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

It is estimated that Evergrande Auto Group (China Evergrande New Energy Vehicle Group Co., Ltd., together with its subsidiaries) will 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.

Due to the increase in comprehensive net losses, Evergrande Auto Group was ordered to be liquidated by the Hong Kong High Court on January 29, 2024.

Out of prudence, Evergrande Auto Group increased its provision for impairment of accounts receivable of subsidiaries and associated companies of China Evergrande Group. In the first half of this year, the full amount of provision 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.

Currently, all Evergrande Group companies are deeply mired in debt. Evergrande Auto, a subsidiary of China Evergrande, is also facing severe financial and operating pressures. On July 28, Evergrande Auto announced that a notice received by a subsidiary company had made new progress.

Evergrande Auto stated 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.

According to the announcement, its subsidiaries Evergrande New Energy Vehicle (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.

Evergrande Auto disclosed in its 2023 annual report that despite a reduction in net losses, the company still faces huge debts and operating pressures. As of the end of 2023, Evergrande Auto's total liabilities reached 72.543 billion yuan, far exceeding its total assets.

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 and purchase agreement, and the potential buyer and the company have not yet entered into a credit agreement.

Going back further, after Evergrande Auto suffered a setback in introducing strategic investors, China Evergrande reported new litigation. On the evening of August 5, China Evergrande announced on the Hong Kong Stock Exchange that the content involved a huge financial recovery action.

The announcement shows that China Evergrande is taking legal action to recover about US$6 billion in dividends and remuneration from its executive director Xu Jiayin, former CEO Xia Haijun, former chief financial officer Pan Dayong and seven defendants including Xu Jiayin's spouse or ex-spouse Ding Yumei.