Evergrande Auto has been completely shut down!

Evergrande Auto has been completely shut down!

On the evening of April 24, Hengda Motor announced in an announcement that the Tianjin factory had suspended production of the Hengchi 5 due to insufficient funds. Before that, Hengda Motor also suspended other factories and concentrated resources on production at the Tianjin factory. The suspension of production at the Tianjin factory means that the first model of the Hengchi brand, "Hengchi 5", will be suspended for a period of time, but Hengda Motor said it expects to resume production in May 2023.

Evergrande Auto has been completely shut down!

Hengda Automobile’s suspension of production had long been foreshadowed. On March 22, Hengda Automobile has issued an announcement indicating that Hengchi 5 is in continuous mass production. As of March 23, 900 vehicles have been delivered, and informed the outside world that Hengda Group will face the risk of suspension in the case of not being able to obtain new liquidity. On the same day, Hengda said in the announcement that in order to concentrate financial resources to support the mass production of Hengchi 5, the company continues to promote cost-saving measures, including optimizing the staff structure. In addition, according to the original plan, a total of 5 billion-7 billion yuan will be required from 2023 to 2026 to support its plan to launch a number of flagship models. Hengda Automobile pointed out that in the case of not being able to obtain new liquidity, Hengda New Energy Vehicles will face the risk of suspension.

Combined with the analysis of the announcement disclosed yesterday evening, it means that the financing plan of Hengda Automobile is not going well, but yesterday evening China Hengda and Hengda Automobile both issued announcements to announce another way out of the predicament – China Hengda intends to acquire 2 yuan Hengda Automobile related projects and collect about 24.80 billion debt to help Hengda Automobile out of the predicament.

Evergrande Auto has been completely shut down!Evergrande Auto has been completely shut down!

China Evergrande and Hengda Automobile announced in separate announcements that China Evergrande intends to acquire 47 residential and property development projects under Hengda Automobile for 2 yuan. After completion, Hengda Automobile will no longer have any interests in the sale group. At the same time, China Evergrande will undertake liabilities of about 24.789 billion yuan for these projects as the transaction price. According to the announcement, the 47 projects sold by Evergrande Automobile include 21 Hengda Health Valley projects, 5 Hengda Health City projects, and 21 various property development projects. The projects are located in Xi’an, Zhengzhou, Chongqing, Wuhan and other cities. Evergrande Automobile said in the announcement that after the transaction is completed, it will continue to operate the existing main business of the new energy vehicle division and hold one residential and property development project in Tianjin and Nanning. In addition, Hengda Motor also stated that since it is only required to pay a nominal consideration of 2 yuan for the sale, the company does not expect to receive any net proceeds from the sale.

Evergrande Auto has been completely shut down!

That is to say, there will be almost no gain from the internal transaction. In this regard, China Evergrande said: "Considering the recent orientation of investors towards companies listed on the Stock Exchange that are mainly engaged in the new energy vehicle division, the board believes that the valuation of Evergrande Automobile can be improved by concentrating Evergrande Automobile’s business in the new energy vehicle division, which may help attract investors to join Evergrande Automobile and raise funds." At the same time, China Evergrande believes that the restructuring can optimize the structure of Evergrande Automobile Group, allowing it to focus on the development of the new energy vehicle division and allocate suitable resources to the research and development and production of new energy vehicles in the new energy vehicle division. In addition, Evergrande Automobile pointed out that it is actively seeking external potential investors for possible cooperation opportunities. As of the date of the announcement, no definitive agreement has been signed with any potential investors.

Evergrande Auto has been completely shut down!

In addition to reducing debt and attracting potential investors, China Evergrande also said in the announcement: "As part of the overall restructuring plan of its overseas debt, it is currently expected that the company’s financial creditors will be able to obtain bonds that can be exchanged for Evergrande Automobile shares on certain terms. Therefore, these creditors will also benefit from the value growth of Evergrande Automobile Group." According to the overseas workout announcement issued by China Evergrande, there are debt repayment plans linked to Evergrande Property and Evergrande Automobile shares in the corresponding debt repayment terms for investors to choose.

According to public information, Hengda Automobile, formerly known as Hengda Health, was initially responsible for operating China Evergrande’s big health business. In 2019, Hengda announced its entry into the field of new energy vehicles. In August of the following year, Hengda Health was renamed Hengda Automobile, responsible for promoting the research and development, production and sales of new energy vehicles, as well as the elderly care industry.

Evergrande Auto has been completely shut down!

So far, Hengda Automotive’s product matrix has a total of 9 models, including Hengchi 1, Hengchi 2, Hengchi 3, Hengchi 4, Hengchi 5, Hengchi 6, Hengchi 7, Hengchi 8 and Hengchi 9. The model grades include cars, SUVs, and MPVs, covering all grades from A to D. However, only one model has been mass-produced so far, and only 900 new cars have been delivered before they are discontinued.

Evergrande Auto has been completely shut down!Evergrande Auto has been completely shut down!

Hengda Automobile annual report data show that during the period of 2018-2020, Hengda Automobile lost 1.429 billion yuan, 4.426 billion yuan and 7.394 billion yuan respectively, that is to say, Hengda has accumulated 13.249 billion yuan in three years.

Although Hengda Automobile’s first model, Hengchi 5, has been mass-produced and listed, it is far from pulling Hengda Automobile out of the quagmire, which is mired in financial crisis. The latest financial report shows that as of December 31, 2021, Hengda Automobile’s total assets were 59.521 billion yuan, total liabilities were 58.83 billion yuan, and the asset-liability ratio reached 98.84%.

Obviously, the financial crisis has become an unavoidable problem in the process of Hengda Automobile’s car construction. Judging from the current situation of Hengda Automobile, if Hengda Automobile wants to continue to operate normally and mass-produce more new cars in the future, it means that Hengda Automobile still needs a lot of "blood transfusion". At present, Hengda is facing a lot of information about the person being executed. Under the fierce market competition, no one knows how high the wind wave Hengda Automobile can set off in the future. As for whether the Hengda Automobile crisis can be improved after this internal reorganization, the answer will soon surface.

Evergrande Auto has been completely shut down!

New car compulsory traffic insurance data shows that since the official delivery on October 29, 2022, Hengchi 5 has delivered a total of 975 vehicles, of which 519 vehicles will be delivered in 2022 and 456 vehicles will be delivered in the first two months of 2023.