By Gina Lee
Investing.com – Chinese developer Hopson Development Holdings Ltd (HK:0754) saw its shares and dollar bonds fall towards record lows after its auditor agreed to resign.
The company’s Hong Kong shares tumbled 18.6% to HK$13.3 ($1.7) by 12:06 AM ET (5:06 AM GMT), after sinking to as low as HK$11.2 earlier in the session. The firm’s note due 2023 also fell 10.5 cents on the dollar to 81.8 cents.
Hopson said on Thursday that its auditor, PricewaterhouseCoopers (PwC), had agreed to resign. PwC said the information provided to it to complete auditing procedures was insufficient.
“Hopson’s near-term refinancing prospects and investor sentiment may be hurt on its disclosure,” Bloomberg Intelligence analysts Andrew Chan and Hui Yen Tay said in a note.
Hopson is one of the ‘safer’ names in the Chinese real estate sector and had so far managed to remain more or less immune to the debt crisis engulfing the sector. Fellow developer China Evergrande Group has not been as fortunate, missing payments on some dollar bonds in December 2021 and struggling to pay off a debt load totaling more than $300 million. Hopson made an offer to buy out China Evergrande in early 2021, which was rescinded later that year.
However, Hopson’s luck may have run out, as invester concerns about the transparency of better developers and the sector’s debt woes continue to grow.
The upcoming earnings season could reveal further pressure points for borrowers, as auditors scrutinize the books for the first time since a clampdown on the debt-ridden sector triggered a wave of defaults.
Hopson and its subsidiaries have $880 million in outstanding offshore notes, including a HK$720 million note due in July 2022, according to Bloomberg.