The fate of EVERG SERVICES appears to have been sealed from the very beginning. On February 6, EVERG SERVICES (06666.HK) announced on the Hong Kong Stock Exchange that the company's liquidators had received updated proposal schemes from certain selected bidders. The equity sale of EVERG SERVICES has entered a new round of bidding.

For this property giant, which once boasted a market capitalization exceeding HK$200 billion, its destiny is about to be revealed.

In 1996, Hui Ka Yan founded EVERGRANDE in Guangzhou. One year later, its first project, "Jinbi Garden," became an instant success, generating RMB 80 million in sales proceeds and laying the cornerstone for EVERGRANDE. As part of its supporting services, the precursor to EVERG SERVICES—Guangzhou Jinbi Property Management Co., Ltd.—was established.

After Jinbi Garden earned a reputation for quality service, Jinbi Property took over the Guangzhou Jinbi Huafu project in 2003, formally entering the high-end property services sector. By 2007, Jinbi Property began expanding nationwide, entering provinces and cities such as Hubei, Sichuan, and Chongqing, replicating the Jinbi Garden service model across EVERGRANDE projects nationwide. By 2018, the number of projects under Jinbi Property's management exceeded 1,000, covering 31 provincial-level administrative regions across China.

On March 13, 2020, Jinbi Property was officially renamed EVERG SERVICES, taking on the core role of property management business within the EVERGRANDE Group. On December 2 of the same year, EVERG SERVICES was listed on the Hong Kong Stock Exchange at an issue price of HK$8.80 per share. On its first day of trading, its total market capitalization reached HK$94.9 billion, making it the second-largest company by market cap in the Hong Kong stock property sector at the time.

EVERG SERVICES was then considered a "star stock" in the capital markets. According to its prospectus, from 2017 to the first half of 2020, the company's revenue was RMB 4.399 billion, RMB 5.903 billion, RMB 7.333 billion, and RMB 4.564 billion, respectively. Net profit was RMB 107 million, RMB 239 million, RMB 931 million, and RMB 1.148 billion, respectively. In the following two months, EVERG SERVICES' stock price soared, reaching a historical high of HK$19.74 in February 2021, with its market capitalization briefly surpassing HK$200 billion.

On March 22, 2022, during the audit of its 2021 financial report, EVERG SERVICES unexpectedly discovered that approximately RMB 13.4 billion in deposit pledges provided to third parties had been enforced by relevant banks. For a property company with an annual net profit of just over RMB 1 billion, this enormous sum was nearly equivalent to the total profits of the past decade.

Subsequent investigation reports disclosed by the company revealed that from December 2020 to August 2021, six subsidiaries of EVERG SERVICES provided certificate of deposit pledge guarantees for financing to multiple third-party companies through eight Chinese commercial banks, involving three amounts of RMB 2 billion, RMB 8.7 billion, and RMB 2.7 billion, totaling RMB 13.4 billion. The related funds were ultimately transferred to EVERGRANDE through some guaranteed parties and multiple channel companies for use as general working capital for the parent company.

This indicated that from the time of EVERG SERVICES' IPO, and even during its preparation for listing, it had already begun to be "bled dry" by related parties. The underlying assets that investors purchased with real money were quietly hollowed out. Subsequently, several executives from EVERGRANDE and EVERG SERVICES resigned collectively, including core figures such as Executive Director and CEO Xia Haijun, and Executive Director and CFO Pan Darong.

From that point, EVERG SERVICES' fate took a sharp downturn. The company's stock price plummeted from a peak of HK$19.74 in February 2021 to a historical low of HK$0.35, evaporating over 98% of its market value from its peak. Even after the Guangzhou Intermediate People's Court ruled in January 2025 that relevant responsible parties must repay the misappropriated RMB 13.4 billion principal and interest, it failed to restore market confidence. The market clearly recognized that EVERGRANDE, the subject of the judgment, had long been stripped of assets, and its massive shell had lost its ability to repay debts. EVERG SERVICES subsequently admitted in announcements that there is significant uncertainty regarding the recovery of the aforementioned amount.

Despite being deeply embroiled in the parent company's crisis, EVERG SERVICES' fundamental operations have shown surprising resilience. Even during the deep adjustment of China's real estate market in 2024, EVERG SERVICES' financial data superficially showed a trend of "stabilizing against the trend." According to financial report data, the company's full-year revenue reached RMB 12.757 billion, a year-on-year increase of 2.2%; gross floor area under management was 579 million square meters, up 4.3% year-on-year; contracted area was 799 million square meters, a slight increase of 0.6%; cash and cash equivalents were RMB 2.697 billion, an increase of 11.1% year-on-year. These growth figures were particularly noticeable during the industry's downturn.

Based on these indicators, EVERG SERVICES seemed to be operating steadily. However, the key profit metrics critical for the company's survival were not optimistic: net profit was RMB 1.032 billion, a significant decrease of 34% year-on-year; gross profit margin dropped from 24.9% to 19.2%, and net profit margin fell from 12.5% to 8.1%. "Increasing revenue without increasing profit" is the most accurate description of EVERG SERVICES' current situation, rooted in the historical trauma caused by EVERGRANDE and its dependency on related parties.

Profits were severely eroded. The massive non-operating expenses directly related to the RMB 13.4 billion deposit seizure incident, including resulting legal litigation costs and related tax late payment penalties, acted like a continuously bleeding wound. As of the end of 2024, its trade receivables from related parties amounted to approximately RMB 2.199 billion, with 51.7% of that amount provisioned for impairment. The credit risk from related parties has substantially translated into losses.

Concurrently, due to increased credit risk from some third-party customers, the company adopted an extremely prudent accounting approach: recognizing incurred service costs but temporarily deferring recognition of the corresponding revenue. This conservative practice of "recognizing costs but not revenue" directly suppressed current period profits, creating the dilemma of a severe disconnect between revenue growth and profit performance.

Furthermore, the rise in operational costs cannot be ignored. The company increased capital investment in managed projects for facility upgrades and community environment improvements, spending over RMB 300 million throughout the year to complete more than 4,000 estate upgrade projects. At the same time, affected by market conditions, merchants' willingness for advertising and demand for venue leasing declined, leading to a 38.5% drop in community operation service revenue.

Amid overall pressure, EVERG SERVICES also showed some positive signals. Community living service revenue was approximately RMB 911 million, a year-on-year increase of 12.6%; asset management service revenue was about RMB 776 million, up 4.9% year-on-year; newly signed third-party area in 2024 exceeded 47 million square meters, a increase of over 100% year-on-year, with contracted annual saturated revenue exceeding RMB 1 billion. Most importantly, the proportion of EVERG SERVICES' revenue derived from related parties has fallen to a very low level. In the first half of 2025, revenue from related parties accounted for only about 0.31%, while revenue from third-party companies reached 99.68%. This indicates the company is actively "de-EVERGRANDE-izing," gradually reducing its reliance on the parent company.

With the collapse of EVERGRANDE, EVERG SERVICES was destined to be put on the auction block. In March 2022, the Hong Kong High Court appointed Edward Middleton and Wong Wing Sze of Alvarez & Marsal as joint liquidators of EVERGRANDE, responsible for disposing of assets and repaying debts. In January 2024, the Hong Kong High Court formally issued a winding-up order for EVERGRANDE, marking the official entry of the former real estate giant into bankruptcy liquidation proceedings.

For the liquidators, the 51.016% equity stake in EVERG SERVICES is a highly valuable asset. On September 10, 2025, EVERG SERVICES received an engagement letter from the liquidators, formally initiating the equity sale process. This was the first official disclosure of the equity sale plan by EVERG SERVICES. The liquidators' strategy is to first sign confidentiality agreements with some interested parties and receive non-binding offers, then invite selected bidders to conduct due diligence and require them to submit updated proposal schemes by the end of January 2026. The liquidators have explicitly stated they do not intend to consider any new non-binding expressions of interest, meaning the transaction has entered the substantive negotiation stage.

Who will become the new owner of EVERG SERVICES, given its historical baggage? According to media reports, potential buyers that have surfaced mainly include three institutions. The first is PAG (Pacific Alliance Group). As a globally renowned private equity firm, PAG manages over $55 billion in assets for nearly 300 institutional investors. In China's commercial real estate sector, PAG has a significant investment track record, including multiple rounds of investment in Zhuhai Wanda Commercial Management. Its extensive investment experience and substantial financial resources make it a strong contender.

The second is Guangdong Tourism Holding Group Co., Ltd. This state-owned enterprise, established in 2014 with registered capital of RMB 1.7 billion, is jointly held by the State-owned Assets Supervision and Administration Commission of Guangdong Provincial People's Government and the Guangdong Provincial Department of Finance. As a provincial SOE, Guangdong Tourism Holding has rich resources in cultural tourism, hotels, and other areas. Acquiring EVERG SERVICES could create synergies with its existing businesses.

The third is Trustar Capital. Market rumors suggest that Trustar Capital, under CITIC Capital, is also a potential bidder, but this has not been officially confirmed.

From a valuation perspective, based on EVERG SERVICES' current market cap of approximately HK$12.5 billion, the 51% stake corresponds to a market value of about HK$6.4 billion. However, considering the control premium and EVERG SERVICES' managed scale, the actual transaction price may be higher than the market value calculation. Based on the 2024 net profit of RMB 1.032 billion, EVERG SERVICES' current static P/E ratio is about 11.5x. In the current property industry environment, an acquisition P/E ratio between 6x and 8x is a relatively reasonable range. Calculating at 8x P/E, EVERG SERVICES' valuation would be approximately RMB 8 billion, with the 51% stake corresponding to about HK$4.3 billion.

For potential buyers, EVERG SERVICES' strategic value is evident: 579 million square meters under management, ranking third in the industry; annual revenue exceeding RMB 12 billion, with relatively stable cash flow; strong third-party expansion capability, with over 47 million square meters of new third-party area added in 2024; coverage of over 280 cities nationwide, with a strong presence in core regions like East and South China.

However, acquiring EVERG SERVICES also means taking on its historical burdens: the uncertainty of recovering the RMB 13.4 billion deposit, huge receivables from related parties, and market expansion resistance due to a damaged brand image. Potential buyers need to carefully weigh these factors.

The fate of EVERG SERVICES has long been tightly bound to EVERGRANDE's liquidation process. Around the time of its IPO, EVERG SERVICES' business was highly dependent on the parent company. From 2017 to the first half of 2020, the proportion of gross floor area under management provided by the EVERGRANDE Group accounted for 99.8%, 98.9%, 98.4%, and 98.8%, respectively. In terms of revenue structure, sales revenue to the single largest customer, EVERGRANDE Group, accounted for approximately 44.0%, 41.3%, 36.3%, and 35.0% of the company's total revenue, respectively.

This highly bound relationship became EVERG SERVICES' biggest "burden" after EVERGRANDE fell into crisis. The mere sight of the name "EVERGRANDE" evoked associations of debt default, stalled projects, and collapsed trust. This negative association severely constrained EVERG SERVICES' market expansion and valuation recovery.

Since 2021, striving for survival, EVERG SERVICES initiated a thorough "de-EVERGRANDE-ization" revolution: rebranding as "Jinbi Services" to cut ties; in business, related-party revenue accounted for a minimal proportion in the first half of 2025, with over 93% of new area coming from third parties, achieving independent expansion; legally, it sued EVERGRANDE as the plaintiff over the misappropriation of the RMB 13.4 billion deposit and obtained a favorable ruling, completing the separation in legal terms.

EVERG SERVICES is attempting to break free from the heavy shadow of its parent company and reshape itself as an independent market entity. However, the path of "de-EVERGRANDE-ization" is not smooth, and repairing the brand image cannot be achieved overnight. The negative impression associated with the name "EVERGRANDE" in the capital markets and among homeowners is difficult to eliminate in the short term, affecting market expansion and homeowner trust. Recovery of receivables is extremely challenging; the RMB 2.199 billion in receivables from related parties are almost fully provisioned, with bleak actual recovery prospects. Liquidity pressure persists; as of the end of 2024, EVERG SERVICES' net current liabilities were approximately RMB 968 million. Although this has improved compared to before, it still requires ensuring sufficient funds to meet financial obligations under various contracts and arrangements.

A deeper challenge lies in the fact that EVERG SERVICES' foundation is built on properties developed by the EVERGRANDE Group. Some of these projects suffer from delivery delays, quality issues, etc., affecting homeowner satisfaction and property fee collection rates. Even if EVERG SERVICES achieves independence at the equity level, its historical baggage will continue to impact its operational quality for a considerable time.

EVERG SERVICES was once a "star stock" pursued by the capital markets, with a market cap once surpassing HK$200 billion; it also experienced the shocking scandal of the RMB 13.4 billion deposit misappropriation, with its stock price hitting rock bottom. Against the backdrop of parent company EVERGRANDE's liquidation, EVERG SERVICES has gone from a "cash cow" to an asset "waiting to be sold," a fate that evokes sigh. From another perspective, EVERG SERVICES is still struggling to survive. With annual revenue exceeding RMB 12 billion, the third-largest managed area in the industry, third-party revenue accounting for over 99%, and annual net profit still over RMB 1 billion, EVERG SERVICES possesses ongoing operational value even while deeply mired in crisis.

The submission of "updated proposal schemes" mentioned in the February 6 announcement signifies that this months-long equity sale is entering its final stage. Regardless of the final buyer, for EVERG SERVICES, shedding the "EVERGRANDE" label and gaining a new lease on life might be its best outcome. As EVERG SERVICES stated in its financial report: "Helping the company navigate cycles and move forward steadily." Against the backdrop of deep adjustments in the real estate industry, the market awaits to see if EVERG SERVICES can truly achieve a phoenix-like rebirth.

For the entire society and industry, the EVERGRANDE incident has become a profound case study in the development process of China's market economy. It serves as a warning to all market entities: without independent operational capabilities and a sound modern corporate governance system, any prosperity built on dependent growth can become an unsustainable bubble, quickly turning into a costly sacrifice when crisis strikes.

The industry awaits a final outcome for the EVERGRANDE system, including EVERG SERVICES, to provide a substantial resolution for the countless creditors who have been eagerly awaiting and struggling to protect their rights, and to draw a conclusion to this most tragic and distorted event in China's commercial history.