|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||47.94 - 48.44|
|52 Week Range||42.73 - 80.20|
|Beta (5Y Monthly)||2.04|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||4.58 (8.96%)|
|Ex-Dividend Date||Jul. 07, 2020|
|1y Target Est||N/A|
(Bloomberg) -- Hui Ka Yan built China Evergrande Group with support from a tight-knit group of fellow real estate billionaires with a fondness for poker.When he forged a deal last month to avert a cash crush, Hui relied on another friend: one who made his fortune selling washing machines and air conditioners and shares his passion for soccer.Zhang Jindong, founder of Suning Appliance Group Co., stood next to Hui at the signing ceremony celebrating the Evergrande agreement. Among the three dozen strategic investors involved, Zhang was the largest corporate supporter to waive his right to force a repayment by January from the developer.With a $120 billion debt pile, Evergrande is the world’s most-indebted developer. In the week leading up to the deal, the firm’s shares dropped 16% and its yuan note due 2023 tanked to a record low. Both assets have since rebounded.“The supplementary agreement is very critical for Evergrande’s long-term development,” said Maggie Hu, an assistant professor at the business school of the Chinese University of Hong Kong. She said it’s reasonable Suning acted to give a lifeline to Evergrande during the crisis, explaining “their commercial interests are closely linked.”While the two have done business together for a long time, doubts over their relationship briefly emerged when Suning said before last month’s agreement it was planning to demand the return of its investment should an Evergrande unit fail to list on a domestic exchange by January. The news also raised questions over Suning’s financial health after the coronavirus pandemic hit retailers particularly hard. Zhang’s flagship Suning.Com Co. reported a 13% drop in revenue and a loss of 166.6 million yuan ($25 million) in the first half of 2020, compared with a 2.14 billion yuan profit for the same period a year earlier.The stock was little changed on Friday, while some of its bonds sank to a record earlier this week. Intense Competition“The risk factors include competition in the retail industry that is getting intense,” Shi Kun, an analyst at China Securities, wrote in an Oct. 15 report. “Chinese residents’ spending willingness is likely to drop, and the influence of the pandemic might be bigger than expected.”Even before Covid-19, Zhang’s empire was showing signs of strain: Debt at his Suning Real Estate Group Co. soared by 47% last year as sales fell by one-third. By April, one of his units had pledged its entire stake in a financial arm valued at 56 billion yuan to four institutions for funds, AIC records show.The hit to the 57-year-old tycoon’s fortune is clear: He has lost more than 30% of his wealth this year and is now worth $5.1 billion, according to the Bloomberg Billionaires Index.The company didn’t respond to a request for comment.Zhang grew up in China’s eastern city of Nanjing, lost his parents by his early teenage years and was brought up by his elder brother.“It was very difficult when I was a child, and it urged me to liberate or change the destiny of poverty when I grew up, with persistent pursuit of my work,” Zhang said in a Chinese interview for a local paper in 2006.Zhang’s academic prowess earned him entry to Nanjing Normal University and he graduated in 1984 with a degree in Chinese literature. He worked as a clerk at a state-owned company, earning 55.8 yuan a month. While more than the national average at the time, he realized on a business trip to Shanghai that it barely paid for a few cups of coffee.So he opened his own cafe in Nanjing.As he searched for cheap air conditioners for his coffee shop -- temperatures can go above 40 degrees Celsius (104 Fahrenheit) in the summer -- he struck up a friendship with a distributor and later a partnership. In 1990, Zhang quit his job at the state-owned company and began selling AC units with the proceeds from his cafe. Suning was born.The business grew quickly, and by 2002 Suning had stores in major Chinese cities. The company now has more than 2,800 outlets nationwide, with Zhang’s empire spanning retail, finance, real estate and even sports -- he owns Chinese Super League giant Jiangsu Suning and Italian football club Inter Milan.While the soccer connection helped strengthen links with Hui, who also owns a Chinese team, their ties go deeper. Suning invested 20 billion yuan in Evergrande’s subsidiary Hengda Real Estate in 2017 and the two set up a $3 billion joint venture to develop Suning malls the following year. More recently, Evergrande used Suning’s e-commerce platform to help sell homes during the Singles’ Day online promotions.The deals highlight the importance of China’s “guanxi” -- social networks of influence among business titans. Zhang is also close to the nation’s richest man, Jack Ma, and Dalian Wanda Group Co.’s Wang Jianlin, to whom he offered a lifeline when he was nearing a cash crunch two years ago.In 2015, Alibaba Group Holding Ltd. invested $4.6 billion for a 20% stake in Suning, which in turn put more than $2 billion in the e-commerce giant, a stake later sold for a 14 billion yuan profit that Zhang used to expand. In 2018, Suning bought 14% of Wanda Commercial Properties Co. for $5.4 billion with a consortium, helping Wang raise cash, and later purchased 37 Wanda department stores as the company was looking to pare debt.“The competition in the retailing industry is very fierce, and a company has to strategically ally with partners and compete in multiple fronts to survive,” said Hu, the assistant professor at the Chinese University of Hong Kong.But Suning’s expansion came at a cost, and the pandemic is forcing the company to reevaluate its plans. As the firm is about to celebrate its 30th anniversary, Zhang said it will spend the next decade focusing on services to stand out from competitors. The retailer will aim to enhance its supply-chain, logistics and finance capabilities, connecting with more small- and medium-sized retailers, according to an article on the company’s website.“We rode over different economic circles over the past three decades, and Suning is still developing,” Zhang said in the Suning article. “Retail is a marathon without a finish line.”(Adds stock, bond moves in seventh 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.
(Bloomberg) -- China Evergrande Group’s latest attempt to restore confidence in its finances received mixed reviews from investors, adding to volatility in the company’s dollar bonds.The world’s most indebted real estate company said it’s exploring various ways to repay its HK$18 billion ($2.3 billion) convertible bond and will consult with investors before it makes a decision, according to people familiar with the matter who attended investor meetings with Evergrande officials on Friday.The officials told attendees that possibilities for the convertible bond include full repayment, a tender offer or an exchange offer, and later emphasized that the company has enough cash on hand to cover potential payments tied to a put option in February. The officials also said Evergrande may buy back some of its dollar bonds.The developer’s dollar note due 2025 rose 1.2 cents on the dollar to 72.4 cents, the biggest jump in nearly three weeks, Bloomberg-compiled pricing shows. Its note due 2021 rose 0.2 cents. Other Evergrande bonds slipped, suggesting investor sentiment remains cautious.“Though the information investors got from each call was slightly different, the ultimate message is that the company is moving in the right direction, and would discuss with investors the repayment plans it is considering,” said Agnes Wong, head of Asia credit strategy & trading desk analysts at BNP Paribas.Evergrande has come under intense investor scrutiny in recent weeks after fears of a cash crunch triggered a sell-off in the company’s bonds and shares. While few expect the developer to default any time soon, it’s facing pressure to pare back a $120 billion debt pile and increase cash reserves.In one of its calls with investors on Friday, Evergrande officials said the agreement signed late last month with strategic investors to waive a January deadline on about $13 billion of repayments doesn’t include any put options.The officials also said China’s government may roll out measures to support some developers either by the end of this month or early next month, allowing firms to swap short-term debt into long-dated obligations to keep the real estate market stable, according to the attendees, who asked not to be identified because the call was private.Evergrande didn’t respond to a request for comment. The People’s Bank of China didn’t immediately respond to a faxed request for comment on support measures for developers.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.
(Bloomberg Opinion) -- The 40th anniversary of Shenzhen as a special economic zone was celebrated with much fanfare. President Xi Jinping came down from Beijing to deliver a 50-minute speech, and offered all sorts of policy goodies to tech and venture capital firms. Conspicuously missing was a nod to the real estate tycoons in town. On the government’s list of 40 MVPs, or the most valued persons contributing to Shenzhen’s rise, were the usual suspects such as Pony Ma of Tencent Holdings Ltd. But intriguingly, not a single property developer — not even Wang Shi, founder of China Vanke Co. — appeared on the list. That’s quite a snub, given that real estate investment is big business in the tech hub, exceeding 300 billion yuan ($44.6 billion) last year. Vanke, the city’s largest developer, is so intertwined with Shenzhen that it went public there in 1991, one of the first on the then-nascent stock exchange. Vanke has been careful with debt build-up, something of a counterpoint to an industry addiction that irks Beijing. There’s a growing sense in the central government that soaring property prices are hurting China’s economic growth. Reading tea leaves from the MVP list, as well as the seating chart during Xi’s speech Wednesday, one can tell that the president is not enamored of property tycoons. This concern can be felt the most in Shenzhen, China’s Silicon Valley strategically located on the border with Hong Kong. Growing from a fishing village of 60,000 people in 1980 to 13 million today, it’s a crucial piece of the Greater Bay Area that has surpassed the financial hub in gross domestic product. The property market has long been unstoppable and didn’t miss a beat with Covid-19. As soon as China lifted its lockdown, anyone with entrepreneurial spirit there went apartment hunting. Existing home prices rose 9.7% in March from the same period in 2019, the fastest pace in three years, even as venture capital funding dried up and tech workers lost their jobs. Subsidized small business loans were not put to proper use.Renting an apartment has become unaffordable. Young professionals earning a basic salary, their wealth tied to stock options that may never materialize, are a common sight in “urban villages,” crowded, tightly clustered warrens of apartment buildings. There’s an increasing concern that in the future, fresh college graduates may not want to join tech start-ups, and not for lack of ambition. Perhaps they just won’t want to live in ghettos. In recent weeks, real estate developers have been in the limelight, especially after news reports that China Evergrande Group, the nation’s second largest by sales, had warned in a letter of an impending credit crunch. Evergrande has said that the letter to the Guangdong provincial government was fabricated, but market jitters persist. Investors have been sifting through developers’ debt pile, classifying their status with Beijing based on the new “three red lines.” Corporate deleveraging is just part of the story. Soaring property prices across China are hurting households’ plans to spend, since they must save more for home purchases. Beijing is seeing this played out in macro statistics: Retail sales failed to bounce back to pre-virus levels until August, months after lockdowns were lifted. Chinese didn’t feel like going out to eat or shop, but still crowded real-estate showrooms set up by developers. Xi has a mantra that apartments are to be lived in, not speculated on. Yet during the October Golden Week holiday, Evergrande offered its deepest discount in history to boost apartment sales. No surprise, speculative buyers dived in. In China, real estate deals are still a backroom business. Investors thus carefully need to watch things like the seating chart at the Shenzhen celebrations to fathom who’s in favor and who’s out. Placed diagonally behind Evergrande Chairman Hui Ka Yan was a Buddhist monk, the abbot of Shenzhen’s Hongfa Temple, netizens pointed out. Perhaps poverty, chastity and obedience are virtues that Hui, one of China’s richest men, could learn?Xi is now fighting an all-out economic war with the U.S.. He can’t afford having China’s best and brightest spending their energies — and money — flipping apartments. 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.