News summary
Evergrande Automobile announced that due to changes in local policies, subsidiaries will need to refund approximately 1.9 billion yuan in investment incentives and subsidies. Suspension continues, facing severe capital challenges, with a total market value of 41bingonearmetoday.21 billion Hong Kong dollars.
Newsletter text
Evergrande Motors faces major financial adjustments and needs to refund nearly 1.9 billion yuan in government subsidies
Evergrande Automobile (00708bingonearmetoday.HK) and its subsidiaries have recently encountered difficulties with local governmentsbingonearmetodayFinancial adjustment requirements. On May 22, the group disclosed that its subsidiary Evergrande New Energy Vehicle Investment Holding Group Co., Ltd. was required to cancel the signing of contracts with the local government.bingonearmetodayThe investment cooperation agreement will be returned to the previous government, with a total amount of approximately RMB 1.9 billion.
Evergrande Automobile pointed out in its announcement that since April 29, 2019, its subsidiaries have signed a series of investment agreements with local governments. However, due to failure to perform its obligations in accordance with the terms of the contract, in accordance with the Civil Code of the People's Republic of China and other relevant laws and regulations, the local government has requested that these agreements be terminated and requested a refund of 1.9 billion yuan in rewards and subsidies.
Evergrande Motor said it is currently planning to coordinate with local governments to resolve the matter. The Company acknowledges that if these requirements are ultimately implemented, they will have a material adverse impact on the financial condition and operations of the Company and its subsidiaries. Evergrande Motor said it would abide by the provisions of the listing rules and required its subsidiaries to actively communicate and properly handle the matter.
In addition, Evergrande Motor's shares will continue to be suspended until further notice. As of the suspension, Evergrande Motor's total market value was HK$4.121 billion.
Recently, Evergrande's situation has worsened. In April this year, the company announced the failure of Newton Group's strategic investment. Evergrande Automobile signed a strategic investment agreement with Newton Group in August 2023. However, due to mandatory measures taken by Xu Jiayin, executive director of China Evergrande, the transaction could not continue, and the investment was suspended in October of the same year.
Since its establishment in 2019, Evergrande Automobile's cumulative losses have exceeded 100 billion yuan. As of the end of last year, vehicle delivery exceeded 1389 units. Last year, the company's revenue was 1.34 billion yuan, mainly from property sales. The annual loss was 11.995 billion yuan, a decrease from the previous year.
Faced with financial difficulties, Evergrande Automobile has stated that it will seek financial support from strategic investors and is committed to promoting the group's survival and future development. Whether the Group can continue to operate will depend on its ability to generate financing and operating cash flows, as well as the implementation of business and operational restructuring plans and financing plans.
Evergrande Automobile also stated that after introducing strategic investors and obtaining funds, it will promote Hengchi's fifth annual payment and modification, as well as the development and mass production of Hengchi 6 and Hengchi 7, while continuing to develop new platforms and new models based on market demand.