Sunac China Skids After Share Placement Plans

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By Clarence Leong
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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.

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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.

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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]

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