Real estate giant announces: resumption of trading, losing 36 billion yuan in two years! Collective | real estate company | giant after nearly 16 months of suspension
Domestic housing stocks that were suspended due to previous thunderstorms have recently announced plans to resume trading. On July 28th, after being suspended from trading for nearly 16 months, Shimao Group released three financial reports in one go and announced that its stocks will resume trading on July 31st.
In the past two years, this former real estate giant has suffered a total loss of 36.075 billion yuan. However, like Evergrande, the auditor of Shimao Group stated that they are unable to express an opinion on the significant uncertainty of the going concern benchmark.
In fact, a group of real estate companies recently announced a resumption of trading, which is related to the arrival of the 18 month suspension time limit set by the Hong Kong Stock Exchange. Behind Shimao Group, there are still a number of real estate companies, including Xuhui Holdings, China Aoyuan, Huayannuan Holdings, Sunshine 100, etc., that have not yet "landed". Many of these real estate companies will face a "big deadline" in the next two months.
Losing 36 billion yuan in two years, liquidity almost depleted
On the 28th, this former real estate company with sales exceeding 300 billion yuan and ranking in the top ten issued three financial reports in one go, including 2021, the first half of 2022, and the full year of 2022.
In the past two years, the financial situation of Shimao Group has significantly deteriorated. The data shows that the contract sales in 2021 were 269.11 billion yuan. The revenue was approximately 107.797 billion yuan, a decrease of about 20.4% compared to last year.
In 2022, the company's contract sales declined to 86.52 billion yuan, with a revenue of approximately 63.04 billion yuan, a decrease of approximately 41.5% from last year. In 2021 and 2022, shareholders of Shimao Group should account for core business losses of 23.251 billion yuan and 12.825 billion yuan, with a total loss of 36.075 billion yuan in the two years.
While its profitability has significantly declined, its debt situation is also worrying. Over the past two years, Shimao Group's total interest bearing liabilities increased from RMB 1451.43 billion at the end of 2020 to RMB 274.07 billion at the end of 2022, an increase of 88.8%. Compared to the end of last year, Shimao Group's cash on hand was only 22.035 billion yuan.
In terms of net debt ratio/total equity calculation, Shimao Group had reached 302.2% as of the end of last year, compared to 156% at the end of 2021. The debt to asset ratio, excluding prepayments, was approximately 83.8% at the end of last year, a significant increase from 77.4% at the end of 2021.
The cash short-term debt ratio, which measures short-term solvency, was only 0.03 as of the end of last year, and 0.21 in the same period of 2021. It is not difficult to see that the current financial situation of Shimao Group has not improved.
Similar to the previous reissue of financial reports by Evergrande, the auditor appointed by Shimao Group, Zhonghui Anda, stated that they will not express an opinion on its comprehensive financial statements. "We believe that the comprehensive financial statements have fully disclosed significant uncertainty. However, given the degree of multiple uncertainties related to the implementation of the aforementioned plans and measures, we are unable to express an opinion on the significant uncertainty of the going concern benchmark," said Zhonghui Anda.
Last April, multiple real estate companies suspended trading in bulk
However, after actively clearing mines in the early stage, Shimao Group announced that it has applied to resume trading of shares from 9:00 am on July 31, 2023. It has been a full 16 months since the suspension on April 1, 2022. According to Article 6.01A of the Listing Rules of the Hong Kong Stock Exchange, securities that have been suspended from trading for 18 consecutive months may be delisted.
On April 1st last year, several real estate companies, including Shimao Group, Jiazhaoye Group, China Aoyuan, Aoyuan Health, Huahuanian Holdings, Caisheng, Rongchuang China, Sunshine 100 China, and Contemporary Real Estate, collectively suspended trading on the Hong Kong Stock Exchange due to their failure to disclose their annual reports in a timely manner.
In fact, in March last year, Luo Bingxian, the then auditor of Shimao Group, stated in his resignation letter that he requested Shimao Group to provide information on several trust loan arrangements involving Shimao Group's joint ventures and affiliated companies. Luo Bingxian noticed four such trust loan arrangements entered into before 2020 and claimed that these trust loans were not previously disclosed to him.
According to the announcement, one of the conditions for Shimao Group's resumption of business is to conduct an appropriate independent investigation into the issues raised by former auditor Luo Bingxian in his resignation letter, publish the investigation results, and take appropriate remedial measures.
On June 23 of this year, Shimao Group released the main results of an independent investigation, revealing four undisclosed details of trust loans exposed by Luo Bingxian when he resigned.
Shimao Group stated that it has published all the unpublished financial results required by the listing rules, processed any audit revisions, conducted appropriate independent investigations on the issues raised by the former auditor Luo Bingxian Yongdao Certified Public Accountants in his resignation letter, published the investigation results, and taken appropriate remedial measures.
The company stated that it conducted an independent internal monitoring review and demonstrated that it has established sufficient internal monitoring and procedures to fulfill its responsibilities under the listing rules. Shimao Group believes that its business has sufficient operational level and asset value to support its operations and fulfill the resumption guidelines.
The deadline is approaching and efforts are being made to seek "landing"
According to incomplete statistics, as of now, including Shimao Group, there are still 20 domestic real estate companies that are still suspended from trading. This includes China Evergrande, Shimao Group, China Aoyuan, Sunshine 100, Huayannuan Holdings, Xuhui Holdings Group, and Xiangsheng Holdings Group.
But there are many domestic housing stocks and related stocks that are preparing to resume trading in full swing. Recently, after China Evergrande and Evergrande Automobile successively supplemented their financial reports, Evergrande Automobile has taken the lead in resuming trading. Earlier, Jiazhaoye Group, Jingrui Holdings, and Rongchuang China successively reached all resumption of trading conditions from March to April, and their shares resumed trading on the Hong Kong Stock Exchange. Before resuming trading, the suspension periods for the three aforementioned companies were as long as 11 months, 9 months, and 12 months, respectively.
Other domestic real estate companies are also striving to seek "landing". For example, China Olympic Park has recently released four announcements to the public, including overseas debt restructuring plans and previously postponed performance reports for the full year of 2021, mid year of 2022, and the full year of 2022. The "liquidation case" of Hua Yan Nian Holdings, which lasted for more than a year, has been tried by the Hong Kong High Court and the Grand Court of the Cayman Islands since July and was ultimately rejected, buying time for it to resolve the crisis.
However, there have been precedents of delisting before. On April 13th this year, Xinli Holdings Group's listing status was officially cancelled, making it the first mainland real estate company to be delisted since the suspension of trading in the Hong Kong stock market. The reason is that the shares of New Power Holdings have been suspended from trading since September 20, 2021, and according to Rule 6.01A of the Listing Rules, the Hong Kong Stock Exchange can delist securities that have been suspended for 18 consecutive months. The deadline for New Power Holdings is March 19, 2023, but it was ultimately unable to successfully resume trading on or before that date.
In addition, among the currently suspended real estate companies, three have been issued liquidation orders by the Hong Kong High Court, including Carnival International, Tianshan Development Holdings, and Jiayuan International Holdings.
According to the reporter's analysis, the Hong Kong Stock Exchange has customized requirements for the resumption of trading of suspended real estate companies, but overall there are significant commonalities. This mainly includes three aspects: firstly, publishing all unpublished financial results and handling any audit revisions in accordance with the listing rules; The second is to prove that the company complies with Article 13.24 of the listing rules, and the third is to provide all significant information to the market for the company's shareholders and other investors to evaluate the company's situation.
The "big limit" for real estate companies that are currently in the suspension stage may come in the next two months or at the end of the third quarter of next year, so there is not much time left for these companies.
