2024-08-28
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editor of every economic report: zhang jinhe
late at night on august 27, evergrande auto (hk00708, share price hk$0.285, market value hk$3.09 billion) issued a profit warning announcement:
it is expected that evergrande auto group (china evergrande new energy vehicle group co., ltd., together with its subsidiaries) will record a consolidated net loss of approximately rmb20.254 billion in the first half of 2024;in the first half of last year, the company 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.
on the evening of march 27, evergrande auto disclosed its 2023 financial report. the financial report shows thatas of december 31, 2023, evergrande auto’s cumulative losses have reached 110.841 billion yuan, of which the loss in 2023 is about 12 billion yuan. as of the end of 2023, evergrande auto's total assets were 34.851 billion yuan, and its total liabilities were 72.543 billion yuan, of which 26.484 billion yuan was borrowed; during the same period, evergrande auto's cash and cash equivalents were 129 million yuan, far from enough to cover the borrowings.
according to a report by the daily economic news on august 12, when a reporter visited the hengchi automobile tianjin factory, he only saw a dozen private cars scattered on both sides of the road and an empty internal parking lot. in the hengchi automobile complex, only one office was lit, and only a few employees were vaguely seen working at their workstations.
"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." said the above-mentioned person familiar with hengchi automobile.
according to the above-mentioned 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 workshop employees. however, 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 later, and there were no more shuttle buses.
in august last year, evergrande auto, which had just been suspended for more than a year, announced that it had received its first us$500 million strategic investment from newton group (nwtn.us). another rmb 600 million in transitional funds will be received in batches starting from five working days after the announcement. the proposed transaction between the two parties will be completed in the fourth quarter of 2023.
in the eyes of the outside world, this money from newton group is a "life-saving money" for evergrande auto, which has been losing money for many years. however, on the evening of october 8, 2023, evergrande auto issued an announcement stating that due to the changes in china evergrande, strategic investor newton group has suspended its transitional funding support for the company and renegotiated the adjustments required for the proposed transaction plan. on april 5 this year, the strategic investment agreement signed between evergrande auto and newton group was officially terminated.
on april 30, evergrande auto admitted in its 2023 annual financial report: "due to funding reasons recently, the group has arranged for some employees to take holidays and the tianjin factory has suspended production."
however, the reporter learned from the above-mentioned insider close to hengchi automobile that hengchi automobile has stopped production since the beginning of this year, and the number of employees has been decreasing. "except for 13 security guards,currently, there are only more than 40 employees working at hengchi automobile."the above-mentioned insider close to hengchi automobile revealed to reporters that there are more than 50 inventory vehicles parked in the hengchi automobile factory.
“there used to be 500 to 600 people in the factory.there are only about 40 people left in the park now."a person familiar with hengchi automobile revealed to reporters.
recently, there have been reports that "evergrande auto dismissed employees without reason and stopped paying social security". in this regard, the above-mentioned insider revealed to the reporter:at present, the salaries of employees working at hengchi automobile are paid normally, but only 80% is paid each month.”
on august 8, the reporter called the relevant person in charge of hengchi automobile, but he remained silent on the questions raised by the reporter regarding the current situation of hengchi automobile, the number of employees working normally, and the payment of employees' wages. he only replied, "i don't know, i'm not sure."
however, regarding the social security payment situation, the relevant person in charge of the evergrande auto tianjin factory replied to the reporter: "it is being paid normally."
on the evening of june 27, evergrande auto issued an announcement stating that evergrande health requested the board of directors to convene a shareholders' meeting immediately and hold a shareholders' meeting within the time specified in article 567 of the company ordinance to consider and, as appropriate, approve the relevant proposals to appoint three directors, cai weikang, liang jiajin, and wang kenan.the ordinary resolution to remove executive directors liu yongzhuo and qin liyong and any positions they hold in the company shall take effect immediately.
the announcement stated that on june 20, 2024, the company received a notice from evergrande health industry group co., ltd. (hereinafter referred to as "evergrande health") (a shareholder of the company, holding 6.22 billion shares, accounting for approximately 57.36% of the total issued shares as of the date of this announcement) controlled by the liquidator of china evergrande group (in liquidation) that pursuant to article 78(2)(b) of the company's articles of association, a proposal to propose a resolution to be submitted at the company's annual general meeting of shareholders to be held on friday, june 28, 2024, is required to be submitted to the company at the annual general meeting of shareholders to be held on friday, june 28, 2024.ordinary resolution appoints (proposed appointment) mr. cai weikang as an executive director; mr. liang jiachun as an independent non-executive director; and mr. wang kenan, together with mr. cai and mr. liang collectively referred to as the “director nominees” as independent non-executive directors.
on june 24, 2024, the company received further notice from evergrande health, which is controlled by the liquidators of china evergrande group (in liquidation). pursuant to article 48(3) of the articles and section 566(2) of the companies ordinance (chapter 622 of the laws of hong kong), evergrande health (as a shareholder holding at least 5% of the total voting rights of all shareholders of the company entitled to vote at general meetings) requested the board to convene a general meeting immediately and to hold the general meeting within the time prescribed in section 567 of the companies ordinance to consider and, if thought fit, approve (i) the proposed appointment, and (ii) thethe ordinary resolution to remove mr. liu yongzhuo and mr. qin liyong as executive directors and any positions they hold in the company takes immediate effect.
the notice of request stated that if the board exercises its general power under article 80 of the articles to appoint a director nominee as a director after the agm, the part of the notice of request relating to the proposed appointment would be automatically revoked.
the board is considering and seeking advice on the appropriate actions in relation to the nomination notice and request notice. the company will issue further announcements, notices and circulars in accordance with the listing rules and applicable laws and regulations as and when appropriate.
it is worth noting that liu yongzhuo wascriminal detention according to law.
on the evening of june 11, evergrande auto announced that it had received two relevant letters from local government departments.first, the local government requires evergrande auto and its subsidiaries to return the 1.9 billion yuan in rewards and subsidies that have been issued; second, the tianjin factory, as evergrande auto’s main factory, is also planned to be ordered to suspend production, stop sales and rectify.
the announcement is a progress of the request received from the relevant local administrative departments on may 22. on may 22, evergrande auto announced that the relevant subsidiaries had signed a series of investment cooperation agreements with the relevant local administrative departments since april 29, 2019.as the company has not performed its contractual obligations in accordance with the relevant terms of the relevant agreements, the relevant local administrative departments intend to require the relevant subsidiaries to terminate the relevant agreements and return the various rewards and subsidies issued to the relevant local administrative departments, totaling approximately rmb1.9 billion, in accordance with the provisions of the civil code of the people's republic of china and other chinese laws and regulations., and the relevant subsidiaries shall bear joint and several liability.
the announcement stated that the company's subsidiary, evergrande new energy vehicle (tianjin) co., ltd. ("tianjin evergrande"), recently received a notice from the relevant department. according to the notice, the department checked the maintenance of tianjin evergrande's new energy passenger vehicle production access conditions and proposed three issues that need to be rectified.it is planned to order tianjin evergrande to stop the production and sales of new energy passenger vehicles and make rectifications.
during the rectification period, the department will suspend the acceptance of new product applications for new energy passenger vehicles from tianjin evergrande, as well as the electronic information transmission of new energy passenger vehicle product certificates, and will resume the application after the rectification is completed and the production access conditions are met through review. if there is any objection, tianjin evergrande may submit appeal materials to the department within five working days from the date of receipt of the notice.
the announcement stated that the company attached great importance to the department's review of tianjin evergrande and actively rectified the problems after the review. the company intends to submit complaint rectification materials to the department before the above deadline.
if the above proposed handling opinions are finally implemented, they will have a significant impact on the operating conditions of the group.
the company will fulfill its disclosure obligations in a timely manner in accordance with the provisions of the listing rules, and require tianjin evergrande to actively communicate and properly handle the matter in accordance with the guidance of the notice.
according to a reporter from securities china, although evergrande has announced the establishment of production and manufacturing bases in shanghai, guangzhou and tianjin,however, hengchi cars were previously mainly produced in the tianjin factory.
evergrande auto's 2023 annual report disclosed that by the end of that year, the tianjin manufacturing base had producedhengchi 5, mass production started in september 2022, with a total of 1,700 vehicles produced, which did not meet the relevant requirements. as of the end of 2023, evergrande auto had delivered more than 1,389 vehicles. at the same time, evergrande auto said that due to funding reasons, the company arranged for some employees to take a holiday and the tianjin factory suspended production.
daily economic news compiled from evergrande auto announcements and public information
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