Evergrande revealed another big news: Xu Jiayin's "right-hand man" Liu Yongzhuo was taken away. On the morning of January 8, Evergrande Automobile issued an announcement that trading of the company's shares would be temporarily suspended from 9 a.m. that day, pending the company's release of an announcement regarding inside information.
At noon on January 8, Evergrande Automobile announced that the company had learned that its executive director, Mr. Liu Yongzhuo, had been criminally detained in accordance with the law on suspicion of illegal crimes.
So far, Xu Jiayin, chairman of the board of directors of China Evergrande, Liu Yongzhuo, president of Evergrande Automobile, and Du Liang, general manager of Evergrande Wealth, have all been arrested.
Affected by this news,After stock trading resumed at 1 p.m. today, Evergrande Automobile's stock price plummeted, with the maximum drop exceeding 20%.
At present, the specific reason why Liu Yongzhuo was taken away has yet to be announced by the relevant departments. Discussions about Evergrande Automobile have been circulating on the Internet.
With a debt of 75.6 billion, Liu Yongzhuo attended the car delivery ceremony a week ago
Liu Yongzhuo joined Evergrande in 2003 and served as Vice President of China Evergrande. He was in charge of Guangzhou Evergrande Taobao Football Club, Evergrande Cultural Industry Group, Evergrande Agriculture and Animal Husbandry Group, Evergrande Internet Finance Group, and Evergrande High-tech Group. He is currently President of Evergrande New Energy Vehicle Group and Chairman of Evergrande New Energy Technology Group, and has served Evergrande for 21 years.
His last public appearance was at the "Large Customer Car Delivery Ceremony" at the end of 2023. Also present that day were Gao Jingshen, CEO of Hengchi Automobile, Zhou Jishu, Chairman of Ward Brothers Co., Ltd., and Zhou Yuqiu, General Manager of Aochi Auto Sales Co., Ltd.
Just as Xu Jiayin "shouted slogans" to ensure the delivery of the building, Liu Yongzhuo vowed at the delivery ceremony, "The delivery volume of Hengchi 5 has increased steadily in the past year. What is even more encouraging is that the excellent quality and considerate after-sales service have allowed this car to win an excellent reputation among users."
But in fact, Evergrande Automobile's delivery situation is very bleak. The latest data shows that in the first 11 months of 2023, the sales volume of Hengchi 5 was 937 units, with the average monthly sales volume being less than 100 units.
The house leaked and it rained all night. A week ago, Evergrande Automobile’s 500 million strategic investment fell through.
According to an announcement by Evergrande Automobile on January 1, the share subscription agreement and debt-for-equity swap subscription agreement between the company and Newton Group were originally scheduled to end on December 32 last year, but Newton Group did not agree to extend the deadline, which means that the original subscription agreement has expired and has now expired.
Before the money could be saved from the wealthy people in the Middle East, some netizens said that "Evergrande Motors is only one step away from bankruptcy."
It is worth noting that the invalidation of the agreement does not mean that Evergrande Automobile has given up the transaction. On January 1, Evergrande Auto responded in an announcement that the parties to the Newton Group Share Subscription Agreement and the Debt-for-Equity Swap Subscription Agreement, as well as certain stakeholders, have been and will continue to negotiate on amending certain key terms of the proposed transaction and the debt-for-equity swap.
The latest financial report data shows that in the first half of 2023, Evergrande Automobile’s revenue was 154 million yuan, a year-on-year increase of 540.98%. The increase in revenue was mainly due to the start of sales of Hengchi 5. Net losses totaled RMB 6.873 billion, a year-on-year decrease of 48.6%, including: losses from discontinued businesses held for sale (i.e. divestment of real estate projects) of RMB 1.061 billion, non-operating losses from asset disposals and asset impairments of RMB 3.716 billion, and operating losses of RMB 2.096 billion.
As of the end of the first half of 2023, Evergrande Automobile's total assets were 42.852 billion yuan, total liabilities were 75.692 billion yuan, and net assets were -32.84 billion yuan. Evergrande Automobile has failed to pay off its due debts, totaling approximately 9.341 billion yuan, and overdue commercial bills totaling approximately 3.591 billion yuan.
How many strategic investors has Evergrande Motors cheated?
Evergrande Automobile is regarded by the outside world as Xu Jiayin's last hope.
In 2018, under the environment of rising sales of new energy vehicles, many companies are actively making cross-border deployments. Naturally, Xu Jiayin was not to be left behind, allowing Evergrande Health to acquire 45% of the equity of Faraday Future (FF) owned by Jia Yueting for HK$6.75 billion. However, the two parties soon went to court over funding and control issues.
After parting ways with Jia Yueting, Xu Jiayin relied on large investments to lay out the new energy vehicle industry chain, trying to use "money capable people" to break through the threshold of car manufacturing.
Xu Jiayin, who was fashionable and famous at the time, spoke very straightforwardly, saying that Evergrande’s car-making philosophy is “buy, buy, buy, combine, circle, circle, big, big, good, good, good.”
Real estate businessman Xu Jiayin's superb skills in the capital market have also been replicated in Evergrande Motor's stock price changes and equity financing.
At the beginning of 2019, Evergrande Health spent US$930 million to acquire NEVS, the parent company of Guoneng Automobile, and obtained the qualification to produce new energy vehicles.
In June 2020, Evergrande Health acquired the remaining equity of National Electric Vehicle Sweden (NEVS) for US$379.5 million, and the company's stock price began to soar. In August of the same year, Evergrande Health changed its name to Evergrande Automobile, realizing the listing of its new energy vehicle business. The share price of Evergrande Automobile, which was successfully renamed, once exceeded that of BYD.
According to incomplete statistics, from June 2018 to May 2021, after Evergrande Health changed its name to Evergrande Automobile, the company's stock price increased nearly 8 times, and its market value increased more than 9 times. Of course, behind this is the contribution of "war investment leeks" and the endorsement effect of Jack Ma, Ma Huateng, Shen Nanpeng and other wealthy people who have invested in the company.
On September 15, 2022, Evergrande Automobile issued an announcement to raise HK$4 billion through the placement of new shares. The strategic investors introduced include Yunfeng Fund, Tencent, Sequoia Capital, Didi and other well-known investors. In the same month, Evergrande Automobile issued another announcement stating that it intended to land on the Science and Technology Innovation Board.
Public information shows that Yunfeng Fund was established in early 2010. It is a private equity fund named after Jack Ma, chairman of the board of directors of Alibaba, and Yu Feng, founder of Juzhong Media, and jointly launched by a group of industry leaders, successful entrepreneurs and successful entrepreneurs.
This means that as the helmsmen and competitors of China's two Internet giants, Jack Ma and Ma Huateng have rarely joined forces to invest in Evergrande Automobile. Prior to this, Jack Ma, Ma Huateng, Shen Nanpeng and others invested 23.5 billion in strategic investment in Evergrande Property.
Soon after, Xu Jiayin expanded his "circle of friends".
On January 24, 2021, Evergrande Automobile issued an announcement to issue 952 million new shares to 6 strategic investors, attracting a total of HK$26 billion in investment. Among the investors in this additional issuance are old acquaintances such as Liu Luanxiong’s wife, as well as new faces such as Wang Kaiguo and Liu Minghui.
This is also one of the largest equity financings in the new energy vehicle industry. After the announcement, Evergrande Automobile, which had not officially sold a single car, had a market value of an astonishing 400 billion, and its stock price increased tenfold.
The difference between the two private placements is only 5 months. The price of strategic placement increased from HK$22.65/share to HK$27.30/share. Those who entered the game early may have benefited. However, Evergrande Automobile's share price has now fallen below 1 yuan, and strategic investors are almost trapped.
Among them, the one who suffered the most heavy losses was Hong Kong tycoon Liu Luanxiong. In 2021, the 3 billion invested by Liu Luanxiong's wife, Ms. Chen Kaiyun (Gambi), in Evergrande Automobile through a fixed increase was almost in vain.
Before the listing of Evergrande Properties, Liu Luanxiong also invested 4.5 billion Hong Kong dollars to enter the fixed-increase list. Now the share price of Evergrande Properties has plummeted by more than 90%. The original tens of billions of deposits on the account have been withdrawn by Evergrande Group to repay debts. It is not known when the trading will be resumed.
write at the end
The capital market never lacks new players. Xu Jiayin once made the right bet during the golden decade of rapid real estate development, and later took new energy vehicles as his new bet.
But his time has long passed.
Unlike cross-border car manufacturers such as Baidu and Xiaomi, Evergrande, which started out in the real estate business, does not grasp the core elements of the new round of competition in the automobile industry. It has neither electrification technology nor intelligent network connection foundation. Evergrande Automobile is an emerging car company driven entirely by capital.
Xu Jiayin had his eye on the trend of the industry, but he no longer had any leverage. Since the second half of 2021, the debt crisis of Evergrande Group has continued to ferment, and Evergrande Automobile has also entered a "severe winter period."
Sales were poor and the company was insolvent. For Evergrande Automobile, it currently does not have the ability to "make blood" and is in the stage of urgently "needing blood transfusion". How to solve the financial pressure is still an urgent test before us. (ifeng.com Technology Comprehensive)
References:
1. A sudden change - "71.7 billion assets sold for 2 yuan, can Evergrande Auto be saved?" 》
2. Ifeng.com Finance - "Evergrande Automobile was abandoned, and the Middle Eastern financier who wanted to take over was also a clay Buddha"
3. Juchao Business Review - "Evergrande Automobile specializes in cutting the leeks of big bosses"