Evergrande has continuously released good news to stimulate its share price. The current market value of Evergrande automobile has surpassed that of a number of well-known automobile enterprises.

As of the end of the 13th, despite the impact of the discount allotment, Evergrande motor's share price fell to HK $47.3 per share, or 7.53%. Its total market value still reached HK $462.072 billion, far exceeding that of its parent company, China Evergrande.

It is worth noting that the rising logic of Evergrande motor's share price is different from that of general track stocks. Evergrande's chips are concentrated, and its performance is also very dull, and the new energy vehicles can be said to be "paper rich".

According to the annual report of Evergrande automobile in 2020, the revenue of Hengda automobile in 2020 is 15.487 billion yuan, and the net loss is 7.665 billion yuan, which is 53% larger than that in 2019.

In terms of vehicle construction progress, according to the latest news released by Evergrande motor, nine models of hengchi have appeared at present. In addition, Evergrande plans to trial produce in the fourth quarter of this year and achieve a large number of deliveries next year.

Out of debt trouble?

As one of the leading real estate enterprises, China Evergrande's debt situation has attracted much attention from the market. Although China Evergrande put forward the operation mode of "three low and one high" as early as 2017, its debt scale has not improved greatly in recent years.

In recent years, China's real estate market has been implementing strict control measures. After the "three red lines", the financial situation of China Evergrande has been impacted to a certain extent, and this sign is gradually emerging.

According to the annual report of Evergrande in 2020, although its total interest bearing liabilities decreased to 716.5 billion yuan, the short-term liabilities remained high, with the debt due within one year reaching 335.5 billion yuan, and the cash was only 158.752 billion yuan. The proportion of short-term debt was still as high as 48.6%, and the cash was not enough to cover the short-term debt.

According to the 21st century economic report, the reporter learned from more than three different sources, including trust and insurance capital, that China Evergrande's current capital is likely to be in a tight state“ We are talking with Evergrande about the acquisition of some large assets, and we are still talking about it. " An asset acquisition platform, who did not want to be named, told 21st century economic reporter.

What's more, the situation mastered by the 21st century economic report reporter shows that Evergrande's current payment of commercial bills has also attracted the attention of ticket holders.

Under such severe challenges, China Evergrande must overcome the current hurdle with greater determination and courage.

The good news is that Evergrande's recent financing channels are relatively smooth. On the evening of April 27, according to the Shenzhen Stock Exchange, Evergrande real estate successfully issued 2021 corporate bonds (the first issue). The actual issuance scale of the bonds was 8.2 billion yuan, and the coupon rate was 7.00%.

In addition, the issue of equity financing, which is regarded as the most effective way to reduce debt, is also used very smoothly by Evergrande.

A Hong Kong stock real estate analyst, who did not want to be named, told the 21st century economic report that the parent company's debt situation is expected to be eased through the rights issue financing of Evergrande automobile or Evergrande property.

Evergrande may have more assets to package for listing. In August last year, Xia Haijun, vice chairman of the board of directors and President of Evergrande group, publicly disclosed that the introduction of war investment by Evergrande property reduced the overall net debt ratio of Evergrande by 19 percentage points, "and other high-quality assets will be successively split and listed.".

At the performance conference of Evergrande in 2020 this year, Xia Haijun also announced that he hoped that through the preparation of this year, fangchebao would be qualified to be listed in the capital market. Through the listing in the capital market, fangchebao would be cultivated into the world's largest online and offline real estate trading platform, as well as a comprehensive service platform.

In addition, Xu Jiayin also boasted that in order to realize the diversified development of Evergrande's clothing, food, housing, transportation, health care, tourism and entertainment, and create a fully closed industry, he bought back 49% of the equity of Evergrande Bingquan and planned to go public in the next step.

An "asset rich" enterprise, a "financial and skilled" entrepreneur, does not need to worry about the current debt crisis. As long as the assets can be packaged and listed, there will be people who will pay the bills and vote of trust. This is the way for China Evergrande to survive.