Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Evergrande EV unit shares jump after chairman signals business shift

Stock MarketsOct 25, 2021 05:31AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: An aerial view shows residential buildings at the construction site of Evergrande Cultural Tourism City, a China Evergrande Group project whose construction has halted, in Suzhou's Taicang, Jiangsu province, China October 22, 2021. Picture tak 2/2

By Clare Jim and Andrew Galbraith

HONG KONG (Reuters) -Shares in China Evergrande Group's electric vehicles (EV) unit (HK:0708) rose on Monday as the embattled property developer moved to prioritise the growth of its nascent EV business over its troubled core real estate operations.

Evergrande , reeling under more than $300 billion in liabilities, averted a costly default last week with a last-minute bond coupon payment, buying it more time to head off a looming debt crunch with its next major payment deadline on Friday.

An announcement by its chairman, Hui Ka Yan, reported by state media on Friday, that it would make its new electric vehicle venture its primary business, instead of property, within 10 years, cheered investors on Monday.

Evergrande rose as much as 6% during the session before closing down 0.7%. China Evergrande New Energy Vehicle Group Ltd rose 11.4%. The benchmark Heng Seng Index was flat.

Raymond Cheng, CGS-CIMB Securities' head of China research, said the business shift makes sense given Beijing's growing support for EVs and its increased tightening of the frothy real estate sector.

"This is the best outcome, if it just focuses on existing developments and maintains the operation," Cheng said.

While the move would help Evergrande deleverage by gradually scaling down its massive undeveloped land holdings, Cheng said it was unclear how it would affect the company's planned disposals including stakes in the EV unit.

Evergrande's new vehicle business, founded in 2019, has yet to reveal a production model or sell a single vehicle https://www.reuters.com/business/autos-transportation/before-debt-woes-china-evergrandes-ambitious-car-making-goals-stunned-industry-2021-10-18. Last month, the unit warned it was still seeking new investors and asset sales, and that without either it might struggle to pay salaries and cover other expenses.

Hui expects property sales will slow to about 200 billion yuan ($31.31 billion) per year within the 10-year period, compared to more than 700 billion yuan last year, China's Securities Times reported on Friday.

NEXT HURDLES

News late last week that Evergrande had averted a default by securing $83.5 million for the last-minute payment of interest on a bond has lifted confidence the company may be able to avoid a messy collapse that would have significant ramifications for global financial markets.

On Monday, sources told Reuters some bondholders had received coupon payments they were owed last week, which suggested debt problems were being addressed.

Evergrande next needs to find $47.5 million by Friday and has nearly $338 million in other offshore coupon payments coming up in November and December.

Broader concerns about China's real estate sector, which accounts for a quarter of gross domestic product, still loom large for investors and policymakers in the world's second-largest economy.

Developer Modern Land has a $250 million bond maturing on Monday. It said last week it ended an attempt to seek bondholder approval to extend the maturity date of the notes by three months, citing liquidity issues.

Calls to Modern Land's investor relations office were not answered when Reuters sought comment on whether the payment has been made.

As liquidity concerns in the sector grow, property firms with large dollar-denominated debts will meet with the National Development and Reform Commission in Beijing on Tuesday to report their total issuance volume and repayment capability, a source with direct knowledge of the matter said.

Media outlet Cailianshe first reported the meeting earlier on Monday.

Separately, Evergrande said on Sunday work had resumed on more than 10 projects in six cities including Shenzhen. Many of its projects had been halted due to payments owed to suppliers and contractors.

Also lifting general confidence, state media outlet Xinhua in an article on Monday said the spillover effect of Chinese real estate companies' debt default risks to the financial industry would be controllable.

The report follows comments from senior officials including Vice Premier Liu He and central bank governor Yi Gang last week, who also said property companies were facing debt default issues because of poor management and a failure to adjust to market changes.

Evergrande EV unit shares jump after chairman signals business shift
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (8)
Terrance Brush
Terrance Brush Oct 25, 2021 6:07PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Smoke & mirrors
Chris Johnson
Chris Johnson Oct 25, 2021 6:02AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
More empty promises based on hot air... And the crowd took the bait. Mission accomplished
Kevin Le
Kevin Le Oct 24, 2021 10:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yes. plow more money into a capital intensive business whrn you have no money. good luck
perplexed76 .
perplexed76 . Oct 24, 2021 10:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
the problem is done, they will sell electric cars after bankcruptcy
Wuhan Lee
Wuhan Lee Oct 24, 2021 10:05PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
China is very honest
ZS Beck
ZS Beck Oct 24, 2021 9:10PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
At least China has money, don't need to be printed. Another crisis in the US and the country goes belly up.
Bill Bill
Bill Bill Oct 24, 2021 9:10PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Nope.
Tyrone Jackson
Tyrone Jackson Oct 24, 2021 9:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
State media said - Lmfao
Matt Brackley
Matt Brackley Oct 24, 2021 9:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
yup just as trustworthy as CNN or Fox
Jokers R Us
Jokers R Us Oct 24, 2021 8:45PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Lol
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email