Trading in Shanghai-based homebuilder Sinic Holdings Group was halted in Hong Kong late on Monday afternoon after shares in the company tanked 87%.
Sinic Holdings, the largest property developer in China’s Jiangxi province, said trading in its shares will remain suspended pending announcement regarding “inside information”. The company did not disclose any details related to the trading halt.
The entire Hong Kong-listed Chinese property sector fell on Monday led by debt-ridden China Evergrande, which closed over 10% lower. Hang Seng Property index fell over 6% on Monday. The souring investor sentiment around China Evergrande’s default risks and its broader implications dragged global markets on Monday.
Sinic Holdings’ 87% dive on Monday showed the unprecedented levels of fear among investors who foresee worsening business conditions in the Chinese real estate sector as credit tap runs dry, consumer confidence hits rock bottom and Beijing steps up its efforts to curb the property market to make housing affordable.
“The worsening situation of Evergrande continues to haunt the market,” said Samuel Tse, economist at DBS.
“Potential defaults have already spilled over to other China property companies with weak financials,” Tse added.
Sinic Holdings’ debt pile
Sinic Holdings in its half-yearly report released in August said the company’s total outstanding borrowings was at CNY29.57bn ($4.57bn), as of 30 June.
The company’s cash and bank balances, inclusive of restricted cash and pledged deposits, was about 34% lower than its total debt coming at CNY19.35bn.
Sinic Holdings’ gross finance costs before capitalisation for the six months of 2021 rose about 13% year-on-year to CNY1.66bn, the company reported.
Last week, Fitch Ratings downgraded Sinic Holdings’ long-term issuer default rating to negative.
“The negative outlook reflects Sinic's weakened access to the debt capital market and the rising execution risk of its high-churn business strategy,” Fitch said.
Fitch said the company has three offshore maturities totalling $694m due in October 2021, January 2022 and June 2022.
“Its bonds due in 2022 are trading at a 20%-25% discount, meaning Sinic may have to repay all three bonds with cash on hand,” Fitch added.
“Sinic's access to offshore debt capital markets has significantly weakened due to poor investor sentiment,” Fitch said.