Sunac's shares plunge as another cash-strapped Chinese developer says it won't make March 31 results reporting deadline
Cash-strapped Sunac China Holdings' shares tumbled by almost a fifth after the Chinese developer said it would delay publishing its 2021 results and suspend share trading.
The Beijing-based home builder said it will not be able to meet the March 31 deadline because the auditing work on its finances has yet to be completed, and will postpone a board meeting scheduled for that date.
In a filing to the stock exchange on Monday night, Sunac said it is in the process of talking to its offshore creditors and is proposing to extend the maturity of a yuan-denominated bond. It cited these as the reasons for failing to meet the deadline.
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It follows a slew of mainland developers including China Evergrande Group and Kaisa Group that have said they are unable to meet the financial reporting deadline for 2021, citing disruption to the audit process caused by Covid-19 and drastic changes in China's real estate landscape.
Sunac, founded by chairman Sun Hongbin in 2003, has some US$1.9 billion of offshore bonds, 21 billion yuan (US$3.3 billion) of onshore bonds and sizeable nonbank borrowings due by June 2023, according to Moody's.
The company's mainland arm is facing "periodic liquidity difficulties in the near future" and expects that it will not be able to raise sufficient funds to repay the two bonds by their due dates, according to a filing to the Shanghai Stock Exchange on Friday.
Sunac becomes the latest Chinese developer to announce the suspension of its shares from April 1. Its shares finished Tuesday 17.4 per cent down, at HK$4.08.
"The moves, especially the trading suspension, come as a big negative surprise to us and the market," said Raymond Cheng, a property analyst at CGS-CIMB Securities.
"The latest negative development could hurt the improving market sentiment [that had resulted from] supportive policy from regulators in the near term."
Investors are worried that more home builders will follow suit if they are also unable to get their results out on time.
Beijing-based Modern Land, which defaulted on a senior dollar note last October, said yesterday that it can deliver neither an audited nor an unaudited report before March 31 and would apply for suspension of trading in its shares on April 1.
China Evergrande, still creaking under the weight of its US$300 billion of liabilities, said last Tuesday it would stop the trading of shares of the parent company, Evergrande New Energy Vehicle Group and Evergrande Property Services, as it will not be able to deliver audited results.
Kaisa Group Holdings, which defaulted on its US dollar bond last December, said that it too would not be able to publish financial figures by March 31 and would halt shares trading on April 1.
Other heavily indebted developers such as Fantasia Holdings Group, Yuzhou Group and Zhenro Properties have not yet unveiled their arrangements for their annual results.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
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