China’s real estate giant Sunac released a profit warning on November 29, saying that its net profit likely plummeted roughly 207% last year over the same period in 2020. Core net profit is projected to have plunged about 184%.
The company already forecasted on March 21 that net and core net profit had probably declined by 85% and 50%, respectively.
Sunac said it adjusted the earlier forecast due to multiple factors, including the COVID-19 resurgence, weak sales, and significant changes in the company’s operating landscape.
Therefore, the developer had to make further provisions for property impairment, an expected credit loss on receivables and external guarantees, and goodwill and related long-term assets in its cultural tourism city business.
According to Da Ji Yuan, Hong Kong Stock Exchange already suspended the company’s shares from trading on April 1 after Sunac failed to publish its 2021 results. Moreover, it has not yet released this year’s interim report.
The Exchange listing rules stipulate that it will delist companies with a continuous suspension of 18 months. Therefore, Sunac has about 10 months to resume trading before being removed from the stock exchange.
Regarding the company’s earnings so far this year, Sunac had contracted sales of about $21.6 billion (153.1 billion yuan) for about 125 million square feet (11.6 million square meters) of properties in the first 10 months. This indicates a year-on-year drop of 70.15% and 67.54%, respectively.
The outlet noted that Sunac’s rank in Fortune China 500 has changed significantly over the last 3 years. The Chinese builder’s rank dropped from 66th in 2020 to 364th last year. As of August this year, it could not enter the list, the same as China Evergrande and China Resources Land.
As reported by Reuters, Sunac is currently in talks with creditors to restructure its onshore bonds worth over $2 billion (14.6 billion yuan) for four-and-a-half years.
In addition, earlier this year, the company also sought to extend repayment for a $564 million (4 billion yuan) bond.