China Evergrande 3333

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DJ MARKET TALK: Macquarie Keeps Evergrande At Outperform

1208 [Dow Jones] STOCK CALL: Macquarie, in response to Citron Research's negative report on Evergrande Real Estate (3333.HK), maintains an Outperform rating, with a target of HK$5.07, based on "robust sales and clarification of negative newsflow."

The house went through some of the major allegations and believes that many were not substantiated.

Macquarie "does not believe Evergrande has material off-balance-sheet debt."

While the house does not "have a good explanation of the low interest income in 2011...one possibility is suppressed cash level of around CNY10-15 billion between the ends of each period."

It believes the company's "other businesses are mainly related to its construction companies," and that the value of it's investment properties, and implied booked land costs are in line with management's disclosures, and third-party other receivables were likely not related to other revenue.

Evergrande closed down 11.4% on Thursday and is currently up 2.0%. The house recommends buying on weakness and to expect flattish June sales.


Source: Dow Jones Newswire

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MARKET TALK: Evergrande +2.3%; Shares Buyback Plan

Source: Dow Jones & Company

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*DJ Evergrande Real Estate: Will Consider Legal Action Against Citron Research

Source: Dow Jones Newswires

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MARKET TALK: JPM Keeps Evergrande As Overweight, Eyes HK$5.7

Source: Dow Jones & Company

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China’s Evergrande defends itself against alleged bribery, fraud

HONG KONG: Evergrande Real Estate, China’s No 2 property developer by sales, said today it may take legal action against a short seller that accused it of fraud, bribery and financial irregularity, and may buy back some of its shares.

Evergrande, which has China’s largest landbank at 137 million square metres, said allegations by Citron Research that it bribed government officials to buy land were “malicious slander”. In a statement, it said it “has never been and will not be engaging in any bribery act in order to obtain benefits”.

Around US$1 billion was wiped off Evergrande’s market value yesterday on news of the Citron Research accusations – which Evergrande dismissed as “totally untrue”. After falling 11.4% yesterday, Evergrande shares slid as much as 5.5% early today. By mid-afternoon, the stock was down 1%, slightly outperforming the Hang Seng Index.

Analysts have said the bribery allegations may be hard to shake off as Evergrande purchases much of its land through private deals rather than at auction.

The company faces an overhang on its shares caused by doubts over its high levels of debt. It may buy back shares, CEO Xia Haijun told investors today on a conference call organised by Credit Suisse, according to a participant on the call.

Xia did not give details of when the company might buy shares, or how much, the source added.

Evergrande’s debt is 1.5 times its equity, according to Thomson Reuters Starmine data – double the industry average – and three times that of China Overseas Land, the biggest mainland developer by market value.

In its statement, Evergrande said it had 28.2 billion yuan (US$4.43 billion) in cash and cash equivalents at the end of last year. It has denied using accounting trickery to cover up its alleged insolvency, and noted auditor PricewaterhouseCoopers signed off on its accounts. It has also said it doesn’t plan to revise its forecast for annual sales of 80 billion yuan.

Personal attack

Evergrande also defended its high-profile chairman Hui Ka Yan (photo above), who owns 63% of the company.

Citron said Hui had an honorary degree from a “diploma mill” – the University of West Alabama – and, contrary to his claims to be a professor, had never taught at Wuhan University of Science and Technology.

Evergrande responded by saying Hui’s credentials were true. “Mr Hui has never exaggerated his academic qualifications and titles, and has never reaped any benefits from any relevant title,” its statement said.

Citron claimed Hui, who owns a private jet, had poured at least 16.2 billion yuan (US$2.6 billion) into pet projects that are “comically off-strategy and frighteningly expensive for Evergrande’s shareholders”.

Hui sponsors Guangzhou Evergrande, a high-spending Chinese Super League soccer team, which last month hired former Italy national coach Marcello Lippi as its manager. He also sponsors a volleyball team.

Evergrande said the claims were “without basis”, noting the firm’s net investment in soccer was 80 million yuan, with less than 70 million yuan spent on volleyball and “cultural industries”.

In defence Evergrande said it was putting together a defence team that may take legal action against Citron Research, which is run by Andrew Left from his Beverley Hills, California home.

In January, private equity firm Blackstone exited a joint venture in Guangzhou, with Evergrande buying back a 40% stake in the Royal Scenic Peninsula development for US$162 million.

Credit Suisse analyst Jinsong Du told Reuters he sees short-term buying opportunities in Chinese property stocks after strong sales in May, though he is bearish on the sector beyond that.

“Housing prices are on the way up so there are policy concerns in the medium term,” he said. “The share price of the sector has already run up.”

Source: Reuters

http://www.freemalaysiatoday.com/catego ... ery-fraud/

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Chairman's Degree Sparked Citron Evergrande Probe By: Ansuya Harjani

“What caught my attention first is the Chairman, he calls himself doctor and he’s not a doctor. He has an honorary doctorate from the University of West Alabama - a mail order university,” Left said in a telephone interview on Friday.

http://www.cnbc.com/id/47914986

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EVERGRANDE (03333) kept OW with TP$5.7 by JPM
2012-06-22

JP Morgan believes that most of the allegations against EVERGRANDE (03333) in a research report were groundless and they ignored the accounting standards applied by Chinese property developers.

JP Morgan remains bullish on EVERGRANDE as it has strong sales momentum, user-demand targeted products and lowering risks by deleveraging and slower expansion pace.

JP Morgan kept an Overweight on EVERGRANDE with target price $5.7, adding that it is right time to buy as the stock has plunged 20%.

Source: AAStocks Financial News

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EVERGRANDE (03333) refutes fraud allegations point by point
2012-06-22

EVERGRANDE (03333) released an announcement to refute the report of Citron Research.

The Company said it was stated in the Report that the Company utilized off-balance sheet financing to carry out company acquisition and this totally distorts the actual accounting practice of the Group. The Group has consolidated land holding companies acquired by the Company in its financial statements and classified outstanding consideration as payables for land acquisition.

With respect to trust financing, the Group has always classified trust financing as liabilities and has not accounted such amount as minority interest. Therefore, the minority interest of RMB2.2 billion reflected in the financial statement of the Company as at 31 December 2011 did not involve any repurchase arrangement.

At the same time, the commitment on the acquisition of land use rights of RMB21.1 billion as disclosed in the financial statements of the Company as at 31 December 2011 refers to contracted amount which was not required to be reflected as liabilities in the financial statements as the land use rights were yet to obtain.

The Report confuses such commitment with the liabilities which should be included in the balance sheet and this totally contradicts with general accounting principle and obviously reveals the lack of accounting knowledge of the author of the Report. Therefore, such claim made in the Report that the Company understated liabilities through the so-called joint venture approach is based on a mistaken subjective assumption and the data used are totally inaccurate.

As at 31 December 2011, the total amount of cash and cash equivalent and restricted cash of the Group was RMB28.2 billion. The Group said it is totally without basis of the Report to claim that the bank deposit balance is fabricated by the Company.

All the projects of the Group were obtained by the Company legally and has obtained the necessary construction planning permit, construction engineering permit, building permit and pre-sale permit for commodity housing. The Group’s business model is the rapid development and quick sale of projects, and the Company has never had a piece of idle land.

The Report alleged Mr. Hui Ka Yan, the chairman and controlling shareholder, has bogus credentials. The Group said the credentials of Mr. Hui is true, Mr. Hui has never exaggerate his academic qualifications and titles, and has never reap any benefits from any relevant title.

Source: AAStocks Financial News

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EVERGRANDE (03333) Hui Ka Yan: cash of listed co. could not be falsified ; investment in football teams shows social responsibility
2012-06-22

EVERGRANDE (03333)'s Hui Ka Yan, after in a conference call with CEO Xia Haijun, expressed that the management is coming to Hong Kong and is going to make a detailed response on the untrue allegation, adding the company will form a large legal team to protect the company's interests.

In response to the report stating the company does not have cash of as much as HK$28 billion, Hui said the cash amount of listed companies could not be falsified as it should be audited and affirmed by accounting firms.

Hui, asked whether major shareholders of the company increase holdings in the company or the company start buyback, rendered no comment on the issues.

Regarding the company's investment in football teams, Hui noted that it represents not only social responsibility but also enhancement of the company's brand.

Source: AAStocks Financial News

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EVERGRANDE (03333) Chairman Hui Ka Yan: Report saying co. using accounting tricks, bribes to hide fact untrue
2012-06-21

EVERGRANDE (03333)'s Chairman Hui Ka Yan clarified that the allegation in a report stating the company has used accounting tricks and bribes to hide the fact that the company is truly insolvent is totally untrue, adding the company will study the details of the report and respond to its with rigid data, and at present, the company will first seek legal advice.

The management expressed that for operations, the company's sales are in line with expectations as always and the company, which met 40% of the full-year target in the first half of the year, is confident of meeting the full-year target and therefore, it will not lower the target.

As for the sales in tier three cities lagging behind those in the tier one cities, the management deems that it is reasonable as economic conditions and market responses vary by districts.

Hui also said that the sales will improve on month progressively.

The company's finances remain sound and solid, with sufficient cash on hand though it may diminish against that of last year.

The company has nil liabilities except those stated in the balance sheet, while its current liabilities have already been reflected in the balance sheet.


Source: AAStocks Financial News