Government’s involvement should help it to go through its biggest-ever crisis but…
■ Evergande announced very disappointing 1H21 results with a Rmb3.7bn core
net loss, dragged down by much lower margins and revenue decline.
■ Government involvement should help Evergrande go through its biggest
crisis since its inception but the cost to the company will be very substantial.
■ We estimate its total potential monetised asset value at Rmb2.2tr; this should
be sufficient to pay off its total liability of about Rmb1.8tr.
■ We cut FY21-23F EPS by 83-118% and slash our SOP-based TP by 82% to
HK$3.7. Downgrade to Reduce from Add.