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Late at night on August 27, Evergrande Auto suddenly issued a profit warning announcement.

The announcement stated that Evergrande Auto Group (China Evergrande New Energy Vehicle Group Co., Ltd., together with its subsidiaries) is expected to record a comprehensive net loss of approximately RMB 20.254 billion in the first half of 2024; while in the first half of last year, it recorded a comprehensive net loss of approximately RMB 6.873 billion.

Evergrande Auto said that the Group expects to record an increase in comprehensive net losses in the first half of 2024. In view of the fact that China Evergrande Group was ordered to be liquidated by the Hong Kong High Court on January 29, 2024, the company increased the impairment provision for accounts receivable of China Evergrande Group's subsidiaries and joint ventures out of prudence. The full provision for the first half of 2024 was approximately RMB 16.737 billion.

Evergrande Auto stated in the announcement: The information contained in the announcement is based only on the preliminary review of the company's management on the current financial information, and is not based on any data or information audited or reviewed by the company's auditors or audit committee. Shareholders and potential investors are advised to carefully read the first half results announcement expected to be published at the end of August.

Image source: Photo by Li Xing, reporter of China Business Network

Currently, all Evergrande Group companies are mired in debt, and Evergrande Auto is also facing severe financial and operational pressures.

On the evening of July 28, Evergrande Auto announced that its subsidiaries Evergrande New Energy Automobile (Guangdong) Co., Ltd. and Evergrande Smart Automobile (Guangdong) Co., Ltd. received notices issued by the relevant local people's courts on July 26. The main contents of the announcement are as follows: Individual creditors of the relevant subsidiaries applied to the relevant local people's courts on July 25 for bankruptcy reorganization of the relevant subsidiaries.

On the morning of August 5, Evergrande Auto announced that the relevant local people's court held a hearing on the bankruptcy reorganization of the relevant subsidiaries on August 2, and the relevant local people's court ruled that the relevant subsidiaries entered the bankruptcy reorganization procedure.

Prior to this, Evergrande Auto was required to return a total of approximately RMB 1.9 billion in rewards and subsidies to relevant local administrative departments due to breach of contract.

According to a report by the "Daily Economic News" on August 12, a few days ago, a reporter came to the Evergrande Auto Tianjin Factory, Hengchi New Energy Vehicle (Tianjin) Co., Ltd. (hereinafter referred to as Hengchi Auto), located on Gaoxin 2nd Road, Binhai Science and Technology Park, Dongli District, Tianjin. The first thing he saw was more than a dozen cars parked scattered on the road outside the south gate of the factory, few people walking on the park roads, and overgrown weeds in the park.

"The factory is in a state of suspension, and there are only a few dozen people working in the factory." A staff member who was on duty at the gate of the Hengchi Automobile Complex pointed to the vehicles parked on the road and told reporters that from the vehicles parked at the gate, it can be seen that there are very few people working in the factory now.

An insider close to Hengchi Automobile revealed to reporters, "The factory used to have 500 to 600 people, but now there are only about 40 people left in the park." "At present, the factory has stopped production, and the remaining staff are mainly company leaders, team leaders, and workers in charge of the day and night shifts in the workshop."

According to the insider, when the factory was at its peak of production, Hengchi Automobile would arrange more than ten shuttle buses to pick up and drop off employees. But starting from October last year, the number of shuttle buses for picking up and dropping off employees began to gradually decrease, until the production was stopped, and there were no more shuttle buses.

In addition, an insider revealed to reporters: "At present, the wages of employees working at Hengchi Automobile are paid normally, but only 80% is paid every month."

Image source: Photo by Li Xing, reporter of China Business Network

It is worth noting that on August 26, Evergrande Auto announced on the Hong Kong Stock Exchange: discussions regarding potential share transfers are still ongoing; the potential seller and the potential buyer have not yet entered into a sales agreement, and the potential buyer and the company have not yet entered into a credit agreement.

(The content and data of the article are for reference only and do not constitute investment advice. Investors act accordingly at their own risk.)