Evergrande Health Surged Nearly 70% on Faraday Future Investment

Tang Shihua

(Yicai Global) June 26 — Shares in the health unit belonging to Evergrande Group, China’s largest real estate developer by sales, skyrocketed today on its plans to become the main shareholder in embattled Jia Yueting’s new energy vehicle firm Faraday & Future.

Evergrande Health Industry Group [HKG:0708] surged 66.3 percent in trading today to close at HKD7.67 (USD0.97) after the Hong Kong-based enterprise announced plans to pay HKD6.7 billion (USD854 million) for a 45 percent stake in the electric car company.

The Hong Kong bourse’s major market index, the Hang Seng, fell 0.28 percent to 28,881.4 points for the day, representing the lowest close this year amid heavy selling pressure on all Chinese markets due to the escalated US-China trade dispute.

Investors appeared buoyant on Evergrande Health’s potential shift in business focus after the transaction closes. The deal will mark cash-rich Evergrande Group’s official entry into the competitive NEV sector, while also giving Faraday Future founder Jia Yueting some much-needed breathing room to revive his dying commercial empire. Jia has been branded a ‘laolai’ by the Chinese government, meaning someone who intentionally avoids paying debts, following repeated cash crises at his other Chinese companies.

Founded in 2014, Faraday Future aims to rival Tesla in the high-end NEV sector, but operations in Nevada, US, were shut last year when liquidity problems from Jia’s LeEco business ventures spilled over. The company reported a USD340 million net loss before tax last year, compared with USD569 million in 2016.

Editor: William Clegg