Trading suspended; Ronshine auditor resigns: Evergrande update

Evergrande plans to sell a 30% stake in a Nanjing property company.
Image: Andrea Verdelli/Bloomberg

China Evergrande Group and its other units were suspended in Hong Kong trading Monday pending “inside information statements,” according to exchange filings that didn’t elaborate. The developer plans to sell a 30% stake in a Nanjing property company.

Elsewhere, Ronshine China Holdings Ltd. won’t meet a March 31 deadline to publish audited full-year results after it became the latest property firm to announce the resignation of its auditor. The developer’s stock and bonds plunged.

Chinese high-yield dollar bonds opened flat to 2 cents on the dollar higher Monday with better quality names leading gains, according to credit traders. Shares of property developers were poised to snap a three-day rally, after rising last week on Beijing’s pledge to stabilise markets and support the real estate sector. A Bloomberg Intelligence gauge of developer stocks fell as much as 2.9%.

Key Developments:

  • China Evergrande and Its Units Suspend Trading in Hong Kong
  • Ronshine China Says Auditor Resigns, to Delay Audited Report
  • China Credit Investors Face Billions in Losses, Shrinking Power
  • Country Garden’s Sliding Sales, Land-Spending Cut Set to Persist
  • Hidden Debt Fears Unravel Lucrative Lifeline for China Builders
  • Most Sunac Holders Exercise Put Option on 2024 Yuan Bond: REDD
  • China’s Property Policy Shift Doesn’t End Default Risks: Moody’s
  • Evergrande Unit Gets Bondholders’ Nod to Delay Coupon Payment

Evergrande and Units Suspended in Hong Kong (9:05 a.m. HK)

Embattled Chinese real estate developer China Evergrande Group along with its other units suspended trading in Hong Kong Monday, according to exchange filings.

Shares of Evergrande Property Services Group Ltd. and China Evergrande New Energy Vehicle Group Ltd. were also halted.

Shenzhen-based Evergrande said in January that it aimed to present a preliminary restructuring proposal in the next six months. It has been at the center of a crisis among Chinese property developers following Beijing’s crackdown on borrowing.

Evergrande’s onshore unit said it received bondholders’ approval to delay coupon payments on its yuan-denominated bond, according to a statement on the Shenzhen stock exchange late Sunday.

Evergrande to Sell 30% of Nanjing Unit (9 a.m. HK)

Evergrande Group’s onshore unit will sell its 30% stake in a Nanjing property company to AVIC Trust for an undisclosed sum, according to data from corporate registry search platform Tianyancha.

The Nanjing property company, focused on valuation and management services, was set up in June 2020 with registered capital of 66.7 million yuan. The sale was earlier reported by The Paper on Sunday.

Ronshine Says Auditor Resigns, to Delay Report (8:50 a.m. HK)

Investors are bracing for more delays in Chinese developers’ 2021 results as Ronshine becomes the latest to announce the resignation of its auditor.

Ronshine said it won’t file results by the end of March deadline as PricewaterhouseCoopers LLC was unable to complete its audit work partly because the supply of requested information had fallen behind schedule, the real estate firm said in a filing to the Hong Kong stock exchange.

Chinese property firms listed in Hong Kong face a March 31 deadline to file annual results, their first audited financial statements since the industry’s liquidity crisis spread. Transparency and governance concerns have cropped up alongside worries about developers’ ability to repay debt following a record number of defaults last year. At least four auditors have resigned or been replaced by builders since the start of this year, and global ratings firms have also pulled some assessments on property bonds due to insufficient information.

Land Sales Slump in First Two Months (8:15 a.m. HK)

Chinese local governments’ revenue from land sales contracted 29.5% in January-February from the same period a year ago, the biggest slump for the period since at least 2015 when comparable data began, data from the Ministry of Finance showed Friday.

The figures underscore the impact the continued housing slump is having on government finances at a time when local authorities are under enormous pressure to bolster economic growth by spending more on infrastructure. Goldman Sachs Group Inc. estimates that combined income from land sales and property-related taxes from the real estate sector shrank by 23.5% in January-February from a year ago, versus a 0.4% gain in December.

© 2022 Bloomberg

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