With an announcement, another real estate company announced its delisting.
On December 20, Sansheng Holdings announced that the Hong Kong Stock Exchange decided to cancel the company's listing status from December 27, 2023. Trading in the Company's shares has been suspended since 16 May 2022.
According to incomplete statistics, this is the fourth real estate company to be cancelled from the listing status of the Hong Kong Stock Exchange this year, after Sinic Holdings, Nanhai Holdings, and Carnival International were cancelled by the Hong Kong Stock Exchange on April 13, November 16, and December 6 respectively.
As one of the "Top 100 Listed Real Estate Enterprises", why did Sansheng Holdings finally come to the step of delisting?
The "100 billion dream" has not come true, and it has fallen into a crisis in the capital chain
Trading in the shares of Sansheng Holdings has been suspended since 16 May 2022.
Under HKEX's newly revised Listing Rules, HKEX may cancel the listing of a Main Board company if trading in the securities of a Main Board company is suspended for a continuous period of 18 months (Rule 6.01A of the Main Board Listing Rules) or that of a GEM Company (i.e. a GEM Company) is suspended for a continuous period of 12 months (Rule 9.14A of the GEM Listing Rules).
Since May 16, 2022, Sansheng Holdings has been suspended for more than 18 months, with a stock price fixed at HK$3.98 and a market value of about HK$1.95 billion.
So, why did Sansheng Holdings come to the step of delisting?
According to public information, Sansheng Group was founded in 1988 by two brothers, Lin Rongdong and Lin Rongbin. Headquartered in Fuzhou, Sansheng Holdings is an enterprise group with real estate as its main business, moderate layout of industries and capital investment. Sansheng Holdings is a listed company on the main board of the Hong Kong Stock Exchange, once ranked among the top 100 listed real estate companies in China, with a layout in more than 40 cities and more than 120 development projects. At present, on the official website of Sansheng Group, his younger brother Lin Rongbin is the chairman of Sansheng Group and the chairman of the board of directors of Sansheng Holdings.
In April 2017, Sansheng Holdings successfully landed in the Hong Kong stock capital market through a backdoor listing, becoming the listing platform of Sansheng Group's real estate business, and achieved profitability in 2019. Since then, Sansheng Holdings has successively injected real estate asset packages into the listed company system.
After the listing, Sansheng Holdings accelerated the pace of expansion. At the end of 2018, Sansheng Holdings proposed a three-year goal of "double 100 billion", that is, to achieve assets of 100 billion yuan and sales of 100 billion yuan in 2021. To this end, in May of the following year, Lin Rongbin invited Feng Jinyi, a real estate veteran from Longfor, to join as the president of the real estate group to escort the company's "double 100 billion".
In September 2019, Sansheng Holdings relocated its headquarters to Shanghai, starting the dual headquarters model of Fuzhou and Shanghai. In fact, compared with the Fujian real estate companies that smelled the opportunity, Sansheng Holdings' actions were still a beat slower, and they were also latecomers in this wave of dividend periods. For example, Zhenro Real Estate and Ronshine China moved to Shanghai in 2016, and CIFI Real Estate also moved to Shanghai in 2017. In 2019, 2020 and 2021, Sansheng Holdings' sales were 11.32 billion yuan, 24.128 billion yuan and 31.388 billion yuan respectively.
Sansheng Holdings was still ambitious when it moved its headquarters to Shanghai, and with the slogan of 100 billion yuan, Sansheng Holdings was positioned as "we want to be a company with China and the United States, because small and beautiful are easy to be marginalized". However, Sansheng Holdings did not complete the dream of 100 billion yuan as scheduled, and faced a crisis in the capital chain two years later.
On the one hand, since its listing in 2017, Sansheng Holdings' financial leverage has continued to rise. By 2019, when the headquarters moved to Shanghai, Sansheng Holdings' asset-liability ratio was 93.58%, and the net asset-liability ratio was as high as 492%. Since then, Sansheng Holdings has been working hard to reduce debt, and as of December 31, 2021, Sansheng Holdings' asset-liability ratio has dropped to 88.2%.
According to the unaudited results of 2021 previously announced by Sansheng Holdings, Sansheng Holdings achieved revenue of 9.9 billion yuan, a year-on-year increase of 12.8%, profit attributable to equity shareholders of the company of 599 million yuan, and basic earnings per share of 1.22 yuan.
Since then, Sansheng Holdings has failed to issue its 2022 financial report.
Internal and external troubles, thunderstorms, "selling"
Although the debt ratio on the balance sheet has decreased, since 2021, Sansheng Holdings has gradually found it difficult to hide its tight liquidity, such as the suspension of its projects, the "thunderstorm" of employee financial management, and the default of US dollar bonds.
During this period, on the one hand, Sansheng Holdings "sold its children to survive" and sold its projects to recoup funds, such as the sale of Lifu Commercial Building in Harbin at a price of 350 million yuan, and on the other hand, it continued to borrow new to repay the old and "replenish blood" with higher leverage, placing US$70 million of notes with an annual interest rate of up to 12.5% to CNCBI Capital in mid-2021, with interest payment dates of May 11 and November 10, 2022.
In the first half of 2022, Sansheng Holdings was exposed by a large number of employees that employee wealth management products were overdue and not paid, and there were many people and amounts involved. Soon after, the company officially "exploded" and was unable to repay a $100 million offshore debt.
As of August this year, Sansheng Holdings had not repaid any amounts due on the July 2022 Notes, November 2022 Notes, and January 2023 Notes.
And the rumors that the two brothers were not on good terms in the market were finally confirmed by a lawsuit. In March 2022, Lin Rongdong took Sansheng Holdings, his younger brother Lin Rongbin and others to court, because without Lin Rongdong's consent, Sansheng Holdings sold the equity of Qingdao and Chengdu projects without authorization. The two lawsuits involved a total of 1.405 billion yuan in damages.
Internal and external troubles have made the development momentum of Sansheng Holdings take a sharp turn.
In addition to the real estate business, the business tentacles of the "Sansheng" system also extend to the education industry, manufacturing industry, etc., but in 2022, several major businesses were exposed to problems at the same time, affecting each other, and the "Sansheng system" accelerated its decline in the intertwined relationship.
On November 3, 2022, Lin Rongbin, the former chairman of Sansheng Education, was investigated by the China Securities Regulatory Commission due to information disclosure violations. In addition to disclosing performance losses, Sansheng Education also revealed that its subsidiaries violated the guarantee of 450 million yuan.
Also in 2022, Fujian Sansheng Industrial Co., Ltd., an enterprise mainly engaged in rubber and plastic products started by Sansheng Group, announced its dissolution in October of that year.
The stall of the "Sansheng system" can't help but make people sigh, and many issues such as how the founders decentralize, how the company operates in compliance, and how to coordinate business diversification have surfaced and made people reflect.
In the eyes of industry insiders, the delisting of Sansheng Holdings has once again announced that the old model of "high turnover", "high leverage" and "high debt" of real estate companies in the past is difficult to get through.
Beijing News reporter Xu Qian
Edited by Yang Juanjuan and proofread by Zhao Lin