Chinese real estate giant Evergrande, drowning in over $300 billion in liabilities, averted a costly default last week with a last-minute bond coupon payment but there's little respite for the company. Evergrande next needs to find $47.5 million by Friday and has nearly $338 million in other offshore coupon payments due in November and December.
Hooray Nevertheless.
However, an announcement by its chairman, Hui Ka Yan - that in the coming 10 years it would make its new electric vehicle venture its primary business, instead of property - cheered investors on Monday. 😲
Yes,
Raymond Cheng, CGS-CIMB Securities' head of China research, said the business shift makes sense given Beijing's growing support for EVs and its increased tightening of the frothy real estate sector.
"This is the best outcome, if Evergrande just focuses on existing developments and maintains the operation," Cheng added.
As if on cue, despite the benchmark Heng Seng index remaining flat, Evergrande rose as much as 6% during the session before closing down 0.7% and China Evergrande New Energy Vehicle Group Ltd rose 11.4%.
Are Evergrande' EVs So Good?
Per Reuters, Evergrande's new vehicle business, founded in 2019, has yet to reveal a production model or sell a single vehicle.
In fact last month, the unit warned it was still seeking new investors and asset sales, and that without either it might struggle to pay salaries and cover other expenses.
Umm, Anything Else?
On another note, Evergrande says construction work has resumed on more than 10 projects in six cities including Shenzhen.
Many of its projects had been halted due to payments owed to suppliers and contractors.
