[ad_1]
Shares of the China Evergrande Group’s electric car unit in Hong Kong collapsed, wiping out around $ 80 billion from its market value.
Shares of its auto subsidiary China Evergrande NEV fell 22% on Thursday after the parent company said the unit lost $ 740 million in the first half of the year. The market value of the electric vehicle sector was around $ 87 billion at its peak on April 16, which is higher than the market value of Ford Motor Company and nearly four times that of Evergrande itself at the era. Evergrande NEV shares have fallen 92% since then, the worst performance on the Bloomberg World Index.
The wave of declines comes in light of fears that Evergrande may resort to selling off its real estate assets amid mounting pressure from Beijing over the scale of its catastrophic debts as it is the real estate developer the most indebted in the world, according to “Bloomberg” and seen by “Al Arabiya.net”.
Shares of listed companies – including the 65% stake it owns in Evergrande NEV – are most liquid if Evergrande needs cash quickly, as Evergrande raised $ 1.4 billion in May from the unit during a sale of shares at a very reduced price.
“It is very clear that Evergrande NEV is underfunded,” said Castor Pang, head of research at Core Pacific-Yamaichi International HK. “Now that the parent company is faced with a liquidity problem, it is impossible for it to meet previous targets for producing electric cars.”
Evergrande has pumped a lot of capital into its electric car unit to become the world’s largest electric car maker by 2025, according to plans by company chairman Hui Ka Yan. Last year the company name changed from Evergrande Healthcare Group to Evergrande New Energy Vehicle, but the majority of its revenue still comes from its healthcare business.
In a call for results in late March, Hu said the company plans to start test production of the cars at the end of this year, later than the original schedule last September.
Evergrande said earlier this month that it was in talks with “several independent investors” to sell stakes in electric vehicle real estate and service subsidiaries.
Source link