Shimao’s Shanghai unit sees sales drop by 62pc

Property developer Shimao Group Holdings said sales at its mainland-listed subsidiary slumped last month, piling further financial pressure on one of the country’s top real estate companies.

Contracted sales at Shanghai Shimao sank by 62 per cent to 1 billion yuan (HK$1.24 billion) in February from a year earlier, according to a filing to the Shanghai exchange yesterday.

Shimao, founded by Hui Wing-mau in 1989, was regarded as a sound and restrained developer until it fell victim to Beijing’s draconian tightening measures to curb the property industry in late 2021.

The company faces 20 billion yuan in payments this year from onshore and offshore notes, according to Fitch Ratings. It also faces debt obligations such as trust financing and around 10 billion yuan worth of asset-backed securities, of which 5.6 billion yuan is due this year.

The mainland’s biggest developers have been struggling to sell homes as a resurgent pandemic and the slowing economy deter big-ticket investments.

The collective sales value of the nation’s top 100 developers fell by 47.2 per cent in February from a year ago to US$63.6 billion, widening from the 41 per cent contraction in January, according to China Real Estate Information Corporation, which compiles the industry data.

Meanwhile, Moody’s Investors Service downgraded Logan Group’s credit rating on Monday on concerns over the property developer’s liquidity conditions and access to funding amid weak market sentiment.

The developer’s corporate family rating was lowered to B2 from Ba3, and its senior unsecured ratings to B3 from B1.

“The rating action reflects our expectation that Logan’s refinancing risks will be elevated, driven by its weakening liquidity due to its tight access to funding,” wrote Cedric Lai, a senior analyst at Moody’s.