After being suspended from trading for 3333 days, Evergrande stock (HK 17) reopened yesterday. The paper immediately came under heavy pressure and lost more than 12%. The reasons are varied, the Evergrande crisis is heading towards a new climax. The coming days will be decisive, because the first grace period for non-payment of interest on US bonds will expire. A problem that was apparently only defused at the last minute. One can also watch with excitement what is going on at Evergrande Auto. In Tianjin, the course is continuing towards production. A (unofficial) date has already been set.
Evergrande crisis about to reach a new high point
If something goes wrong, it usually happens completely. The situation of the Evergrande Group can be described in a similar way. All negotiations, which should wash fresh money into the empty coffers of China Evergrande, have been ended unsuccessfully. Of the Sales of 50,1% of Evergrande Property Services to Hopson Development, which could have brought billions, does not materialize. The talks were officially declared a failure.
The search for a new owner of the Evergrande headquarters in Hong Kong, the sale of which was supposed to raise US $ 2 billion, was also unsuccessful. The property is not for sale at the desired rate in the current situation. While the price was reduced to US $ 1,7 billion in the course of the negotiation, even this price appeared to be Yuexiu Property to be too much.
A delicate detail on the side: The Yuexiu Property is majority owned by the local provincial government, which up until a few weeks ago was a supporter of the Evergrande ambitions. And who now surprisingly refuses to help.
The slump in real estate sales is exacerbating the crisis. From September to October 20, Evergrande Group's sales plummeted 97% compared to the previous year. The company appears to be completely cut off from the inflow of new funds.
Important deadlines are running out
A crucial date is October 23rd. A 30-day grace period for the first non-adhered interest payment of 83.5 million US $ for dollar bonds ends on Saturday. If this deadline is broken, the default is official and China Evergrande is considered a bankruptcy case according to the usual rules.
Here, too, there is a marginal detail: While Evergrande no longer handles all interest payments on US bonds, the interest payments on domestic yuan bonds continue to run so far.
Apparently at the last minute, Evergrande has the funds today the überwies, reports a state medium. An official confirmation is pending.
The total of the non-compliant payments has grown to US $ 279 million in the last few weeks, including the payment that may have been made now. The deadlines continue, the possible payment is only a short delay. And new interest payments are due for November and December.
Further highlights of the Evergrande crisis cannot be ruled out.
Evergrande Auto continues to stick to plans
While the real estate division keeps writing new headlines, the auto division (HK 0708) seems to have decoupled from it. The share has been trading at a low level with a slight plus for the last 30 days. Evergrande Auto received new funding in September, following unconfirmed reports. The work in Tianjin is on schedule and the suppliers are also unchanged on board.
The order quantities are said to have been reduced, but Evergrande Auto is sticking to the start of production and the Hengchi brand. The unofficial start date is January 10, 2022 at the NEVS plant in Tianjin.
As things stand today, the collapse of the real estate group seems more likely than ever. The future of auto plans and thus also the future fate of European properties remains open.