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China Evergrande Group (3333.HK)

HKSE - HKSE Delayed Price. Currency in HKD
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22.400+0.900 (+4.19%)
At close: 4:08PM HKT
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Neutralpattern detected
Previous Close21.500
Open21.850
Bid22.350 x 0
Ask22.400 x 0
Day's Range21.800 - 23.200
52 Week Range9.760 - 28.000
Volume37,328,787
Avg. Volume21,276,359
Market Cap292.434B
Beta (5Y Monthly)2.16
PE Ratio (TTM)15.24
EPS (TTM)1.470
Earnings DateAug 26, 2020 - Aug 31, 2020
Forward Dividend & Yield0.71 (3.31%)
Ex-Dividend DateJul 08, 2020
1y Target Est28.00
  • South China Morning Post

    Evergrande puts 223 properties on chopping block as list hits WeChat, online platforms, following back-to-back profit warnings

    China Evergrande, the nation's biggest developer by sales, has put 223 commercial properties for sale in a move to tackle its leverage, after issuing two back-to-back profit warnings in the past year.The list of of properties n 111 cities has made it to one WeChat account called "distressed asset industry observations" and other mainland online platforms as the fortunes of China's top developers come under the spotlight amid a slide in earnings and a surge in vacancy rates during the nation's historic economic slump."Property companies are trying to sell their products that are not suitable" to their portfolio mix, said Zhang Bo, chief analyst at 58 Anjuke Real Estate Research Institute, a Shanghai-based firm. "At least this year and next year, such reduction of commercial portfolio at a relatively low price will increase."China's pandemic-ravaged economy shrank 6.8 per cent in the first quarter, the first contraction since 1976, pushing office vacancy rates in Beijing, Shanghai, Guangzhou and Shenzhen to all-time highs. Evergrande's list is stoking concerns Evergrande is trying to boost liquidity to help pay down debt, some of them junk-rated and has been growing at higher costs. The economy rebounded last quarter with a 3.2 per cent gain.China's biggest developers have in recent years offloaded their assets before the economic slump shook the 16 trillion yuan (US$2.3 trillion) market, partly triggered by efforts to cut down borrowings.Soho China has also been selling down its commercial real estate worth around US$8 billion, while Dalian Wanda sold its hotels and other cultural properties to R&F; Properties and Sunac China Holdings. Future Land and Longfor Properties are also said to be dumping some shops, according to analysts.Evergrande confirmed the authenticity of the "sell list" in a WeChat reply to the Post. The 223 properties are located in 111 cities. The developer has an expansive reach in the onshore market, owning more than 870 projects in more than 280 cities across all provinces and regions."It's a normal sales action," the company added, without any notion of financial distress. "The company pushed them all out at once because it hopes its professional sales teams can facilitate the deals." Office vacancy rates in China's commercial hubs surge to highest level on record as rents drop amid pandemic headwindsShenzhen-based Evergrande's borrowings grew 19 per cent to 800 billion yuan as of December 31, of which about 47 per cent of them were to be repaid in 2020 and about a quarter by the end of 2021. Its cash stood at 229 billion yuan, according to its latest 2019 annual report.The developer, helmed by China's third richest person Hui Ka Yan, warned in March about a collapse in its 2019 earnings, citing the "delivery and settlement of the lower-priced clearance stock properties." It followed a warning in August, its only warnings since the stock was listed in 2009."In bad times like now, when developers need money urgently and they do not have enough lands or homes to sell, they have to get rid of underperforming commercial assets," said Ray Wu, Head of Investment at Savills' Investment Shenzhen.The block-list of properties suggests a strategic change in business, property analysts said. It came as oversupplies have dragged down the value of commercial assets amid record vacancy rates. 'Opportunity of a lifetime' for distress investors as companies from HNA to China's LVMH flounder and bad debts balloonEvergrande, for example, this year adopted a new development strategy of "growing sales, controlled scale and reduced leverage," according to its annual report. Since 2017, it has also switched its model from "three highs and one low", referring to high liabilities, leverage and turnover, and low costs.Chairman Hui has been a professor in management in Wuhan University of Science and Technology since 2003 and was appointed as doctoral tutor there in 2010, according to its annual report.Chinese developers are so used to getting high profit quickly through purchasing land and selling homes within one to two years, or sometimes even as short as a couple months. But it has been hard for them to manage commercial assets."Like Evergrande, for example, its commercial units are under each regional division and when it comes to evaluation of their work performance, sales is the most important benchmark," said Wu of Savills. "How do you expect their people to put more effort into leasing an office unit or a shop?"Looking ahead, analysts expect more commercial property projects to be placed onto the market later this year. This trend is also likely to extend into 2021, they added."The strong ones will become stronger," said Zhang of Anjuke. "Although these assets in good locations of cities with good development potential will face some headwinds in the short-run, they can be relatively valuable in the long run." This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.

  • How to Turn Negative Equity Into a $30 Billion Market Cap
    Bloomberg

    How to Turn Negative Equity Into a $30 Billion Market Cap

    (Bloomberg Opinion) -- For weeks, those of us in Asia watched the U.S. stock frenzy with amazement — how a video game-like trading interface could lure millennials, cost fortunes and some even their lives; how Tesla Inc. founder Elon Musk became richer than Warren Buffett; and why on earth retail investors were rushing to buy shares of Hertz Global Holdings Inc., even though the car rental company had filed for bankruptcy. Well, gawk no more. The mania has landed in Hong Kong, too. Take a look at Evergrande Health Industry Group Ltd., a healthcare facilities provider under the umbrella of real estate giant China Evergrande Group. Its stock price has soared more than 200% this year, with most of the gain notched in July. That’s resulted in a market cap as high as $30 billion this week. The catalyst is not its Elderly Care Valley business, which operates specialized centers, but its electric vehicle operations, accounting for only 12% of sales last year. There’s little news on Evergrande Health — it isn’t even covered by the sell-side equity analysts Bloomberg polls — but some investors have latched onto this stock as a Tesla play. Its parent company has the grand ambition to be more Tesla than Tesla, vowing to become the world’s biggest maker of electric vehicles. Since late 2018, Evergrande has spent billions on an array of EV-related companies. Goodwill, accrued upon a series of acquisitions, came in at 6.2 billion yuan ($885 million), or 17% of the company’s non-current assets at the end of 2019.Never mind that Evergrande has yet to release its first pure battery vehicle under the flagship Hengchi brand — that deadline was already pushed back once — or that its factories in Guangdong and Shanghai won’t start production until 2021. That Tesla stock could draw 40,000 Robinhood users in a four-hour window shows there’s enough appetite for anything remotely like the U.S. market darling. Investors may also feel reassured now that Evergrande Health owns National Electric Vehicle Sweden AB, an EV maker that acquired Saab Automobile in 2012. It also has a joint venture with Koenigsegg Automotive AB, a top-tier supercar manufacturer. If anyone bothered to look at the company’s financials, though, they’d quickly get cold feet. According to its latest annual report, “equity attributable to owners of the company” was negative 1.3 billion yuan. In other words, while stock investors think Evergrande Health is worth $30 billion, an accountant could reckon that this company has zero value to shareholders. Building electric vehicles from scratch is an expensive endeavor. Evergrande Health’s negative equity stems from the fact that it has accrued 94.7 billion yuan in debt. Its parent, for instance, has provided a three-year, 32.2 billion yuan loan due next July, with interest rates ranging from 7.6% to 8%. Last year, finance costs in the EV business alone came in at 2.2 billion yuan, or 2.6 times the profit generated from the healthcare segment. As a result, Evergrande Health has no price-to-earnings, or price-to-book, to speak of — both are negative. But then liquidity and policy-driven markets can create very strange phenomena. Speculative capital flows have have already arrived in Hong Kong — just look at the stronger local dollar, which by ordinary logic would have weakened as U.S. moved to strip the city of its special status. Trading will become even cheaper, too. Huatai International Ltd., the Hong Kong arm of China’s third largest broker, is no longer charging commissions.Meanwhile, animal spirits returned to China’s $9.7 trillion stock market in July. At this market cap, Evergrande Health can just do a secondary listing on the mainland if it’s short on cash, without having to prove to regulators that it has an “edge” or “world-leading technology.” A sky-high valuation in China, in turn, would support its Hong Kong-listed shares, one could argue. Hong Kong’s stock market is an interesting hybrid, part-American because of the Hong Kong dollar peg, and part-Chinese because many mainland companies list there. Now that both U.S. and China markets have gone into a trading frenzy, it's only natural that Hong Kong will catch up. So don’t be surprised if more Tesla wannabes start cropping up. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Jack Ma Dethroned as China's Richest by Tencent's Pony Ma
    Bloomberg

    Jack Ma Dethroned as China's Richest by Tencent's Pony Ma

    (Bloomberg) -- Tencent Holdings Ltd.’s $40 billion surge this week and the recent ascent of Pinduoduo Inc. have reshuffled the ranking of China’s richest people.The country’s largest game developer has surpassed Alibaba Group Holding Ltd. as Asia’s most-valuable company, with its shares rising above HK$500 in intraday trading Wednesday for the first time. Pinduoduo, a Groupon-like shopping app also known as PDD, has more than doubled this year.The rallies have propelled the wealth of their founders, with an added twist: Tencent’s Pony Ma, worth $50 billion, has surpassed Jack Ma’s $48 billion fortune, becoming China’s richest person. And Colin Huang of PDD, whose net worth stands at $43 billion, has squeezed real estate mogul Hui Ka Yan of China Evergrande Group out of the top three earlier this year, according to the Bloomberg Billionaires Index.The coronavirus pandemic has accelerated the digitization of the workplace and changed consumers’ habits, boosting shares of many internet companies. Now tech tycoons are dominating the ranks of China’s richest people. They occupy four of the top five spots: Ding Lei of Tencent peer NetEase Inc. follows China Evergrande’s Hui.‘Perform Strongly’Tencent has come a long way since hitting a low in 2018, when China froze the approval process for new games. Since then, the stock has almost doubled, and last month the tech giant reported a 26% jump in first-quarter revenue.“Tencent’s online games segment will probably perform strongly through the Covid-19 pandemic, and most of its other businesses are relatively unscathed,” said Vey-Sern Ling, a Bloomberg Intelligence analyst.That has been a boon for Pony Ma, 48, who owns a 7% stake in the company and pocketed about $757 million from selling some 14.6 million of his Tencent shares this year, data complied by Bloomberg show.The native of China’s southern Guangdong province studied computer science at Shenzhen University and was a software developer at a supplier of telecom services and products before co-founding Tencent with four others in the late 1990s. At the time, the company focused on instant-messaging services.It has been a long comeback for Pony Ma. He overtook real estate tycoon Wang Jianlin as China’s second-richest person in 2013 and topped Baidu Inc.’s Robin Li as the wealthiest in early 2014. Later that year, Alibaba went public in the U.S., catapulting Jack Ma’s fortune.Bloomberg Intelligence’s Ling notes, however, that Tencent’s jump this year has lagged behind some internet peers, especially those in e-commerce, games and online entertainment. Just consider: Tencent shares have climbed 31% in 2020, while PDD’s American depositary receipts have more than doubled. Alibaba, meanwhile, has advanced just 6.9%.(Updates with Alibaba shares in last paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.