On March 28, the 2023 annual report released by Xuhui Holding Group (00884.HK) showed that in 2023, the company achieved operating income of 71,833 billion yuan, an increase of 51.4% over the previous year, and the net cash from operating activities was positive for 2 consecutive years. Net profit to mother and core net profit to mother decreased losses of approximately $4,066 billion and $1,269 billion respectively compared to 2022, and losses narrowed significantly.

According to the annual report, as of the end of 2023, Xuhui's total assets were 301.1 billion yuan, net assets of 64.6 billion yuan, and cash in hand of 13.75 billion yuan; total interest-bearing liabilities were 92.281 billion yuan, all down 16.169 billion yuan from the same period last year, a pressure drop of 15%.

Judging from several core data disclosed in the annual report, Xuhui still has considerable assets to support medium- to long-term continuous operation and balance sheet improvement.

At the beginning of November 2022, Xuhui Holding Group officially announced liquidity difficulties, suspended the payment of principal and interest on overseas debts, and sought comprehensive solutions for overseas liquidity. Since then, Xuhui has taken steps to actively help itself and revitalize capital delivery and management through partner equity swaps and cooperative project withdrawals. In March 2023, Xuhui and Henderson Zhaoye exchanged shares in Shijiazhuang and Guangzhou project companies. In September, it withdrew from the Guangzhou Zengcheng project in cooperation with Henderson Land Development at a price of 240 million yuan. In December, Xuhui withdrew from the Tianjin Boyue Rongyu Project, which cooperated with Financial Street, at a cost of 436 million yuan, and sold 33% of the shares in the Nanjing Getang Project for 313 million yuan.

Earlier, according to media reports, Xuhui's actual controller Lin Zhong traveled frequently between Shanghai and Hong Kong to hold talks with various creditor agencies. On the one hand, he communicated with domestic financial institutions about corporate bond rollover votes, and on the other hand, continued to visit overseas creditors to promote overseas debt restructuring.

Thanks to the efforts of the company and management, Xuhui's domestic and foreign debt has made positive progress. According to the domestic bond announcement, Xuhui completed 2 consecutive domestic bond rollovers totaling 2,448 billion yuan this month, all for a period of 3 years. Throughout 2023, Xuhui completed a total of 4 rollovers of domestic bonds totaling 7.18 billion yuan.

In terms of foreign debt, Xuhui proposed a new version of the foreign debt restructuring plan in January of this year and reached a directional consensus with creditors. Compared with the previous plan, Xuhui provided a flexible package based on creditors' different capital needs and according to differences in principal reduction amounts and rollover periods. It is expected that the debt will be reduced by at least 3.3 billion US dollars.

After the new restructuring plan was proposed, Xu Hui also held communication meetings with some overseas syndicated creditors. According to investors attending the conference, a number of major Chinese banks participated. At the conference, Xu Hui presented the RMB repayment plan for Chinese syndicated loans for the first time. This innovative move should help speed up the implementation of its restructuring plan.

Furthermore, Xuhui Holdings also returned to Hong Kong Stock Connect on March 4 this year. According to Wind data, as of March 27, the net inflow through the Hong Kong Stock Connect channel reached 457 million shares. Currently, Hong Kong Stock Connect's holdings account for 22.6% of the total share capital; the average daily turnover after opening reached HK$58.64 million, which is also a significant increase compared to the average daily turnover of HK$10.22 million from January 1 to March 3, 2024. Industry insiders said that judging from the transaction data after returning to Hong Kong Stock Connect, Xuhui is still an investment target that domestic and foreign capital markets are concerned about and approved. This will also help advance its overseas debt restructuring plan, especially directly promoting its “debt-for-equity” option.

Since the second half of 2021, it has been more than two years since many housing enterprises went into insurance one after another. In November of last year, Sunac took the lead in completing an overseas debt restructuring on a scale of 10 billion US dollars, becoming the first large-scale housing enterprise to complete domestic and overseas restructuring.

Entering 2024, the debt conversion process for insured housing enterprises has accelerated markedly. On March 19, Zhongliang Holdings announced that the requirements of the overseas debt restructuring had been met. The total principal and interest amount of the restructuring plan was US$1,316 million. The cash payment amount would be equivalent to 1% of the outstanding principal amount of the creditor's debt. The remaining 99% of the principal amount would be replaced with new senior notes and new convertible bonds. On March 21, China's Aoyuan announced that its overseas debt restructuring had met the conditions and that about 6.1 billion US dollars of debt would be replaced.

Compared with the companies mentioned above, Xuhui's foreign debt of about 7 billion US dollars is second only to Sunac, and the restructuring process is relatively more complicated. Industry insiders said that if Xuhui can complete overseas debt restructuring within the year, it will further boost market confidence and have strong reference significance for debt restructuring and risk mitigation for other insured companies.