After today's rally, Evergrande NEV stock is still down about 45 percent from before trading resumed.
Evergrande New Energy Vehicle Group (Evergrande NEV), the electric vehicle (EV) unit of China Evergrande Group, saw a strong rebound in its stock in Hong Kong today, though it's still well below where it was before trading resumed.
By the end of morning trading, Evergrande NEV was up 42.74 percent to HK$1.77, likely because investors spent this past weekend digesting more of the announcements it made last week.
On Thursday, July 27, Evergrande NEV announced in a Hong Kong Stock Exchange announcement that trading in its shares would be resumed from the next day. Trading in Evergrande NEV's shares in Hong Kong had been suspended since April 1, 2022.
In an announcement last Wednesday, the company disclosed its key financial results for the past three years, showing it had reduced its losses by 51 percent in 2022, but still had RMB 27.7 billion ($3.9 billion).
On July 25, the first day Evergrande NEV resumed trading, its shares fell 61.25 percent to HK$1.24 at the close. After today's rebound, the company's stock is still down about 45 percent from before trading resumed.
In last Thursday's announcement, Evergrande NEV mentioned that it plans to raise about $500 million through equity or debt financing, which may be one of the things that made its shares rally today.
The funds will cover the production and sales of the Hengchi 5, the only model of its Hengchi Auto that is currently on sale, as well as the company's capital needs for normal operations, Evergrande NEV's announcement mentioned.
The company has been discussing financing with potential investors and is confident that it will be able to raise sufficient funds to support its business operations and growth plans, the announcement said.
Currently, Evergrande NEV's capacity utilization at its plant in Tianjin is affected by financial constraints and there are instances where employees' salaries are not paid in a timely manner, the announcement said, adding that if the financing plan is successful, it will ease the financial situation of the Tianjin plant.
Evergrande NEV will launch a range of Hengchi models in the future, with the next target including the launch and production of Hengchi 6 and Hengchi 7, the announcement said.
Hengchi Auto brand's only model, the Hengchi 5, started deliveries on October 29, 2022.
On April 24, a Hong Kong stock exchange announcement said Evergrande NEV would suspend production of the Hengchi 5. On June 20, Evergrande NEV said it resumed production of the Hengchi 5, which had accumulated more than 1,000 deliveries by the end of May.
($1 =RMB 7.1423)