Shares of China Aoyuan Group saw a significant drop on Monday, their first day of trading in over a year. This comes after the company completed several requirements related to debt restructuring, an internal investigation, and the publication of financial results. The resumption of trading coincides with a prolonged downturn in China’s property market.
By midday, shares had plummeted by 74%, reaching 0.31 Hong Kong dollar ($0.04).
In a late Friday filing with the Hong Kong exchange, Guangzhou-based Aoyuan stated that it is making “good progress” on the proposed restructuring of offshore debt. The company expects to begin making court filings related to the proposal soon.
Back in July, Aoyuan announced plans to raise several billion US dollars in bonds and issue one billion ordinary shares at HK$1.06 each as part of its debt restructuring plans with major creditors.
Furthermore, Aoyuan confirmed that it possesses sufficient working capital to meet its financial obligations and will continue operating as a going concern.
As part of a separate development, an independent investigation into the company’s internal financial practices concluded that Aoyuan has adequate control systems in place. The investigation found no concerns regarding the integrity of senior management.
Aoyuan shares trading was halted in April 2022 after the company, along with several other property developers in China, delayed the publication of various financial results.
This year, Aoyuan released its financial results, which revealed losses of 33.07 billion yuan ($4.53 billion) in 2021, CNY7.84 billion in 2022, and CNY3.74 billion in the first half of 2023. These performances are in stark contrast to the profit of CNY5.91 billion in 2020, before Beijing implemented stricter regulations in the property sector, restricting liquidity and causing a sharp decline in sales.
China-focused real estate companies continue to face significant pressures, as evidenced by the 34% decline in the Hang Seng Mainland Properties Index this year.