Sunac China Holdings Ltd. joined fellow property developer Country Garden Holdings Co. to become a penny stock after warning of $2 billion in net loss for the first half.
(Bloomberg) — Sunac China Holdings Ltd. joined fellow property developer Country Garden Holdings Co. to become a penny stock after warning of $2 billion in net loss for the first half.
Shares of the Chinese builder slumped 13% in Hong Kong on Monday to HK$0.97, closing below HK$1 for the first time. After a 79% year-to-date decline, Sunac’s market value has shrunk to just $675 million, a fraction of its peak at $28 billion.
Once China’s fourth-largest developer by sales, Sunac is the latest builder to flash profit warnings as the sector’s turmoil deepens. It said in an exchange filing Friday that the setback was mainly due to deteriorating gross profit margin of its projects, as well as expected net foreign exchange losses.
The sector’s crisis is showing no signs of a let-up even as authorities consider measures to boost home sales. China’s new-home prices fell again in July, while Bloomberg reported that figures are far worse than what official data suggests. Investors are also worried about spillover risks from Country Garden’s looming bond default as the builder struggles to survive an industry-wide cash crunch.
Earlier this month, Country Garden’s stock price fell below HK$1 amid increasing scrutiny of its operations and mounting liquidity concerns. It also lost its last stock buy rating from major international brokerages and currently trades at HK0.74.
(Updates with closing prices.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.