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Chinese developer Shimao to miss 2021 sales target amid tightening- investors

Chinese developer Shimao to miss 2021 sales target amid tightening- investors

FILE PHOTO: A man walks past a wall carrying the logo of Shimao Group, with residential buildings and the financial district of Pudong seen in the background, in Shanghai, China January 1, 2013. REUTERS/Stringer

HONG KONG : Chinese developer Shimao Group has told investors its sales this year will be 12per cent below target due to a national credit tightening, and it could consider selling assets, investors told Reuters.

Shares and bonds issued by the nation's 13th-biggest property developer by sales have sold off on concerns about a deepening liquidity crisis in the Chinese property sector.

In an investor call on Friday, Shimao a executive said that to boost confidence, the company would start repurchasing some shares and bonds, according to two people who joined the call.

Shimao said it would consider selling come commercial and hotel assets if prices were good, the investors said.

The company declined to comment on the call.

In a filing late on Friday, the company said it bought back US$1.5 million of 4.75per cent senior notes due in 2022.

In a separate filing, Shimao denied reports that it had discussed extending the payment schedule for its borrowing with Lujiazui International Trust, adding the cooperation with the trust company is normal and stable.

The developer's shares sank 13.3per cent on the reports, while four of the corporate bonds of its unit traded in Shanghai plummeted over 20per cent.

During the call, the Shanghai-based developer said its project companies may have issued some wealth management products but the amount is very small, the investors said.

Missed payments by China Evergrande Group and Kaisa Group on their wealth management products - a popular way of borrowing in China that sidesteps stringent government lending restrictions - have sparked worries about the wider risks in the sector.

Pressured by tight credit, Shimao said it has started cutting home-selling prices since July to boost sales, and stopped buying land to reserve capital. It forecast 2021 sales will be around 290 billion yuan (US$45 billion), missing its 330 billion yuan target.

Its contracted sales were 300.3 billion yuan in 2020.

Despite some recent signs of easing in development loan and mortgage lending, it said market liquidity and confidence will take a long time to recover and the coming two months will be critical for the sector before more loosening is expected next year.

(US$1 = 6.3980 Chinese yuan renminbi)

(Reporting by Clare Jim in Hong Kong and Jason Xue in Shanghai; Editing by William Mallard)

Source: Reuters

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