Original title: Sudden! The stock price of the 10 billion real estate giant in Jiangxi surged 90%, and was once ranked 29th among the “Top 100 Real Estate Companies in China”! Source: e-Company

Today, another Hong Kong stock market experienced a cliff-style sharp decline.

This company plummeted 90%

Today, Xinli Holding Group fell more than 87%. At one point, the decline was over 90%, and its market capitalization evaporated about HK$12 billion. Currently, trading of the stock has been suspended in Hong Kong.

According to reports, Fitch downgraded its rating outlook to negative, and its long-term issuer default rating remained at B+. Not long ago, S&P also adjusted Xinli Holdings' rating outlook to negative.

Since July, Chinese dollar bonds have been impacted by market sentiment, and the prices of US dollar bonds of many real estate companies have fluctuated drastically.

According to a report by Zhongxin Jingwei, in September, many dollar bonds issued by Xinli Holding Group had a record decline. On September 17, the price of Xinli Holdings' US dollar bonds due in October 2021 fell 25.5%. In addition to Xinli Holdings, many Chinese real estate companies' dollar bonds have recently experienced sharp declines in price, such as the year of various kinds.

Up to now, Xinli Holdings has three ongoing dollar bonds. Fitch pointed out that the transaction price of its bonds due in 2022 has been discounted by 20% to 25%, indicating that Xinli Holdings may need to use cash to repay all three bonds. Management said that for nearly 700 million US dollar bonds, Xinli Holdings will reserve its own funds or apply for new dollar debt coverage depending on market conditions.

Let's take a look at the company's relevant information. Xinli Holding Group Co., Ltd. (Xinli Holdings for short) is a large-scale comprehensive property developer. Xinli Holdings' residential property development business in Jiangxi Province occupies a leading position in the market, and has expanded its business to the Yangtze River Delta region, the Guangdong-Hong Kong-Macao Greater Bay Area, the central and western core cities, and other regions with development potential in China, achieving a nationalized layout. In November 2019, Xinli Holdings was successfully listed on the main board of the Hong Kong Stock Exchange (stock code: 2103.HK).

On March 17, 2020, Xinli Holding Group ranked 29th in the “2020 China Top 100 Real Estate Enterprises”. Meanwhile, Zhang Yuanlin, owner of Xinli Holding Group, ranked 354th in the “2020 Forbes China 400 Richest People List” with a wealth of 11.41 billion yuan in 2020.

Interim reported revenue of $11.2 billion and current liabilities exceeding $70 billion

Earlier, Xinli Holding Group (02103.HK) handed over a solid interim financial report. The company achieved revenue of 11.219 billion yuan (RMB) in the first half of the year, an increase of 28.9% over the same period last year; achieved gross profit of 2,438 billion yuan, gross margin of 21.7%; realized profit of 882 million yuan, an increase of 2.4% over the previous year; and core profit attributable to shareholders was 730 million yuan, an increase of 7.4% over the previous year. Combining the backdrop of repeated epidemics and continued pressure on housing enterprises to operate, various performance indicators of Xinli Holdings maintained good growth and showed strong operational resilience.

Recently, judging from the latest sales situation announced by the company, Xinli Holdings achieved contract sales of about 77.04 billion yuan in the previous August, an increase of 25.45% over the previous year; the corresponding sales area was 5070,400 square meters, an increase of 17.43% over the previous year. The average sales price was 15,193 yuan per square meter. Based on what Xinli's management said during the previous performance period, the company expects sufficient saleable value for the second half of the year. It is estimated that the total saleable value equity will be 44 billion yuan. The regional layout is more diversified, with Tier 1 and 2 cities accounting for 92%. It can be seen that the company can be expected to steadily advance to achieve its annual goals.

However, financial data also shows that as of the end of June 2021, Xinli Holdings' current debt was 75.428 billion yuan, and Xinli Holdings' debt of 13.24 billion yuan will expire within the next year. At the 2021 interim results report meeting of Xinli Holdings, management explained that the company has made arrangements for debt repayment plans.

Looking back: Xinli Holdings once refuted the rumor of the content of the “Boss's Letter for Help”

Looking back at previous news, on July 9, the official of Xinli Holdings issued a statement refuting the rumor on WeChat. The statement said that the content of the “Letter for Help from Xinli Real Estate Owners” and similar related remarks recently spread online was false and viciously slandered. At present, the company has alerted the public security authorities to hold the rumor makers legally responsible.

According to the “China Financial News” report, this document called “Xinli Real Estate Owner's Request for Help” went viral online on the evening of July 8. According to the document, Zhang Yuanlin, chairman of Xinli, was caught up in a financial scam. He was tricked by an overseas financial usury loan group in promoting the company's listing and several financing transactions after listing, and became a victim of a financial fraud syndicate.

As mentioned in the document, the financial fraud syndicate consists of five groups of professionals, namely sponsors, underwriters, financial usury groups, market capitalization management teams, and fund managers. The division of personnel is clear.

Zhang Yuanlin's path of being scammed began by going to Hong Kong to promote Xinli's IPO. The sponsor of the fraud group obtained Zhang Yuanlin's trust and induced him to promote Xinli's listing, while the underwriter was responsible for inducing Zhang Yuanlin to borrow money from the Financial Usury Loan Group.

When Xinli officially raised capital and went public in Hong Kong in November 2019, underwriters pretended that Hong Kong was affected by social events and deliberately relaxed fund-raising, leading to insufficient subscriptions for Xinli's public sale. Zhang Yuanlin was only able to raise 300 million to 400 million yuan on his own, while the remaining 1.6 billion yuan was borrowed from a group of Hong Kong financial usury loan groups introduced by the underwriters. The monthly interest on this money was 3%, and the monthly interest expenses alone reached HK$48 million.

After listing, Zhang Yuanlin was able to barely cover 1 year's interest expenses by pledging stocks and paying large dividends. Since then, the Usuri Loan Group has instigated the arrangement of gardens to transfer their positions frequently, defrauding them of high commission income from them. According to the data listed in the document, from listing in 2019 to May 2020, Xinli's unreasonable transfer transactions reached 400 million shares, involving commission revenue exceeding HK$8 million.

All major transactions of this type are traded through non-automated trading (M orders), and there are discounted prices. The discount price consists of two parts: the discount on the apparent transaction price and the rebate received from the fund manager. Xinli's M market transactions are traded at market prices, and the fund managers who pick up the goods receive rebates privately.

On the other hand, in order to keep Xinli's stock price around 4 yuan, the fraud group's market capitalization management team created false transactions for Xinli and collected high service fees from them. Based on Xinli Holdings' daily transactions of HK$8 million, a steady commission of HK$40,000 per trading day was calculated.