Optimistic in Fundamentals of Evergrande — A Number of Investment Banks Give Their Support
BEIJING, June 25, 2012 /PRNewswire-Asia/ — Sina Leju today issued a report further discussing the support received by Evergrande from leading investment banks. On June 21, Evergrande (HK.3333) started the general counterattack on the sudden attack from Citron Research, a short-seller in the U.S.A. Sina Leju notes that following a brief clarification announcement on the same day, Evergrande published another detailed clarification announcement on the next day, rebutting the short-selling report of Citron item by item. According to Evergrande, the related accusation of Citron is fully inconsistent with the facts. Details of Sina Leju’s report follow:
The clarification announcement of Evergrande has rebutted the short-selling report of Citron item by item, and in the opinion of Evergrande, the related accusation is misleading on the financial data of the Company.
Meanwhile, the counterattack of Evergrande has obtained support from investment banks, which are still optimistic in the fundamentals of Evergrande.
Sina Leju reports that, according to Deutsche Bank, the related reports seemed well-founded, but are actually based on a number of assumptions, obviously misunderstanding the basic business of Evergrande. The Bank estimated that the liquidation value of Evergrande was close to 67 billion yuan, and regarded Evergrande as one of the preferred Mainland real estate enterprises, with the target price of HKD 8.3.
Sina Leju also notes that Bank of America Merrill Lynch responded to the accounting misunderstandings of the short-seller item by item, and made full responses to all the challenges. In combination with the cash flow plan and the contracted sales volume of Evergrande, in the opinion of Bank of America Merrill Lynch after calculation, Evergrande has adequate liquidity, has no problem of financial solvency, and the stock price and the PE ratio of the Company have already been obviously lower than those of the same industry, so the bank has reiterated its previous rating.
The report notes that Goldman Sachs has said that in the future several years, Evergrande will benefit from the urbanization process of second- and third-tier cities, and its standardized development mode will allow the Company to rapidly expand and to increase market share.
The report also notes that Credit Suisse has confirmed that Evergrande is steady in the balance sheet, and will have more projects for sale in the future.
According to Fitch, a rating agency, the liquidity and the credit rating of Evergrande will not be influenced in the short term. Fitch believes that Evergrande may not need capital raising in the short term, because the first batch of bills 5.55 billion yuan will expire by 2014, and the Group has sufficient current capital, plus cash of 20.1 billion yuan at the end of last year and the contracted sales volume of 26.8 billion yuan in the first 5 months this year.
According to the public data, by the end of 2011, Evergrande had achieved the total assets of 179.0 billion yuan, and the full-year sales volume of 80.4 billion yuan, with the cash balance of 28.2 billion yuan and the unused bank credit line of 36.91 billion yuan. In the first 5 months of 2012, Evergrande achieved the accumulated sales volume of 28.6 billion yuan.
SOURCE Sina Leju