Investment Banks Join Hands to Support Evergrande In the Counterattack Against the Short Seller
23 Jun, 2012
BEIJING, June 23, 2012 /PRNewswire-Asia/ ;– ;Citron, an international professional short seller, published a report on June 21 throwing an extremely sensational conclusion that Evergrande, a Chinese leading property developer listed in Hong Kong stock market, had been insolvent and had been presenting fraudulent information to the investing public. Evergrande made a quick response to the report on its release, getting straight to the point that the Citron report was seriously false. On June 22 Evergrande released a detailed clarification announcement at noon responding to each of the allegations, and pointed out the problems such as misreading financial data, miscalculation, groundless speculations, accusations and comments in the Citron report. ; An original report from Sina Leju follows:
Meanwhile, investment banking institutions and investors including Value Partners, Jefferies, Deutsche Bank, JP Morgan, Credit Suisse and Guoco Capital all expressed their support for Evergrande and their doubt of the hedging institution whose intention is to short the overseas-listed Chinese stocks.
Value Partners (00806), as one of Evergrande’s main shareholders, indicated in the first place that they had confidence in Evergrande and didn’t sell a single share all day. Mr. Louis So, Vice Chairman and Co-Chief Investment Officer of Value Partners read the report and said that the accusations to Evergrande were not solid. He believes the fundamentals of Evergrande will be reflected on the stock price in the long term.
Jefferies thinks that Citron didn’t have enough knowledge about Evergrande and therefore released the misleading report. Evergrande’s stock price fell to 73% of net asset value and its estimated value is attractive. Evergrande is still the first choice among the Chinese property developers.
Deutsche Bank continues its support for Evergrande and regarded it as one of the first choices among the Chinese property developers.
JP Morgan believes that most of the allegations against Evergrande in the research report were groundless and the report 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.
Evergrande may get re-rated as its sales, cash flow, and financial status improve. Credit Suisse also advised that the recent stock price weakness just offered a compelling entry point.
Guoco Capital indicated that there was no evidence to prove Evergrande’s insolvency.
SOURCE Sina Leju