Jinke Smart Services shares collapse after loan deal with parent company


By Clarence Leong

Shares of Jinke Smart Services Group Co. fell sharply on Monday morning after the Chinese property manager announced plans to extend a loan to its parent company worth up to 1.50 billion yuan (222.4 millions of dollars).

Shares of Jinke Smart fell 33% to HK$10.44, taking year-to-date losses to 69%. The stock is also heading for its worst one-day percentage loss since listing in November 2020.

The city’s benchmark Hang Seng index was recently 0.3% lower at 20093.33.

Jinke Smart said in a Hong Kong stock exchange filing on Sunday evening that it had entered into a loan agreement with Jinke Property Group Co., which is listed in Shenzhen. The loan bears an interest rate of 8.6% and matures on Dec. 20, 2024, according to the filing. The purpose of the loan is to replenish working capital, he said.

The deal still needs to be approved by Jinke Smart’s independent shareholders at a general meeting, he said.

Other Hong Kong-listed Chinese property managers were also sold off on Monday. Country Garden Services Holdings Co. lost 10%, Shimao Services Holdings Ltd. lost 7.5% and Sunac Services Holdings Ltd. fell 8.0%.

Sentiment on China’s property management sector was weighed down by a prolonged downturn in the Chinese property market. Analysts have raised concerns about slowing corporate earnings growth due to general weakness among developers.

Last week, Nomura slashed its price target on Country Garden Services by 65% ​​and downgraded the stock to lower it from the buy, citing weaker earnings growth, lower profit margins and its “ inevitable link with a declining residential real estate market”.

There are also concerns that new projects under Country Garden Services’ management could be driven by potential delays in Country Garden Holdings Co.’s project deliveries, Nomura analysts Jizhou Dong and Stella Guo said in a note.

“In the long term, it is important for CGS to prove its operational independence from CG, with reasonable profit growth, which is not yet visible to us,” they added.

Write to Clarence Leong at [email protected]

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