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03333 EVERGRANDE
RTNominal down15.000 -0.260 (-1.704%)
Research Report

17/08/2020 17:54

Evergrande's sale of property arm stake improves liquidity

[ET Net News Agency, 17 August 2020] Moody's Investors Service said in a new report
that the sale of an equity stake in China Evergrande Group's (03333)(Evergrande, B1
negative) property arm to a group of strategic investors is credit positive, because it
will improve the company's immediate liquidity.
"However, if the property management arm cannot be listed by the second anniversary of
the transaction completion date, Evergrande will be required to repurchase the equity at
an original investment cost with an interest rate of 10%," said Cedric Lai a Moody's Vice
President and Senior Analyst.
Evergrande previously announced it was considering a spin-off and separate listing of
the property management business.
On 13 August 2020, Evergrande announced that it will sell 28.1% of its property
management arm to a group of strategic investors for a total consideration of HK$23.5
billion (US$3 billion), reducing its ownership to 71.9% from 100%. The entity will remain
a subsidiary of Evergrande.
Moody's expects the company's contracted sales will grow moderately in 2020 following
strong growth so far this year despite the coronavirus outbreak, supported by strong sales
execution. In addition, its leverage, as measured by revenue/adjusted debt, should improve
to 53%-59% over the next 12-18 months from 46.5% in 2019, driven by slower debt growth
from controlled land acquisitions. (KL)

Remark: Real time quote last updated: 23/10/2020 17:59
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