The Shenzhen-based company tumbled to HK$0.134 on Wednesday in Hong Kong from HK$0.212 on Friday as trading resumed after a two-day Lunar New Year break, the lowest close since its listing in September 2009.
Today’s slump extended the stock’s loss over the past 12 months to about 76 per cent, and erased as much as HK$48.3 billion (US$6.17 billion) of market value from the stock’s all-time high of HK$4.35 in March 2014.
The cumulative effect of China’s crippled property market has put an increasing strain on the company’s working capital, it said. Sales had been below expectations and cash flow was only sufficient to fund daily operations, it added.
10:57
Boom, bust and borrow: Has China’s housing market tanked?
Boom, bust and borrow: Has China’s housing market tanked?
China South City said its operations and financial situation have not yet sufficiently improved and that it would not be able to make the mandatory redemption on February 9 with respect to notes maturing in October 2024. It also said it would not be able to make an interest payment due on February 12 on a bond maturing in April 2o24.
China South City said the defaults could lead to failure of other payment obligations. This would “have a significant material adverse effect on our business, operations and financial condition, including possibly insolvency or other forms of restructuring,” the company said in the filing on Friday.
China’s four state-backed distressed asset managers downgraded by Fitch Ratings
China’s four state-backed distressed asset managers downgraded by Fitch Ratings
BOC, China Everbright among banks injecting billions into ‘whitelist’ properties
BOC, China Everbright among banks injecting billions into ‘whitelist’ properties
In the latest filing, the developer added it was also considering different options, including consent solicitation, schemes and exchange offers to address its financial woes.
China South City, which is backed by the Shenzhen local government, runs integrated logistics and wholesale shopping centre operations in several mainland Chinese cities including Shenzhen, Xian, Harbin and Zhengzhou.
The firm sold US$8.4 million face amount of China South City notes on the open market for US$3.8 million from February 2 to 8, according to an exchange filing on February 8. As a result, Wang On Group expects to incur a HK$32.9 million (US$4.2 million) loss for the financial year ending March 31.