The Evergrande Group today confirmed the talks on the sale of the auto division. It remains to be seen whether it will be a complete sale. Evergrande seems to prefer partners and partial sales to further develop the auto business. It is unclear whether Evergrande can enforce its own ideas. Because the company is not in a good negotiating position. Regardless of this, the development was positively received by the stock exchange.
Record loss in the first half of the year
The share (HK 0708) went out of the market with a plus of over 8% and continued the positive development of the previous days. Simultaneously warns Evergrande faced a record loss for the Auto Department. For the first half of 2021, the group expects a loss of US $ 740 million. The numbers would be a significant increase in losses from last year when a deficit of $ 377 million was incurred over the same period.
The losses are generally not a surprise. Evergrande invests significantly in modern car factories and new models. Money is also flowing to Sweden, where NEVS provides development services for Evergrande Auto. Against this background, the record loss is impressive with regard to the future, assuming that the funds are mainly used for research, development and the construction of new plants.
Research and development are not the biggest item
A closer look at how the losses were made up is helpful. He puts the sums in a different light.
The numbers for the last year (2020) are revealing. The losses, which were already high at that time, are made up as follows: The costs for research, development and advertising add up to US $ 351 million. Depreciation was reported at US $ 160 million. But the biggest item is different. Interest payments on shareholder loans are the most significant at $ 423 million.