Original title: Evergrande won the battle and had strong investment. Today's stocks and bonds both rose: taking more measures and lowering debt or exceeding expectations Source: Financial graffiti

This morning, the stock prices of Evergrande's related listed companies and bond prices all rose sharply.

According to company intelligence expert “Financial Graffiti”, on the evening of September 29, 2020, China Evergrande Group issued an announcement stating that Evergrande Real Estate signed a supplementary agreement with the 86.3 billion war investment out of the 130 billion war investment. The supplementary agreement made it clear that the war investment agreed to convert the war investment to long-term holding of common shares, and that the share ratio remained unchanged. Of the remaining 43.7 billion yuan war investment, Evergrande has completed negotiations with the 15.5 billion war investment. Currently, formalities are being processed, and discussions on the 28.2 billion war investment are ongoing.

At the signing ceremony held yesterday, Xu Jiayin, Chairman of the Board of Directors of Evergrande Group, and Zhang Jindong, Chairman of Suning Holdings, Wang Wenyin, Chairman of the Board of Directors of Zhengwei International, Ye Yuanxi, Chairman of Guangtian Holdings, Yan Zhongyu, Vice President of Shenye Group, and Tian Jiayu, Chairman of Jiayu Group, attended the signing ceremony.

In one fell swoop, it signed the 86.3 billion war to invest in common stock. War Investment agreed to abandon the request to buy back and increase the shares and convert the interest to common stock. In response, analysts believe that this fully shows that through cooperation over the past few years, not only have all strategic investors shared Evergrande's development dividends and are highly appreciative of Evergrande's management and healthy development, but they are also confident in Evergrande's development prospects, so they will firmly choose long-term cooperation with Evergrande.

Today, agreements have been signed with the vast majority of strategic investors in a short period of time, which also indicates that Evergrande has solved its urgent needs.

According to the on-site contract signing pictures, the war investors that have signed agreements include Suning, Jiayu Group, Zhengwei International, Hirota Holdings, AIA,World Bank,Boss appliances,Sophiaetc.

Affected by this news, China Evergrande's stock price continued to rise after opening today. As of 11:15 in the morning, it was HK$18.92, an increase of 14.67%. Domestic bond prices also showed an upward trend. “19 Evergrande 01” rose 4.5 points to 90.3, and “15 Evergrande 03” rose 4 points to 91.88.

International investment banks are optimistic about Evergrande's prospects

On the evening of September 27, international investment banks including Deutsche Bank, J.P. Morgan, Lyon, DBS, Lianchang, and Huatai released reports optimistic about Evergrande's long-term development. J.P. Morgan said that it is expected that Evergrande will reach a consensus with strategic investors. Considering the market reaction, the current valuation of Evergrande bonds is extremely attractive.

Leon suggested that although the debt ratio is too high, Evergrande has formulated a clear three-year debt reduction plan. In addition to the spin-off and listing financing of properties and automobiles, it is believed that the effectiveness of debt reduction will far exceed market expectations. Leon maintained China Evergrande's “buy” rating, with a target price of HK$23, and said that the short-term stock price adjustment brought investors a good buying opportunity.

According to a research report published by Galaxy Lianchang, Evergrande's impressive sales and business conditions, and the fact that it is promoting the spin-off listing of properties and automobiles will help ease market concerns about its liquidity and risk of default, giving a target price of HK$20.6/share, with a potential increase of about 50%. Galaxy Lianchang predicts that Evergrande's sales are expected to exceed 800 billion yuan throughout the year, further strengthening cash flow; the listing of both property and automobiles will drastically reduce the net debt ratio by 50 percentage points; furthermore, with the drastic reduction in land purchases, Evergrande's net debt is expected to fall below 100% in 2021.

The strength of investment banks also ushered in a wave of growth in Evergrande's stock price. After opening on the 28th, the stock price continued to rise. By the close of trading on the 28th, China Evergrande reported HK$16.62 per share, up 20.61%; Evergrande Auto reported HK$20.25 per share, up 20.39%.

Evergrande Property submits prospectus materials

On the evening of September 29, Evergrande Group had another good news. Evergrande Property Group submitted a prospectus to the Hong Kong Stock Exchange on September 29. Huatai International, UBS, Agricultural Bank International, CCB International,CITIC Securitiesand Haitong International acted as co-sponsors, marking a substantial step in Evergrande Property Management's listing.

At the end of July this year, Evergrande announced plans to spin-off the property management company; in mid-August, Evergrande also introduced 14 strategic investors to the property sector, including Huatai International Greater Bay Area Co., Ltd., Chen Kaiyun, wife of Chinese Real Estate founder Liu Luanxiong, Yunfeng Fund, Tencent, Agricultural Bank International, and CITIC, involving a total transaction amount of about HK$23.5 billion, and post-investment valuation exceeding HK$75 billion.

Today, Evergrande Property raised capital of 1 billion to 2 billion US dollars (about 69.8-13.96 billion yuan). In view of Country Garden Services and CNOOC Property's introduction listing, the current maximum amount raised by property stocks is 4.83 billion yuan for Poly Properties. Evergrande Property's capital raised will be the highest among property companies.

Evergrande Auto's rapid return to A-shares wants to become the first share of the new energy vehicle company on the Science and Technology Innovation Board

In the Evergrande Automobile sector, on September 25, Evergrande Motor announced that its application for listing on the Science and Technology Innovation Board had been reviewed and approved by the board of directors. At this point, Evergrande has officially begun a rapid return to A-shares, striving to become the first new energy vehicle company to land on the Science and Technology Innovation Board.

According to the plan, about 70% of the capital raised will be invested in R&D, production and marketing network construction projects for new energy vehicle projects to continuously increase the company's technical reserves in related fields, further enhance the company's R&D strength and production capacity, and expand marketing channels. Additionally, approximately 30% of the capital raised will be used to supplement operating capital and corporate purposes to improve the company's financial position.

Earlier, on September 18, Evergrande Motor announced that it plans to list on the Science and Technology Innovation Board of the Shanghai Stock Exchange and raise HK$4 billion through the placement of new shares. The investment introduced includes well-known investors such as Yunfeng Fund, Tencent, Sequoia Capital, and Didi. The capital raised will mainly be used to support the development of the company's NEV business.

New energy vehicles are China's key development strategy. According to statistics, the NEV market will reach trillions of dollars in the future. Through a forward-looking layout of the NEV industry, Evergrande Group has now built an entire NEV industry chain covering advanced vehicle manufacturing, powertrains, power batteries, car sales and smart charging. Fourteen models were developed simultaneously in cooperation with global automotive engineering leaders. The first six Hengchi models have been released globally. In 2021, mass production will be achieved one after another, and the world's most advanced intelligent manufacturing bases will be built in Shanghai, Guangzhou and other places in accordance with Industry 4.0 standards.

In the next 3-5 years, Evergrande aims to become the world's largest and most powerful new energy vehicle group, helping China move from an automobile power to an automobile power.

Evergrande Auto has returned to the Science and Technology Innovation Board and has a better financing advantage. Not only can it enjoy national policy dividends, but it is also easier to open up domestic financing channels. The domestic market financing environment is better, there is more room for brand premiums, and higher corporate valuations.

Interest-bearing debt decreased by $53.4 billion from the end of March

China Evergrande Group was founded in 1996. After 24 years of integrated layout and steady development, it has now formed an industrial layout based on residential property, cultural tourism, health and wellness as the two wings, and new energy vehicles as the lead. In 2020, it ranked 152 in the Fortune Global 500.

Earlier, in its business performance announcement, Evergrande stated that at present, the company's operations are normal and healthy, and its finances are sound. As of September 24, 2020, it achieved cumulative sales of 504.9 billion yuan, an increase of 11.4% over the previous year; sales payback of 452.1 billion yuan, an increase of 51.3% over the previous year. As of June 30 this year, the cash balance was 204.6 billion yuan. Since September 3, the company has launched a major national real estate discount and plans to achieve cumulative sales of 200 billion yuan in September and October. There are a total of 866 projects under construction nationwide, and construction is commencing normally.

On March 31, Evergrande began implementing a three-year development strategy of “high growth, scale control, and debt reduction”, that is, achieving high sales growth, strict control of land reserves, and striving to reduce interest-bearing debt by 150 billion yuan per year. According to the announcement, as of September 24, the company's interest-bearing debt had decreased by 53.4 billion yuan compared to the end of March this year, financing costs were reduced by 2.24 percentage points, and loans maturing after September 25 were repaid 43.5 billion yuan ahead of schedule. Various debt reduction results have been remarkable.

After solving the urgent investment crisis of 130 billion dollars, the listing of Evergrande Property and Evergrande Auto will bring them more financing channels. At the same time, Evergrande still maintains strong sales data this year and is expected to achieve its 2020 sales target ahead of schedule. Financial graffiti believes that although Evergrande's debt pressure is high, the support provided by financial institutions and its own hematopoietic capacity can help it achieve the goal of further debt reduction and stabilize its financial situation.