Chinese developer Sunac’s shares sink in Hong Kong after 12-month suspension is lifted
- Sunac’s shares slumped as much as 59 per cent in Hong Kong as trading in the developer’s shares resumed after a 12-month suspension
- Trading resumed as Sunac met the Hong Kong stock exchange’s conditions, including the publishing of its long-delayed results
The company published its annual results for 2021 and 2022 to meet the Hong Kong stock exchange’s requirements for trading to resume, according to Sunac’s filing on Wednesday evening.
The stock plunged as much as 59 per cent before closing at HK$2.04 on Thursday after trading resumed following the suspension on April 1, 2022.
Trading in Sunac’s stock was likely to be “quite volatile”, said Will Chu, a senior associate at CGS-CIMB Securities.
Sunac was a member of the Hang Seng China Enterprises Index and its removal “saw an immediate selling pressure by index funds”.
Sunac is the fourth distressed Chinese developer to resume trading in Hong Kong. Kaisa Group Holdings and Jingrui Holdings resumed trading last month while Logan Group was the first last August.
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Meanwhile, shares of another beleaguered developer Sinic Holding Group, which had been suspended since September 2021, were delisted on Thursday.
At least 20 others, including Shinsun Holdings, Fantasia Holdings Group and China Evergrande Group, the world’s most indebted developer with more than US$300 billion of liabilities, are still suspended in Hong Kong and face the risk of delisting.
These developers are in the process of restructuring their offshore debt, taking advantage of the measures introduced by Beijing in November to rescue the property sector, ranging from bank credit to bond issuances and equity financing.
Sunac said in its filing that last month it had reached an agreement with an ad hoc group of offshore creditors on the restructuring and was now implementing the plan. This includes exchanging US$1 billion of offshore debt into nine-year bonds that are convertible into its shares.
The developer, however, added that it was also facing a winding-up petition, with a hearing set for June 14 in Hong Kong.
Sunac said that it had managed to reduce its losses, which fell 54.2 per cent year on year in 2022 to 820 million yuan, while core net loss decreased 45.2 per cent to 13.86 billion yuan in the same period. Outstanding loans fell by 7.2 per cent to 298.4 billion yuan last year.
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The company’s total assets amounted to 1.09 trillion yuan last year, while revenue dropped 51.2 per cent to 96.75 billion yuan, according to its filing.
It also said it has “assets of sufficient value to support its operations”. As of 2022, it had 37.54 billion yuan in cash and expects to generate 1.41 trillion yuan in sales from its land bank of 130 million square metres.
In March, Sunac’s contracted sales value gained 3 per cent month on month to 11.18 billion yuan, while contracted sales area grew 2.6 per cent to 835,000 square metres.
