Evergrande Auto - talks and plans to no avail

Evergrande Auto (HK 0708) and Evergrande Group (HK 3333) share prices today only knew one color. It was red. A surefire sign that plans don't seem to be working. What happened? Evergrande wants to sell shares in the auto and service businesses. But not so many, preferably in small packages. The idea: collect a few billions, but still keep the wheel firmly in hand.

Hengchi 1 from Evergrande Auto
Hengchi 1 from Evergrande Auto

That doesn't seem to work. Evergrande stands on the wall with a mountain of debt probably worth $ 300 billion. The room for negotiation is only minimal. Especially if the desired solution does not get a political tailwind from Beijing. After today it seems certain that there will be no tailwind.

Talks ended for the time being

Evergrande Auto slipped 6,51%, the Evergrande Group with 8,21%. Yuan talks reported talks with China Vanke, the country's largest real estate developer, as broken. Also the conversations with Country Garden, a large real estate company in Guangdong Province, had come to an end without success. Both companies were in Evergrande's crosshairs as potential major investors.

The negative news had not yet been dealt with. China Property Focus announced an invitation from the provincial government of Guangdong to other companies to discuss the possibility of taking over parts of the 798 projects in 234 cities in order to bring them to a regular conclusion. The national radio announced the suspension of two projects in the city of Kunming in the south-west of the country after bills of more than US $ 32 million were overdue.

Banks create some air

There was good news after all. Multiple banks extended Loans already or soon to be due and thus temporarily gave Evergrande some breathing space.

It is possible that the measures taken are not yet sufficient to stop the crisis. Selling part of Evergrande Auto might not be enough, a complete change of ownership, or selling the majority might be the solution.

The pressure is increasing almost every day, Beijing is still demanding a quick and above all “market-driven” solution. Whatever you think of it.

5 thoughts on "Evergrande Auto - talks and plans to no avail"

  • blank

    When everyone is looking at these monitors, who is actually driving?

    • blank

      Hello areo50,
      Computer controlled “naturally” by the camera, while users can study the current shopping offers. When called, they stop at the next ice cream parlor because it has become so unbearably hot outside (and inside). The air conditioning was automatically locked because otherwise the vehicle batteries would be damaged ... ;-).
      Sunny prospects!

  • blank

    Tailwind from Beijing

    I have a feeling that the CCP and Xi Jinping generally have a problem with their own economic policy (twisting) course.

    On the one hand, one strives for national greatness, which should also be expressed in terms of high technology and prosperity. On the other hand, you create an elite that increasingly derives its elitist self-image from personal wealth, from freedom, privileges and also from your own abundance of power.
    The members of this elite no longer have anything in common with the directors and plant managers, who for several decades loyally slid around on their knees in front of their state employer with the party book in their breast pocket out of sheer gratitude ...

    The CCP glanced at Russia and other former states of the Soviet Union with sweat on its forehead and armpits.

    Evergrande-Hengchi's success is both a longing fantasy and a nightmare for the CCP and Xi Jinping.
    Longing is a national and at least nationally dominant automobile group that is on a par with foreign competitors and outperforms them technologically as much as possible. A self-confident elite that actually achieves this, on the other hand, is an absolute nightmare. In the worst case, they become media icons with money, influence and democratic ideas. A GAU from the point of view of the CCP and its leaders.

    It cannot be ruled out that we are currently experiencing one of many building blocks here on the Saabblog, which in the long term may add up to the fact that present-day China could sooner or later dismantle itself based on its internal contradictions. Really exciting ...

    Thanks Tom.

    • blank

      The question is, what is disassembled yourself? Mao dismantled China several times (e.g. the Cultural Revolution or the Great Leap), but that did not remove himself from the top. Presumably the CP will also stay in the saddle, in Hong Kong they are currently demonstrating very clearly how to restore “order”.

      • blank

        That's true, unfortunately …

        In China you sit much more firmly in the saddle than in Russia. And even there the rulers sit (still) very comfortably ...

        Perhaps you can reinvent yourself several times more? The hope for a democracy and for the old system to fail due to internal contradictions is at best a long-term perspective. But at least one….

        I don't see anyone else at the moment.

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