SINGAPORE - Singapore property group City Developments Limited (CDL) says it will continue to limit further exposure to a China unit, which is now facing a bankruptcy claim.

CDL reiterated in a filing to the Singapore Exchange on Thursday (July 8) that it has "ring-fenced its current financial exposure" to its investment in Sincere Property, and will not support the unit's continuing financial obligations.

"Despite the bankruptcy proceedings, the group will continue to strenuously protect its position and limit further exposure," CDL said.

It added that it is aware of the bankruptcy claim filed by creditor Beijing Yi He Mercury Investment against Sincere Property.

It was also told that Sincere Property would announce this bankruptcy claim on the Shanghai Stock Exchange.

Bloomberg reported earlier that Sincere Property may undergo a court-led restructuring after the bankruptcy application was made against it.

The Beijing-based creditor filed the petition to a court in Chongqing on July 5.

In February, CDL booked an impairment loss of $1.78 billion on its Sincere Property investment, effectively impairing 93 per cent of its total investment in the unit.

"Having recognised the substantial impairment in financial year 2020, the group's remaining exposure amounts to only $126 million as at Dec 31," CDL said in its Thursday filing.

Citi analyst Brandon Lee said he expected the news surrounding Sincere Property to result in a "knee-jerk negative reaction" on CDL, The Business Times reported.

However, CDL should still see some buying interest among long-term value-oriented investors, given its "significant underperformance" in the year to date and undemanding valuations, Mr Lee said.

CDL shares closed up 15 cents or 2.2 per cent to $6.99 on Friday, reversing its 2.4 per cent fall on Thursday.