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    1918   KYG8569A1067

SUNAC CHINA HOLDINGS LIMITED

(1918)
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Evergrande and other Chinese property giants have sizeable off-balance sheet debt - JPMorgan

10/07/2021 | 03:27pm EST
FILE PHOTO: The China Evergrande Centre building sign is seen in Hong Kong,

LONDON (Reuters) - Investment bank JPMorgan has estimated that troubled Chinese property giant Evergrande and many of its major rivals have billions of dollars worth of off-balance sheet debt that, once added on, ramp up their leverage ratios.

JPMorgan's China and Hong Kong property analysts said the tactic is likely to have been used to help firms look like they were conforming with new borrowing cap rules introduced last year, but Evergrande's case looks the most extreme.

"Instead of true deleveraging, we think Evergrande has shifted some of the interest-bearing debt to off-balance sheet debt," JPMorgan's analysts said. "Commercial papers, wealth management products and perpetual capital securities, etc, which are not officially counted as debt."

They estimated Evergrande's "net gearing," as debt as a ratio of a firm's equity is known, was at least 177% at the end of the first half of the year, instead of the 100% its accounts reported.

"It is possible that the real gearing could be even higher, as data on some off-balance sheet debt is not publicly available," JPMorgan added, saying the "disguised" debt as it called it added up to 55% of Evergrande's overall debt.

Other major firms whose gearing levels were likely to be higher than formally reported included R&F Properties at 139% versus the 123%, Sunac China Holdings at 138% versus 87% reported and Country Garden at 76% versus 50% reported.

(Reporting by Marc Jones, Editing by Nick Zieminski)

By Marc Jones


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
CHINA EVERGRANDE GROUP -8.80% 2.28 End-of-day quote.-84.70%
COUNTRY GARDEN HOLDINGS COMPANY LIMITED -0.71% 6.99 End-of-day quote.-34.79%
GUANGZHOU R&F PROPERTIES CO., LTD. -3.06% 4.12 End-of-day quote.-58.68%
SUNAC CHINA HOLDINGS LIMITED -0.71% 14.04 End-of-day quote.-50.99%
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Financials
Sales 2021 277 B 43 430 M 43 430 M
Net income 2021 30 987 M 4 851 M 4 851 M
Net Debt 2021 186 B 29 169 M 29 169 M
P/E ratio 2021 1,74x
Yield 2021 13,4%
Capitalization 57 461 M 8 995 M 8 996 M
EV / Sales 2021 0,88x
EV / Sales 2022 0,78x
Nbr of Employees 68 663
Free-Float 56,8%
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Sunac China Holdings Limited Technical Analysis Chart | 1918 | KYG8569A1067 | MarketScreener
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Mean consensus BUY
Number of Analysts 23
Last Close Price 11,50 CNY
Average target price 26,33 CNY
Spread / Average Target 129%
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Managers and Directors
Meng De Wang Chief Executive Officer & Executive Director
Shu Ping Huang Executive President & Executive Director
Xi Gao Chief Financial Officer, Secretary & VP
Hong Bin Sun Chairman
Li Shan Ma Independent Non-Executive Director