Evergrande’s stock of electric cars collapses, struggling to pay suppliers

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China’s shares of Evergrande New Energy Vehicle Group fell more than 9% in Hong Kong on Monday after news that it would no longer pursue a secondary listing in Shanghai and that it was struggling to pay its suppliers. The stock had lost up to 30% earlier today.

Concerns have been swirling for some time: Shares of the EV company have suffered several single-day declines of more than 20% in recent weeks, and have collapsed by more than 90% so far this year.

The automaker’s latest warnings mirrored those of its owner, which rocked global investors and raised some analysts’ fears of a possible Lehman Brothers moment in the world’s second-largest economy.

The Evergrande group has warned in recent weeks that it could default on its massive debts, which amount to more than $ 300 billion. Evergrande New Energy Vehicle, known for its brand of electric cars Hengchi, is 65% owned by the Chinese conglomerate.

The group tried to sell part of its stake in the electric vehicle sector to ease its debt crisis, but was unsuccessful, according to a document released on the stock exchange earlier this month.

Despite the name of the automaker, cars still represent only a small part of its business. Instead, senior care dominates its sales, according to its preliminary June results.

China Evergrande New Energy Vehicle Group Hengchi 1 electric vehicle at a Shanghai auto show in April.

Until recently, the automaker was also considering selling new shares, which would have taken place during a listing on the Shanghai Stock Exchange.

But after “careful consideration”, he decided to cancel the plan, he said Sunday in a regulatory dossier in Hong Kong, without giving further details.

This came just days after the EV company revealed that work had been suspended on some projects due to its owner’s “serious lack of funds”.

Evergrande New Energy Vehicle “was still exploring with different potential strategic investors to bring in new investors,” including trying to sell some of its assets overseas, the automaker’s chairman, Shawn Siu, wrote in a separate filing on Friday. But there has been “no material progress” so far, he added.
5 things to know about the Evergrande crisis: a simple failure

Without fresh funding, Siu warned that the Evergrande group’s liquidity shortage “is expected to affect the day-to-day operations of the [overall] group, worsening its ability to pay employee wages and / or other expenses. “

It would also hurt the company’s ability to continue production of its vehicles, he noted.

The warnings highlighted how critical the days and weeks ahead will be for Evergrande as a whole. The group did not settle an interest payment of nearly $ 84 million on Thursday, although it still has a grace period of up to 30 days to pay. He should then make a payment on another bond this week.

– Jill Disis contributed to this report.

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