Hengda Auto loses life-saving money

In the final game of Evergrande, the last boot finally landed.

From 1996 to 2021, Hengda’s overspeed development drew a steep upward arc in various markets. From 2021 to 2022, it left a chicken feather with a net loss of more than 800 billion yuan. In 2023, from the group’s total debt of more than 2.40 trillion yuan to Xu Jiayin’s compulsory measures, Hengda has repeatedly been on the hot search list.

Evergrande’s fall, spare a place to sigh, and the debt quagmire that has been difficult to end so far. But I thought it was obtained on August 14 last yearNewtown GroupAfter about 500 million US dollars of strategic investment, Hengda Automobile can become the last lone star of the Hengda series. Unexpectedly, on April 5, Hengda Automobile announced in the Hong Kong Stock Exchange that the strategic investment agreement signed with NWTN (Newton Group) was terminated.

The original deal and the related debt-equity swap amendments failed to develop further. This also means that in the endgame of Evergrande, the last boot has finally landed.

Real help or fake straw?

In August 2023, Hengda Automobile suddenly announced that it had signed an agreement with Newton Group. Newton Group implemented a strategic investment of about 500 million US dollars in Hengda Automobile and provided a transition fund of 600 million yuan. All the funds invested in this war will be used for Hengda Automobile’s Tianjin factory to ensure thatHengchi 5The normal production and the sequential mass production of 7.

In addition, Newton Group will also assist Evergrande in exploring overseas markets and achieve the annual export of 30,000 – 50,000 vehicles to the Middle East. The transaction was originally expected to close in the fourth quarter of 2023.

At that time, Hengda Automobile introduced the background of Newton Group as "Middle East capital". In the hours before the official announcement of the transaction, Hengda Automobile’s share price rose abnormally, closing up 14% on August 14.

In the eyes of the outside world, the Newton Group’s funds are a "life-saving money" for Evergrande, which has been losing money for many years.

"The Group will need to obtain significant capital in the foreseeable future to fund these financial obligations and capital expenditure under various contractual and other arrangements." Evergrande has said it has taken a number of plans and measures to ease liquidity pressures and improve its financial position.

Just two months later, the deal was suspended for a strategic investment that was thought to have saved Evergrande.

It is reported that the change is related to the negative news of Xu Jiayin, the chairperson of the board of directors of China Evergrande at that time, and the change of Evergrande workout. The transaction was signed with 19 preconditions, including the entry into force of China Evergrande workout and the absence of material adverse events.

Since then, the above transaction was temporarily suspended. It is understood that the payment is indeed 200 million yuan.

On the first day of this year, Hengda Automobile announced that the share purchase agreement and debt-for-equity subscription agreement between Hengda Automobile and the UAE new energy vehicle brand Newton Group were originally scheduled to end on December 31, 2023, but Newton Group did not agree to extend the deadline, which means that the original subscription agreement is invalid.

In this regard, the outside world believes that this is just a rhetoric of Hengda Automobile, and the possibility of Newton Group continuing to invest in Hengda Automobile is very small. At the same time, securities industry experts also analyze that Newton Group has never shown its more professional experience and ability than Hengda Automobile, and it is just a "hunter" in the capital markets. Evergrande Automobile has lost its value in the eyes of Newton Group without the halo of Evergrande concept.

However, the outside world has been divided on the details behind the "top gifter in the Middle East" who helped Evergrande.

According to public information, the founder behind Newton Group is actually from China. Its predecessor was founded by Chinese Wu Nan in Tianjin in 2014. After completing the equity transfer agreement with Tianjin Tianqi Group in 2019, it was qualified to build a car and released a concept car that year. However, it has not built a car since then.

In June 2022, Newton Group announced that it would move its global headquarters to the UAE and change the company’s brand from "Iconic" to "Newton". In November of the same year, Newton Group listed on Nasdaq and became the first listing of new energy vehicles in the United States. Currently, Newton Group is listed inAbu DhabiOwns a vehicle assembly plant and a supply chain production base in Jinhua, China.

However, the financial strength of the Newton Group, which moved to the Middle East and climbed the royal family, is far from being a "top gifter". According to the financial report, from 2020 to 2022, the Newton Group will achieve zero revenue. By the end of 2022, the total debt of the Newton Group is 91.97 million US dollars, while the cash and cash equivalents held are only about 212 million US dollars.

This just confirms the judgment of the securities industry experts mentioned above.

Who else can stand up?

Now the external support to determine the exit, into the car 5 years, Hengda car where to go is still not the answer. After all, in the past few years, Hengda car is basically burning money, 2021-2022, Hengda car losses were 56.344 billion, 27.664 billion yuan.

After 2023, Hengda tried to save itself. In April last year, China Evergrande and Hengda Automobile both issued announcements, and Hengda Automobile agreed to sell 47 existing health space projects to China Evergrande affiliates for 2 yuan as the actual owner.

Evergrande’s explanation is that after the completion of the transaction, in addition to continuing to hold the Tianjin project and the Nanning project in the short term, Evergrande Automobile will focus on the research and development and production of new energy vehicles. In fact, this is only Hengda’s stop-loss operation.

After all, the health management division is still Hengda’s main source of income. According to the financial report, in 2019 and 2020, Hengda’s health management revenue was 4.975 billion yuan and 15.268 billion yuan respectively, an increase of 208%, mainly due to the significant increase in Hengda’s health Valley revenue. At the same time, the health management division accounted for 88.28% and 98.79% of Hengda’s total revenue.

This means that although Evergrande is named after "cars", its real main business is the health management business that makes money from the Health Valley project.

But "losing money" is even more true. According to the latest financial report, Hengda Automobile, listed on the Hong Kong Stock Exchange, has a full-year revenue of 1.34 billion yuan in 2023, and a net loss of 11.995 billion yuan, a year-on-year reduction of 56.64%.

According to Hengda Automobile’s announcement on the Hong Kong Stock Exchange on March 27, as of December 31, 2023, Hengda Automobile’s cumulative loss and shareholder loss were 110.841 billion yuan (loss 98.906 billion yuan in 2022) and 37.693 billion yuan (loss 68.651 billion yuan in 2022). Cash and cash equivalents on December 31, 2023 were 129 million yuan (220 million yuan in 2022).

So the question of "where did Hengda’s money go?" has always made capital markets suspicious. But in fact, looking back at the five years that Hengda entered the market, "crazy" will inevitably end up in chicken feathers.

In 2019, the Hengchi Auto brand was born, and then it participated in the 2021 Auto Show with a high profile, launching 9 pure electric models in one go, with a booth area larger than that of the same international first-tier car companies.

At that time, Liu Yongzhuo, president of Hengchi Automobile, said that in the fourth quarter of 2021, Hengchi Automobile will start full trial production, and large-scale delivery will be made in 2022. However, it will not be until April 2022 that three real cars will be unveiled. Six months later, Hengchi 5 was finally delivered. However, Hengchi Automobile soon fell into quality doubts.

Since then, due to external and internal factors affecting the Group, production and sales did not meet expectations, the company was facing operational difficulties, and business activities such as R & D, production and sales, as well as the stability of the workforce, were affected. The Tianjin factory of Hengchi Automobile suspended production of Hengchi 5.

However, China Evergrande, which is betting on the new energy vehicle track, is still trying to help its Evergrande car, which is also listed on the Hong Kong Stock Exchange, out of trouble after being mired in a liquidity crisis.

At the end of May 2023, the leaders of Tianjin Binhai New Area led a team to carry out research services in the Tianjin factory of Hengchi Automobile. Hengchi Automobile introduced that the Tianjin factory of Hengchi has now fully resumed production. Liu Yongzhuo said that the company will make every effort to speed up the production and delivery of Hengchi 5, and continue to promote the R & D and production of subsequent models to make the enterprise bigger and stronger.

But the good times did not last long, Hengda Automobile announced on January 8 that Liu Yongzhuo, the executive director of the company, has been detained according to law for suspected illegal crimes. In addition, Hengda Hengchi New Energy Automobile (Shanghai) Co., Ltd. recently added three pieces of information to be executed, with a total target of 98 million yuan.?

This has added new variables to Evergrande Automobile. Therefore, some analysts believe that, on the one hand, Evergrande Group’s thunderstorm has largely dragged down Evergrande Automobile. Evergrande Automobile’s announcement shows that China Evergrande has transferred tens of billions of funds from Evergrande Automobile; on the other hand, a large part of the funds are dedicated to Xu Jiayin’s "buy buy buy" and "circle circle".

Obviously, Evergrande is currently just one step away from bankruptcy.

On the one hand, because assets such as the Tianjin factory of Hengchi Automobile have been mortgaged many times, it is difficult to find a deal. On the other hand, with the fierce price war, the domestic new energy automobile industry has entered the stage of overcapacity, and the assets of the production bases of the new forces that have gone bankrupt and reorganized have not been taken care of.

Hengda, which is currently mired in financial crisis, can no longer continue to transfuse blood for Hengda Automobile, and it is even more difficult for Hengda Automobile, which is neither recognized by the market nor trapped in delivery, to achieve self-hematopoiesis.

Therefore, the best outcome for Evergrande Auto is that it is highly likely that it will only be used to pay off its debts.