(Corrects the percentage rise in the headline and first
paragraph to 87, not 73)
* Earnings report hints at Kaisa recovery
* Total borrowings $12.7 bln in 2016 vs $11 bln mid-2014
* Core loss 4.2 bln yuan in 2016 vs 2.2 bln yuan profit in
By Clare Jim and Umesh Desai
HONG KONG, March 27 Kaisa Group Holdings Ltd
shares leapt as much as 87 percent on Monday as
trading resumed after a 2-year suspension, as the first Chinese
property developer to default on offshore bonds hinted at
recovery with its first earnings report in 2-1/2 years.
Kaisa's stock has been on hold since being unable to report
2014 earnings after local authorities blocked the sale of some
of its properties, rendering the developer incapable of repaying
creditors. In its last report for the first half of that year,
Kaisa was saddled with $11 billion worth of debt.
Neither the Shenzhen-based firm nor local authorities
disclosed reasons behind the sales block, yet its predicament
was widely interpreted as highlighting the uncertain operating
conditions and amounts of debt that Chinese developers faced.
In updating earnings, trading of Kaisa's Hong Kong-listed
shares could resume after being suspended on March 31, 2015. On
Monday, the shares hit their highest price since December 2014,
at HK$2.92 ($0.38).
"Allowing Kaisa to resume trading means its financial
accounts are cleared," said Alvin Cheung, associate director of
Prudential Brokerage in Hong Kong. "Within the period Kaisa's
been suspended from trading, Chinese property stocks have gained
a lot so Kaisa shares are catching up with the broader market."
However those gains may reverse should the developer fail to
demonstrate its ability to repay debt, Cheung said.
In reporting earnings on Sunday, Kaisa said aggregate
borrowing totalled 87.5 billion yuan ($12.7 billion) at the end
of last year, of which about 9 percent was repayable within the
That put its net debt ratio at 545 percent versus an
industry average of about 70 percent, analysts said.
The earnings showed Kaisa slowly recovered after proposing
to restructure debt in 2015, posting record contracted sales of
29.8 billion yuan last year - about 25 percent over its last
reported sales in 2013.
Overall for 2016, Kaisa booked a core loss of 4.16 billion
yuan, up 2 percent from a year earlier. That compared with the
2.8 billion yuan core profit of 2013.
Kaisa also said it has sufficient working capital for at
least 12 months of operation, and has enhanced internal controls
to prevent accounting fraud and buttress auditing credibility.
The developer in December had said financial adviser FTI
Consulting had found 30.8 billion yuan in misclassified
outstanding loan liabilities for 2012-2014.
Kaisa is scheduled to hold a news conference at 0815 GMT to
update on its business.
Kaisa owed $2.5 billion to offshore creditors as of last
March when it sweetened a debt-restructuring proposal that
offered creditors higher coupons and amended payments contingent
Though interest payable at the end of June is $99.5 million,
Thomson Reuters data showed, Kaisa will not have to part with
cash as the interest is payment-in-kind in the first year
"The group actively facilitated the negotiation of its
onshore debts and restructuring of its offshore debts to lift
blockages and re-launch projects for sale in major cities,"
Kaisa said in a statement to Hong Kong's stock exchange on
Kaisa plans to repay offshore debt from 2019 after
addressing onshore debt over 2017-19.
Its bonds were broadly higher after it announced strong
sales on the back of a strong Shenzhen market. Bonds due 2020
were up nearly a point at 100.25/101 cents on the
"Kaisa was nearly the number one in Shenzhen before the
blockade, and Shenzhen home prices have risen a lot, so its cash
flow could be able to cover much debt if its sales are OK," said
CRIC Hong Kong head of research David Hong ahead of the earnings
($1 = 6.8870 Chinese yuan renminbi)
($1 = 7.7670 Hong Kong dollars)
(Reporting by Clare Jim and Umesh Desai; Editing by Anne Marie
Roantree and Christopher Cushing)