[Epoch Times December 14, 2021](Epoch Times reporter Li Jing comprehensive report) On December 13, the stock and bond prices of Chinese real estate company Shimao Group Holdings Co., Ltd. (“Shimao Group” for short) fell and spread to others Real estate companies. Shimao Group is one of China’s largest real estate companies with bond issuance, and the company’s stock debt plunge has once again triggered investors’ concerns about the health of China’s real estate companies.
On the 13th, the prices of several bonds of Shimao Group, a subsidiary of Shimao Group, fell to varying degrees. Among them, “20 Shimao G1” under Shimao shares fell by more than 28%; “20 Shimao G3” fell by more than 24%; “19 Shimao G2” and “19 Shimao G3” both fell by more than 18%; “20 Shimao 06” fell by more than 54 %.
In terms of share price, Shimao shares fell 2.65% on the 13th. In addition, Hong Kong stocks Shimao Group and Shimao Services, which are controlled by the same actual controller Xu Rongmao, also fell. Shimao Group’s share price fell by more than 11%, and Shimao Services’ share price fell by more than 9%.
The slump in Shimao Group’s stocks and bonds spread to other real estate company bonds, including Sunac China Holdings Co., Ltd. and KWG Pacific Group Holdings Co., Ltd.
“Financial crisis” news triggered investor panic
A real estate company official told Jiemian News that today’s Shimao stock and debt double decline may be related to rumors of a default over the weekend.
In response to The Paper, Shimao Group stated that there was gossip in the capital market during the weekend, causing some investors to panic selling, and the internal situation is being understood.
According to the Economic Observer Network, this is not the first time that Shimao Group has reported liquidity-related news. At the beginning of November, it was reported on the Internet that “Shimao and Lujiazui Trust Negotiated Extension”, on November 5, Shimao Group had denied overdue or delayed payment.
However, “21st Century Business Herald” learned exclusively that Shanghai Shimao Building was mortgaged to Ningbo Commercial Bank for an unknown amount. Prior to this, the Shanghai Commercial Bank had granted 2 billion to 3 billion yuan of credit to Shimao.
Hundreds of billions of debt overwhelming
According to the official website of Shimao Group, the company is involved in real estate, commerce, property management, hotels and other industrial fields. The actual controller is Xu Rongmao, who is currently Chairman of the Board of Shimao Group and Chairman of Shimao Co., Ltd.
Shimao Group is the 13th largest real estate company in China and one of the real estate companies with the largest bond issuance.
In recent years, Shimao Group’s total liabilities have been steadily increasing. In the first half of 2020, Shimao Group’s total liabilities reached 414.3 billion yuan, and in the first half of 2021 it was 466.333 billion yuan. As of June 30, 2021, Shimao Group borrowed approximately RMB 164.51 billion.
At present, Moody’s long-term rating of Shimao Group has been rubbish Ba1, and it is on the negative watch list. Fitch’s rating is still investment-grade BBB-. Last month, Standard & Poor’s downgraded the company’s rating to junk.
According to Bloomberg News, there were previous signs that the Chinese (CCP) government was shifting to a policy of promoting growth. The optimism about the government’s further relaxation of policies has offset some of the negative effects brought about by the crisis of Evergrande and Kaisa. However, the sharp fall in Shimao Group’s stocks and bonds will once again trigger investors’ concerns about the health of Chinese real estate companies.
Since the beginning of September, Chinese real estate companies have exploded in succession. The real estate giant Evergrande Group is now in a deep debt crisis. After Evergrande defaulted on its first dollar debt on December 3, the Guangdong authorities of the Chinese Communist Party sent a working group to Evergrande.
On the same day that Evergrande announced its debt default, Kaisa Group issued an announcement that the failure of seeking an extension of a US dollar bond due to expiration put the group at risk of default. In addition, many real estate companies such as Fantasia Group have also experienced debt crises one after another.
According to incomplete statistics from China’s “Times Weekly”, since this year, as of September 5, a total of 274 real estate companies have issued bankruptcy documents. On average, about one real estate company goes bankrupt every day.
Editor in charge: Sun Yun#
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