Shares in China Evergrande New Energy Vehicle Group fell more than 9% in Hong Kong on Monday following announcements that it would no longer pursue a secondary listing in Shanghai, and that it was having trouble paying suppliers. The stock was down as much as 30% earlier in the day.
Concerns have been swirling for some time: shares of the EV firm have suffered several single-day drops of more than 20% in recent weeks, and have crashed more than 90% so far this year.
Evergrande Group has in recent weeks warned that it could default on its enormous debts, which run up to more than $300 billion. Evergrande New Energy Vehicle, which is known for its Hengchi electric car brand, is 65% owned by the Chinese conglomerate.
Despite the automaker’s name, cars are still a small part of its business. Instead, senior care dominates its sales, according to its preliminary results in June.
Until recently, the automaker had also been considering selling new shares, which would have taken place as a listing on the Shanghai Stock Exchange.
That came just days after the EV company disclosed that work had been suspended on some projects due to the “serious shortage of funds” from its owner.
Without fresh funding, Siu warned that Evergrande Group’s cash crunch “is expected to affect the daily operations of the [overall] group, worsen its ability to pay employees’ salary and/ or other expenses.”
It also would hurt the company’s ability to continue production of its vehicles, he noted.
— Jill Disis contributed to this report.