National Business Wire (Jan 8) -- Shares of China Evergrande New Energy Vehicle Group Ltd (0708.HK), known as Evergrande Auto, the electric vehicle unit of indebted property developer China Evergrande Group (3333.HK), had fallen more than 10% by midday Monday.
After announcing a brief suspension of trading on Monday morning, Evergrande Auto made another announcement at midday, saying that Yongzhuo Liu, an executive director of the company, had been detained on suspicion of violations or crimes.
Evergrande Auto once dropped more than 10% after trading resumed at 1:00 pm on Monday. As of now, it has fallen more than 7% to HK$0.38 per share, with a total market capitalisation of HK$4.13 billion ($528.51 million).
Liu, 43, joined China Evergrande Group in December 2003, and has served as vice president of China Evergrande and chairman of Guangzhou Evergrande Football Club.
Evergrande unveiled the first six models of its new energy vehicle brand "Hengchi" in 2020, and renamed listed company Evergrande Health Industry Group Ltd to China Evergrande New Energy Vehicle Group Ltd. It was also in this year that Liu assumed the roles of Executive Director, Vice Chairman and President of Evergrande Auto.
In early 2022, Evergrande Auto suspended share trading for nearly 16 months from 1 April due to its inability to publish the relevant financial results for 2021 and 2022 on time. Following the fulfilment of all resumption guidance, the company resumed trading on the Hong Kong stock exchange from 28 July 2023 onwards.
Evergrande Auto currently sells only one model, the Hengchi 5, which Liu has touted as "the best pure-electric SUV under 300,000 yuan ($41,905)".
As of 31 May 2023, Evergrande Auto had delivered more than 1,000 units of the Hengchi 5, according to official data.
In the first half of 2023, Evergrande Auto achieved revenue of 155 million yuan ($21.65 million), a 540.98% increase year-on-year, as it started selling the Hengchi 5, its financial results showed. And as of 30 June 2023, the company's total liabilities stood at 75,692 million yuan ($10,572 million).
Troubled Evergrande Auto announced in August that it had reached an agreement with Dubai-based NWTN Inc. (Nadaq: NWTN) to secure a strategic investment of about $500 million.
However, Evergrande Auto announced on 1 January that the investment agreement had expired at the end of last year. Nevertheless, the automaker said it was still negotiating with NWTN and other parties on key terms of the deal, and the two sides may still reach a new agreement or amend the original one.
According to Evergrande Auto, Liu made his last public appearance on December 26, 2023, the day of the delivery ceremony for the Hengchi 5's big customers at its Tianjin production site.
Liu said at the event that Hengchi 5 deliveries have steadily increased over the past year, but he did not disclose the exact number of deliveries.
Prior to Liu, Hui Ka-Yan, founder, executive director and chairman of the board of directors of China Evergrande, has also been subject to mandatory measures on suspicion of violations or crimes, according to the company's disclosure at the end of September 2023.
On top of that, a number of China Evergrande executives have also been investigated or placed under police control, including former chief financial officer Darong Pan, former executive president Peng Ke, and general manager of China Evergrande's wealth management division Liang Du, among others.
(US$1 = HK$7.8144; US$1= 7.1591 yuan)
