The Unfolding Drama of Evergrande’s Exit
On August 25, Evergrande—once China’s largest private property developer—formally exited the capital market. Almost immediately, attention turned to Shandong Hi-Speed Group, the state-owned enterprise once dubbed ‘Evergrande’s largest backer.’ Just four days after the delisting, Shandong Hi-Speed, the group’s flagship listed company, released its 2025 interim report. While net profit attributable to shareholders saw a modest 3.89% year-on-year increase, revenue dropped by 11.52%, lagging behind the sector median. More critically, the company’s debt-to-asset ratio climbed to 65.96%, a full 20 percentage points above the industry average. But beyond these numbers lies a deeper story of risk, ambition, and repercussions.
How Shandong Hi-Speed Became Evergrande’s Largest Backer
In December 2016, Evergrande raised RMB 30 billion from its first round of strategic investors. Shandong Hi-Speed Group was among them, investing RMB 3 billion. A year later, during Evergrande’s second and third rounds of fundraising, Shandong Hi-Speed tripled down—pumping an additional RMB 20 billion through three subsidiaries. In total, the group invested RMB 23 billion for a more than 5% stake in Evergrande Real Estate.
A Symbolic Partnership
The closeness of this relationship was on full display in March 2018 at Evergrande’s ‘Strategic Partner Summit’ in Guangzhou. At an event often described as a gathering of Xu Jiayin’s ‘super network,’ Shandong Hi-Speed Group’s then-chairman Sun Liang stood firmly at the center of a group photo alongside business heavyweights like Zhang Jindong of Suning and Wang Wenyin of Zhenwei Group. For a time, the investment seemed shrewd. From 2017 to 2019, Evergrande paid substantial dividends. Shandong Hi-Speed received an estimated RMB 5.76 billion in returns during this period. But the tide was about to turn.
The Unraveling of a High-Stakes Bet
In September 2020, a leaked letter pleading for government support revealed Evergrande’s severe liquidity crisis. Two months later, its backdoor listing plan via Shenzhen Properties collapsed. Under their investment agreement, strategic investors like Shandong Hi-Speed had the right to demand a buyback. The group acted swiftly, agreeing to sell its 4.7% stake in Evergrande Real Estate to Shenzhen Talent Housing Group for RMB 20 billion. But the final tranche of payment was delayed, leading Shandong Hi-Speed to file for arbitration. As of its latest financial report, the group still hasn’t received the full amount. Even so, Shandong Hi-Speed fared better than many other investors. Hong Kong socialite甘比 (Gan Bi), wife of tycoon刘銮雄 (Joseph Lau) and major shareholder of Chinese Estates, lost over HKD 10 billion on Evergrande shares. Wang Wenyin, whose Zhenwei Group invested RMB 5 billion in Evergrande, later faced his own corporate liquidity crisis, was restricted from high-consumption activities, and in June 2025 was labeled a失信被执行人 (discredited person subject to enforcement) over a RMB 50 million debt.
The Hidden Costs of Being Evergrande’s Largest Backer
While Shandong Hi-Speed avoided the worst of the financial losses, the fallout extended far beyond its balance sheet. A court ruling from Zaozhuang Intermediate Court revealed that between early 2016 and February 2018, then-chairman Sun Liang abused his power by authorizing irregular subsidiary transactions, resulting in a state asset loss of RMB 31.54 million. This period coincided exactly with the group’s aggressive investment in Evergrande. Under Sun’s leadership, Shandong Hi-Speed embraced a strategy of high-leverage expansion. He famously described the company’s approach as ‘borrowing a chicken to lay eggs, using eggs to repay the chicken—eventually achieving a cycle where you neither borrow the chicken nor return the eggs.’ This philosophy aligned closely with Xu Jiayin’s own high-debt, high-turnover model. Evergrande wasn’t the only risky bet. In 2017, Shandong Hi-Speed acquired a controlling stake in Hong Kong-listed China New Financial Group, later renamed Shandong Hi-Speed Financial Group. The subsidiary went on to purchase high-yield dollar bonds from distressed developers like佳兆业 (Kaisa), Suning, and奥园 (Aoyuan), many of which later defaulted.
Official Reprimand and Strategic Reckoning
In 2023, the Chinese Communist Party’s disciplinary publication China Discipline Inspection Magazine published a scathing critique of Sun Liang’s tenure. Auditors found that ‘in the pursuit of revenue growth, the company borrowed heavily for low-margin international trade and blindly followed trends away from its core business, investing road-construction funds into real estate—causing significant state asset losses and running counter to the Party Central Committee’s requirements.’ This official rebuke marked a turning point. The era of aggressive diversification was over.
Weighing Down a Giant: Shandong Hi-Speed’s Financial Strain
Today, Shandong Hi-Speed is the largest player in China’s highway sector by revenue—racking up RMB 107.4 billion in the first half of 2025. But its profitability tells a different story. Net profit reached only RMB 16.96 billion, trailing competitors like Jiangsu Expressway (RMB 24.24 billion) and China Merchants Expressway (RMB 25.04 billion). More tellingly, its return on assets (ROA) sits at just 1.29%, well below the sector median of 1.91%. The company is big, but it isn’t efficient.
The Debt Burden
Years of expansion have left Shandong Hi-Speed with a debt-to-asset ratio of 65.96%—20 points higher than the industry average. And the pressure is mounting. The company has multiple capital-intensive projects underway, including: – The Dalailong Railway expansion, budgeted at over RMB 4.5 billion but only 25% complete – A smart transportation industrial base project, nearly RMB 1 billion budgeted but under 30% complete – A hazardous waste disposal project in Yibin, budgeted at RMB 1.1 billion but barely started These initiatives will continue to drain cash flow for years. Perhaps that’s why Shandong Hi-Speed and its parent group have been active in capital markets. In March 2025, Shandong Hi-Speed Group registered a RMB 30 billion corporate bond issue—approved in less than a month. The listed entity also issued China’s largest single类REITs (similar to REITs) by a local state-owned enterprise, raising RMB 7.984 billion at an interest rate of 2.48%.
Market Sentiment and Future Challenges
Investors have taken note of these struggles. Between May and late 2025, Shandong Hi-Speed’s share price fell nearly 20%, from RMB 11.09 to 9.01—a significant underperformance in a generally bullish market. This decline reflects deep-seated concerns about the company’s operational efficiency and financial health. Evergrande may have exited the stage, but for its largest backer, the financial and strategic aftershocks are far from over. The company must now navigate: – A high leverage ratio that limits financial flexibility – Inefficient asset utilization and low returns – Ongoing capital demands from unfinished projects – Increased regulatory scrutiny of state-owned enterprises’ investments
Lessons from the Fallout
The story of Shandong Hi-Speed and Evergrande serves as a cautionary tale for investors and state-owned enterprises alike. Diversification and ambitious growth can bring rewards, but they also come with profound risks—especially when aligned with highly leveraged business models. For Shandong Hi-Speed, the challenge now is to refocus on its core competencies, improve operational efficiency, and rebuild investor confidence. The era of chasing high-risk, high-reward investments appears to be over. As China’s property sector continues to recalibrate, the experiences of its largest backers will undoubtedly shape future investment strategies across the industry. Stay informed with in-depth analysis on corporate investments and financial risk—follow our coverage for ongoing updates and expert insights.