Original title: Evergrande thunderstorm follow-up: then sell Hengteng shares, Evergrande severed arm to survive

Evergrande, which has been experiencing a storm of capital chain problems recently, had no choice but to sell its stake in order to get back its funds.

China Evergrande, a controlling shareholder of Evergrande, signed an equity transfer agreement with an independent third-party buyer, a subsidiary of Tencent, to transfer 11% of Hengteng's stake at a total transaction price of HK $3.25 billion.

As early as June this year, Evergrande sold Hengteng Network at a transfer price of HK $6 per share, corresponding to a total price of HK $4.433 billion.

It is understood that Hengteng Network is jointly established by China Evergrande and Tencent, with China Evergrande as the major shareholder and Tencent as the second shareholder.

After the completion of the deal, Evergrande's stake in Hengteng will fall from 37.55% to 26.55%, still the company's largest shareholder, while Tencent's stake will increase to 23.9%.

In recent years, the performance of Hengteng Network is not good. At the beginning of its listing in Hong Kong in 2015, its operating income gradually increased from HK $0.80 to HK $508 million in 18 years. In 2020, revenue was only HK $247 million, down 29 per cent from a year earlier, while net profit was 12 million yuan, down 87 per cent from a year earlier.

In October 2020, Hengteng announced the acquisition of Ruyi Pictures and Pumpkin movies owned by Ke Liming for HK $7.2 billion.

Ruyi Pictures has produced "to our lost Youth" and "Old Boy: the Raptor Crossing the River", and the pumpkin movie is a streaming platform.

In the past two weeks, Hengteng network has been affected by the continuous thunderstorm of Evergrande's capital chain, and its share price has plummeted. The company suspended trading on July 29 and closed at HK $3.42 a share before the suspension, with a total market capitalization of only HK $315.8.

Under the "three red lines" announced by the real estate industry, Evergrande is facing considerable pressure to reduce its debt. On July 19th, Guangfa Bank sued Evergrande, asking the bank to freeze 132 million of its bank deposits; on July 28th, Huaibei Mining accused Evergrande of defaulting 396 million on its project payment.

The problem of Evergrande's capital chain has been questioned.

The sale of Hengteng network equity is undoubtedly to cash out to ease the financial pressure.

And this is not the first time Evergrande has sold assets on sale in recent years.

In November 2020, Evergrande sold its 40.96 per cent stake in Guanghui Group to Shenneng Group, cashing out 14.85 billion.

On June 21, Evergrande transferred its 29.9% stake in Jiakai City to Shenzhen Huajian, cashing out 2.508 billion.

June 25, resell Evergrande Culture, change the company's equity.

But the money from a series of asset sales is still a drop in the bucket for Evergrande's debt, and Evergrande's funding chain problems continue to ferment.

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