China’s billion-dollar real estate company Powerlong Real Estate explodes again with total liabilities of NT$716.5 billion | Liberty Electronic News | LINE TODAY

[Compiled by Lu Yongshan/Comprehensive Report]China’s real estate market continues to be sluggish, and many real estate companies have defaulted on their debts recently. Powerlong Real Estate, a Shanghai real estate giant with a debt scale of 163.6 billion yuan (the same below, NT$716.5 billion), recently announced that the company’s liquidity situation has intensified and it is unable to pay its overseas debts as scheduled, which constitutes a substantial breach of contract.

According to Powerlong Real Estate’s announcement, the interest payable date for the company’s US$15.9125 million (approximately NT$500 million) note due in April 2025 is October 30, and the grace period is 30 days, but as of November 29, The company was still unable to pay, constituting a material breach of contract.

Powerlong Real Estate stated in the announcement that since the second half of 2021, the real estate industry has entered a stage of deep adjustment, and the group’s liquidity has faced unprecedented pressure. From January 1, 2022 to the date of the announcement, the group has repaid approximately 6.12 billion yuan (NT$26.8 billion) of overseas debt principal and interest contracts.

Powerlong Real Estate said that due to the complex operating environment, the group’s sales recovery has been slow and the liquidity situation has worsened. The company has tried its best, but it is expected that the current cash and bank deposits will still be unable to meet current and future debt requirements.

Powerlong Group was founded in Macau in 1990. Its businesses include real estate, commerce, hotels, etc. Its founder, Xu Jianjiang, is from Jinjiang, Fujian. Powerlong Real Estate was listed in Hong Kong in 2009. In 2010, the company moved its headquarters from Xiamen, Fujian to Shanghai.

According to the financial report released by Powerlong Real Estate, the company’s revenue in the first half of this year was approximately 12.299 billion yuan (NT$53.9 billion), a year-on-year decrease of approximately 27.2%. Total liabilities reached 163.6 billion yuan, with part of the short-term loans and long-term loans due in the current period. About 13.08 billion yuan (NT$57.3 billion), while cash and equivalents were 8.947 billion yuan (NT$39.2 billion), leaving a funding gap of several billion yuan.

As of December 8, Powerlong Real Estate’s share price was only 0.64 Hong Kong dollars, becoming a “penny stock” (dumpling stock). The total market value was only 2.65 billion Hong Kong dollars (NT$10.6 billion). The stock price was higher than the closing price on April 28, 2021. The Hong Kong dollar has fallen 92.4% at 8.5 points.

Recently, many listed real estate companies in China have defaulted on their debts. On November 7, a US dollar bond issued by a subsidiary of Zhongnan Construction declared default. In the first three quarters of this year, Zhongnan Construction suffered a net loss of NT$1.95 billion (NT$8.5 billion). As of the end of September 2022, Zhongnan Construction’s interest-bearing liabilities (including interest payable at the end of the period) were 49.76 billion yuan (NT$217.9 billion), of which interest-bearing liabilities within one year totaled 19.85 billion yuan (NT$86.9 billion). Zhongnan Construction is affiliated to Northeast Special Steel Group, a state-owned enterprise in Liaoning Province.

In addition to Zhongnan Construction, real estate companies that experienced debt defaults from October to November this year include Shanghai Xuhui Group, Beijing Hongkun Weiye, Guangdong Longguang Group, etc. In addition, the Hong Kong High Court announced on December 4 that it would postpone the liquidation hearing of China Evergrande Group to January 29 next year to allow Evergrande Group to continue negotiating debt restructuring with creditors.

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