Kaisa becomes latest Chinese developer to delay earnings results; share the slide

A sign of the Kaisa Plaza, a real estate property developed by Kaisa Group Holdings, is seen in Beijing, China December 1, 2021. REUTERS/Tingshu Wang

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HONG KONG, March 23 (Reuters) – Cash-strapped Kaisa Group Holdings Ltd (1638.HK) has joined a growing list of Chinese property developers unable to release their audited 2021 results by March 31, as the ‘requiring listing rules, heightening market concerns about the financial health of the sector.

Kaisa said Tuesday night that a virus lockdown in Shenzhen had left audit work incomplete and so he could not release financial results on time. In a filing, it said trading in its shares in Hong Kong would therefore be suspended from April 1 in accordance with stock exchange rules.

Its share price fell 2.7% on Wednesday morning against a 1.7% rise in the benchmark Hang Seng Index (.HSI).

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Big peer China Evergrande Group (3333.HK), the world’s most indebted property developer, also said on Tuesday that it would not be able to release results in time due to a large number of insolvency proceedings. additional audit resulting from “drastic changes” in operations. since the second half of 2021. find out more

Trading in shares of Evergrande and two Hong Kong-listed subsidiaries has been suspended since Monday.

Other major developers, including Sunac China Holdings Ltd (1918.HK) and Shimao Group Holdings Ltd (0813.HK), also said this week they would delay releasing audited results due to disruptions caused by COVID-19. , but that they will produce unaudited results on March 31 to continue trading their shares.

However, some delayed the results due to the change of auditors. Ronshine China Holdings Ltd (3301.HK) said on Monday that auditor PwC quit due to a lack of time to complete audit work.

Analysts said companies’ inability to report 2021 results in a timely manner will further weigh on sentiment in the sector, which has been hit in recent months by liquidity issues.

“We believe that tighter controls by auditors on project booking/debt may also have played a role,” JP Morgan said in a report, referring to the delay.

The U.S. investment bank said it would not be surprised to see more delays because, even for companies that have announced the dates for board meetings, there is still the possibility of earnings delays if the audit process cannot be completed by then.

Nomura said he typically raises red flags when companies switch auditors before earnings are announced, and such a practice raises serious concerns about market reliability.

Kaisa, the second-largest issuer of U.S.-dollar bonds among Chinese property developers after China Evergrande, is restructuring its $12 billion offshore debt after defaulting on some bonds last year. Read more

In Tuesday’s filing, Kaisa said she worked with legal and financial advisers over the past few months to formulate a solution “for the benefit of all stakeholders” and to alleviate liquidity issues.

Kaisa also said she has started a “constructive dialogue” with creditors. It has been in talks with bondholders over a debt restructuring deal since late last year. Read more

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Reporting by Clare Jim; Editing by Edwina Gibbs and Christopher Cushing

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