China Evergrande New Energy Vehicle Group (708) H1 2024 earnings summary

Executive summary

• Principal activities include R&D, manufacturing, and sales of new energy vehicles under the Hengchi brand; operations and workforce stability were severely impacted by financial difficulties, leading to suspended R&D and production.

• Delivered over 1,429 vehicles as of 30 June 2024, with 1,700 units of Hengchi 5 produced; sales and revenue fell sharply due to internal and external challenges.

• Net loss reached RMB20,257 million for the six months ended 30 June 2024, a 194.73% increase year-over-year, with revenue dropping 75.17% to RMB38 million due to lower vehicle sales and suspended operations.

• The company faces severe liquidity challenges, with only RMB54.96 million in cash against RMB26,590 million in borrowings and RMB46,695 million in payables.

• The company is actively seeking strategic investors and new funding to ensure survival and future development, with plans to expand sales channels and improve manufacturing standards.

Financial highlights

• Revenue for the six months ended 30 June 2024 was RMB38.38 million, down from RMB154.54 million year-over-year, mainly due to lower Hengchi 5 sales.

• Gross profit was RMB2.43 million, compared to a gross loss of RMB60.88 million in the prior year period.

• Net loss for the period was RMB20,256.65 million, a significant increase from RMB6,873.05 million year-over-year.

• Net impairment losses on financial assets surged to RMB16,909.03 million, mainly from increased provisions for receivables from related parties.

• Cash and cash equivalents and restricted cash totaled RMB54.96 million as of 30 June 2024, down from RMB146.72 million at year-end 2023.

Outlook and guidance

• Plans to introduce strategic investors and raise funds to support ongoing operations and future R&D.

• Intends to resume R&D and production, expand sales channels, and improve after-sales service once funding is secured.

• Focus on developing new platforms and models, improving manufacturing quality, expanding sales (including overseas), and enhancing after-sales service.