Sunac China shares plunge on LeEco’s worsening crisis
The share price decline in the past four days has wiped off more than HK$8 billion in market value
Shares of Sunac China slumped in Hong Kong on Friday as investors fear that the developer could suffer a big loss from its 15 billion yuan (US$2.2 billion) bet on the cash-strapped LeEco Group, and would be forced to take over operations of the group’s core business.
Sunac shares plummeted 7 per cent to close at HK$14.80 on Friday. The stock has dropped 12 per cent in the past four trading days, wiping off more than HK$8 billion in market value for the country’s seventh largest developer by sales.
“Sun [Hongbin, chairman of Sunac] has underestimated the problems in LeEco,” said Chu Tongxin, a property analyst at Shenzhen Anji Asset Management.
Sun [Hongbin] has underestimated the problems in LeEco
The developer made a “strategic investment” in three LeEco affiliates in January, even after the tech group revealed a cash crunch in November last year. Shenzhen-listed Leshi Internet Information &Technology Corp is the core business of the group.
On Thursday night, LeEco founder Jia Yueting suddenly announced that he was stepping down as Leshi’s chairman and exiting the board, amid mounting debt problems.
Sunac’s chairman Sun Hongbin, was proposed as one of Leshi’s three new directors, the tech group said in a statement.
A Shanghai court this week freezed the 16-billion yuan 26-per cent stake that Jia owns in Leshi, as a local bank sought for asset preservation after LeEco failed to pay interest on its loans.