Jinke Smart Services Shares Slump After Loan Agreement With Parent

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By Clarence Leong

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Shares of Jinke Smart Services Group Co. fell sharply in Monday morning trade, after the Chinese property manager said it plans to extend a loan to its parent worth up to 1.50 billion yuan (US$222.4 million).

Jinke Smart’s shares slumped 33% to HK$10.44, taking year-to-date losses to 69%. The stock is also headed toward its worst one-day percentage loss since its listing in November 2020.

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The city’s benchmark Hang Seng Index was recently 0.3% lower at 20093.33.

Jinke Smart said in a filing to the Hong Kong exchange late Sunday that it has reached a loan agreement with Jinke Property Group Co., which is listed in Shenzhen. The loan carries an 8.6% interest rate and matures Dec. 20, 2024, according to the filing. The purpose of the loan is for replenishing working capital, it said.

The agreement still needs to be approved by Jinke Smart’s independent shareholders at a shareholder meeting, it said.

Other Hong Kong-listed Chinese property managers were also heavily sold off on Monday. Country Garden Services Holdings Co. shed 10%, Shimao Services Holdings Ltd. lost 7.5% and Sunac Services Holdings Ltd. declined 8.0%.

Sentiment over the Chinese property-management sector has been weighed by a prolonged downturn in the Chinese real-estate market. Analysts have raised concerns about the companies’ slower earnings growth due to broader weakness among developers.

Nomura last week slashed its target price on Country Garden Services by 65% ​​and downgraded the stock to reduce from buy, citing weaker earnings growth, declining profit margins and its “unavoidable connection with a weakening residential property market.”

There are also worries that Country Garden Services’ newly added projects under management may be dragged by potential delays in Country Garden Holdings Co.’s project deliveries, Nomura analysts Jizhou Dong and Stella Guo said in a note.

“Long-term, it is important for CGS to prove its operational independence from CG, with reasonable earnings growth, which is not visible to us yet,” they added.

Write to Clarence Leong at [email protected]

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Credit: www.marketwatch.com /

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