Sinic turn at cash woes

Finance | Bloomberg and staff reporter 21 Sep 2021

Sinic Holdings Group (2103) is the latest mainland developer strapped for cash, which may offer investment and consolidation opportunities for others.

The company had halted trading after an 87 percent slump in the last two trading hours of yesterday and amid volumes that were about 14 times its average in the past year.

The company has a 9.5 percent US$246 million (HK$1.92 billion) bond due on October 18 and Fitch Ratings revised its outlook to negative last week.

It was reported to have instituted a 70 percent pay cut for those having the roles of vice-president or higher.

"It's the same story as everywhere else - investors are concerned about liquidity," said Philip Tse, director and head of Hong Kong and China property research at Bocom International Holdings, "I think there are most likely some margin calls on some of the major shareholders" by looking at Sinic's stock price pattern this afternoon.

The move comes as Hong Kong's property gauge dropped the most since last May amid growing angst about China's real estate crackdown and worries that Beijing may tighten grip on the city's property sector in its "Common Prosperity" campaign.

However, Country Garden Service (6098) splashed 10 billion yuan (HK$12 billion) buying a stake in the property management unit of Guangzhou R&F Properties (2777), whose chairman Li Sze Lim and chief executive Zhang Li intend to provide short-term financing of approximately HK$8 billion to the company.

The first batch of HK$2.4 billion is expected to be transferred today.

Guangzhou R&F Properties expects to have "sufficient liquidity to address obligations that will mature in the short term" following the support, even without taking into account the availability of measures such as asset sales, it said.

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