Troubled developer Sunac China Holdings Ltd. has estimated that it swung tens of billions of yuan into loss last year, after previously forecasting billions in profit, as it makes provisions for mounting losses from properties and other business contracts.
The company attributed the loss forecast to the recurrence of Covid-19, the rapid downturn in property sales and significant changes in the company’s operating environment, according to a Tuesday filing with the Hong Kong Stock Exchange.
The projection reflects the deteriorating business performance of the debt-ridden property giant, which in March said net profits attributable to shareholders in 2021 would only fall by 85% year-on-year, which would have put its profit at 5.34 billion yuan ($745 million).
But on Tuesday the firm said it expects its “profit… will decrease by approximately 207%,” translating to a loss of some 38 billion yuan, based on Caixin’s calculations.
The company has made further provision for impairment of properties under construction and those completed and ready for sale as well as expected credit losses on the payments that other firms or individuals owe to Sunac and its external guarantees, according to the filing.
Sunac’s Hong Kong-listed shares have been suspended from trading since April because it failed to disclose its 2021 financial statements on time. On Monday, the company said it will hold a board meeting on Dec. 8 to discuss the disclosure of the statements.
The company has been deeply embroiled in a liquidity and debt crisis as it seeks to restructure onshore and offshore bonds worth a total of about 46 billion yuan.
It has submitted a restructuring plan to onshore bondholders for a vote in a meeting to be held in December, several market insiders have told Caixin.
Sunac proposed to delay payment by 3.75 years through 2026 for those bonds that have already been extended, and 4.5 years through 2027 for those that have not been extended, the market insiders said.
In September, a creditor in Hong Kong filed a liquidation petition against Sunac. The company said the petition is an “aggressive” move by an individual creditor whose holdings account for an “extremely small” share of the company’s debt. A hearing over the petition will be held in June 2023 in a Hong Kong court.
In the first 10 months of 2022, the contract sales of Sunac were 153.1 billion yuan, down 70.2% from the same period last year.
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)
Get our weekly free Must-Read newsletter.
