China developer Kaisa’s shares plunge as trade resumes after year-long halt
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Kaisa is one of many Chinese developers that defaulted on their offshore debt after the sector plunged into a debt crisis in late 2021.
PHOTO: REUTERS
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HONG KONG – Embattled Chinese property developer Kaisa Group Holdings saw its shares lose a quarter of their value on Friday when they resumed trade after having been suspended for almost a year.
Trade in Kaisa’s stock was frozen after the debt-ridden developer failed to publish earnings statements for 2021 by a March 31 deadline.
Those results, released late on Thursday, showed a 12.7 billion yuan (S$2.5 billion) net loss for 2021 as well as a 7.7 billion yuan loss for the first half of 2022.
Shenzhen-based Kaisa was among the first developers to default in the debt crisis that has engulfed much of China’s property sector since mid-2021. It also has the dubious distinction of being the first Chinese real estate developer to have defaulted on United States dollar bonds. This occurred in 2015.
Saddled with US$12 billion (S$16.3 billion) in offshore debt, Kaisa is the second-largest US dollar bond issuer among its peers after China Evergrande Group. It is currently restructuring its debt – a process that many of its creditors say is too slow.
Its shares sank by as much as 41 per cent in early Friday trade but trimmed losses to close down 21.4 per cent in Hong Kong, giving it a market value of some US$456 million.
The stock has lost some 80 per cent since May 2021, a loss in line with many of its other debt-ridden peers.
Trade in some rivals remains halted.
Evergrande’s and Sunac China’s shares have been suspended since March 2022.
“The resumption of trade is one burden that Kaisa has managed to tick off in its list of things to do, but... we need to see if it can engineer a recovery in its business,” said Ms Conita Hung, investment strategy director at Tiger Faith Asset Management.
“Kaisa has assets in many prime cities and we need to see if it can slowly sell assets and apartments as well as how it restructures its debt.”
Kaisa said in its earnings filing that exploring cooperation with state-owned enterprises would be important for its transformation.
Its total liabilities stood at 239.8 billion yuan as at June 30, a 3.6 per cent increase from the end of 2020. Total assets dropped 10 per cent to 278.7 billion yuan.
Its net gearing ratio jumped to 313.2 per cent from 97.9 per cent during the period.
Kaisa will have to report its full-year 2022 results by the end of this month to prevent its shares from being suspended again. REUTERS
