Shimao surges 20pc on talk of asset sales

Shares of embattled Chinese developer Shimao Group (0813) jumped nearly 20 percent yesterday on reports that it is in talks with China Vanke (2202) on asset disposals.

This followed Caixin's report earlier that Shimao is rushing to put its property projects on sale and has even hired agents in Hong Kong to speed up the disposal.

But S&P Global Ratings lowered its long-term issuer credit rating on Shimao to B- from B+ and the rating on its senior unsecured notes to CCC+ from B. It said Shimao's liquidity will further deteriorate and may not improve without new funding sources due to ongoing regulatory restrictions and tough market conditions.

Meanwhile, Chengdu Real Estate Chamber said it had a meeting with developers on how to strengthen and enhance their credit ratings, and how to enjoy credit incentive policies as well as to carry out credit repair last Friday.

Those taking part included Longfor Group (0960), China Overseas Land & Investment (0688), Excellence Group, China Railway Construction Corporation (1186) and China State Construction Engineering Corporation, the chamber said in a WeChat post.

In the meantime, China Evergrande (0333) has moved out of its Shenzhen headquarters building and relocated most of its staff back to Guangzhou, mainland media said.

The builder's logo had been partly removed from the building and some of its personnel will move to its own property in Shenzhen to save costs, the report said.

Separately, Modern Land China (1107) dived 40 percent after a trading resumption as it said some noteholders have demanded early repayment of indebtedness and may take enforcement action.

The homebuilder said the aggregate outstanding principal amount of its offshore senior notes is US$1.35 billion (HK$10.53 billion) and it has appointed financial advisers to assess its liquidity situation.

There was also good news - some developers including Logan Group (3380), Longfor Group and Poly Property (0119) said their 2021 contracted sales increased while Agile Group (3383) sold 14 non-core properties for 2.8 billion yuan (HK$3.42 billion) and had received 1.15 billion yuan in 2021.