BEIJING, June 25, 2012 /PRNewswire-Asia/ -- Sina Leju today issued a report further discussing Evergrande's rating from Fitch and the support received by Evergrande from leading investment banks. Since June 21 when Citron released its negative report, Evergrande, the leader of the Chinese real estate industry, has mounted a strong counterattack against Citron, while leading investment banks, including Citibank and Goldman Sachs, and Fitch International have expressed support for Evergrande. Sina Leju points out that the Citron report reveals a lack of understanding of China's real estate market and shows problems like unfounded presumption and criticisms. They reiterated their positive view of the sales potential and stable cash flow of Evergrande. Details of Sina Leju's report follow:
Because of the effect, the shares of Evergrande managed to go up in fluctuation. On June 25, the highest rise once reached 4.96% and closed at 3.96 yuan, chalking up an increase of 2.61%. For two trading days running, the shares have outperformed the market to become the one of the highest rise of the shares of large domestic real estate enterprises on 25.
Sina Leju reports that, earlier, 9 world-famous investment banks, including Goldman Sachs, Deutsche Bank, Citibank, Merrill Lynch, JP Morgan Chase, Macquarie, Credit Suisse, UBS and DBS, voiced support for Evergrande. Goldman Sachs noted that Citron lacks knowledge about the operations of the industry and has made many presumptions rather than investigations, with no understanding of the accounting rules. Goldman Sachs predicts that, in the forthcoming years, Evergrande will benefit from the urbanization process in the tier-2 and tier-3 cities and its standardized development mode will enable the company to expand rapidly and increase its market shares.
The report from Sina Leju also notes that Fitch, one of the top international rating agencies, also issued a report which holds that the Citron report has no immediate impact on the fluidity of Evergrande and maintains the ranking given to Evergrande. Fitch believes that Evergrande has no need of going into the offshore capital market in the near term, for the first debt of Evergrande on the capital market, synthetic USD bills equal to RMB 5.55 billion yuan, will not fall due until January 2014.
Fitch pointed out that Evergrande had a cash balance of RMB 20.1 billion yuan by the end of 2011 and secured 26.8 billion yuan of sales under contract in the January ~ May period of 2012. Therefore, its fluidity is adequate. Fitch judged that, like its domestic counterparts, Evergrande would continue to raise operation capital in an onshore mode. Considering the financial position reflected in the report of the company and the asset-based loan nature on the onshore market, Fitch also believes that Evergrande will be immune to the impact of the recent uncertainty caused by the study report of Citron when getting into the onshore market for fundraising.
