By Clarence Leong
Sunak China Holdings Ltd fell sharply on Thursday as it sought to raise funds through discounted share placement amid investor concerns about liquidity in China’s property sector.
The Chinese property developer’s stock fell 19% in afternoon trading, hitting its lowest level in more than four years. Sunak previously said it plans to raise about 4.52 billion Hong Kong dollars (US$580.2 million) through share sales to pay off debt and meet general corporate needs. It offered an offering price of HK$10 per share, a 15% discount at Wednesday’s closing.
However, Bocom International analyst Philip Tse thinks the sell-off is looking higher, partly because the company didn’t have any major debt in the first quarter, he told Dow Jones Newswire.
Mr Tse said the share placement may only be a precautionary step as it is the fastest way for Sunak to raise funds offshore. A 15% discount also seems reasonable, when considering that companies offer 5%-7% discount in better market conditions, he said.
Sunak reported a 4% increase in full-year contracted asset sales last week, better than some of its peers, which posted declines for 2021. China’s property sector has been hit by Beijing’s regulatory clampdown and weak home-buyer sentiment.
Sunac, one of China’s biggest developers, had total borrowings of 303.53 billion yuan (US$47.74 billion) at the end of June. In November, it raised approximately HK$5.09 billion through a share sale.
Shares were last at HK$9.56, taking 12-month losses to 69%. The Hang Seng Mainland Properties Index was down 4.8% at 4302.79, having weakened after a recent rally.
Write to Clarence Leong at [email protected]