The Zhitong Finance app learned that according to the disclosure of the Hong Kong Stock Exchange on November 28, Haohui International Holdings Limited (Haohui International) submitted a listing application to the main board of the Hong Kong Stock Exchange, and Dongxing Securities (Hong Kong) was the exclusive sponsor.

According to the prospectus, Haohui International is a property developer focusing on revitalizing non-performing loan mortgaged properties for sale and rent. Unlike traditional real estate developers who usually increase land reserves through a listing and sale process, Haohui International focuses on identifying and acquiring mortgaged properties with non-performing loans. The company obtained property secured by non-performing loans through asset management companies, judicial auctions, and partnerships with or from property developers. Ruian Garden, the company's flagship project, is a residential, commercial and retail complex located in Foshan. It was obtained through an asset management company, and is also a successful example of the division's revitalization of distressed property assets.

Since the promulgation of the “Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area”, the Greater Bay Area's “one-hour life circle” has now been formed. Benefiting from the national strategy to develop the Greater Bay Area, the company has been striving to identify and transform poor residential property assets with good value and potential in the Greater Bay Area and surrounding cities, such as Ruian Ideal Home in Yangchun City, Guangdong Province and Wanrui Ideal Huafu. Haohui International said it will continue to focus on developing residential properties in the Greater Bay Area. Furthermore, Haohui International plans to continue expanding its market share, which may involve undertaking property development projects in the Greater Bay Area and surrounding cities as well as in Heilongjiang Province.

According to Cushman & Wakefield's report, the total balance of non-performing loans to public real estate from 17 banks listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange increased 72.0% from RMB 149.1 billion on December 31, 2021 to RMB 256.4 billion on December 31, 2022. According to statistics from the China Real Estate Housing Information Service Platform, on December 31, 2022, 126 key real estate projects across the country were suspended. As the opportunities available increase, Haohui International believes that the company can select projects in line with its business strategy.

As of the valuation date, Haohui International had a total of ten property development projects at various stages of development. These projects are located in Foshan, Yangchun and Enping in Guangdong Province, and Daqing City in Heilongjiang Province. At the valuation date, the company's total land reserve was approximately 491,178.1 square meters, including: the total unsold and pre-sold floor area of completed properties and the leasable construction area of 115710.2 square meters for investment; the planned construction area under development of 15,1521.6 square meters; and the estimated construction area of 223946.3 square meters for future development.

On the financial side, in fiscal year 2020, fiscal year 2021, fiscal year 2022 and the first six months of 2023, Haohui International's revenue was approximately RMB 115 million, $182 million, $286 million and $310 million respectively. In the same period, the company achieved annual profits of RMB 24323 million, RMB 454.94 million, RMB 65.710 million and RMB 46.208 million, respectively.

According to Haohui International's prospectus, in the future, the company may not be able to find and acquire land or projects suitable for development in an ideal location at a commercially acceptable price, or be unable to obtain land or projects at all. The growth and success of a company's business depends on continued access to ideally located land or projects.

Haohui International said that plots acquired through judicial auctions and asset management companies are usually sold as is, and there may be inherent risks relating to land ownership, legal disputes between original owners, and required land permits. If the original landlord fails to pay the required land fees or taxes, or leases or mortgages the land to a third party, the company may not be able to immediately use the relevant land for the intended purpose, or may incur additional expenses to cover the taxes, expenses or debts of the owners. Furthermore, the company may be involved in or may be compelled to file legal action, which may have a significant adverse impact on the company's business, financial position, and operating performance.