At least 14 real estate firms listed in Hong Kong and mainland China have a one-year probability of default in excess of 20% as of the end of the first half of 2021, according to a report from S&P Global Market Intelligence.
These 14 Chinese companies whose primary business is either real estate development or diversified real estate activities include:
Company | Market capitalisation ($M) | 1 year PD (%) |
Tianjin Songjiang Co., Ltd. | 404.5 | 54.482 |
China Mining International Ltd. | 5.5 | 33.422 |
China Infrastructure Investment Ltd. | 25.2 | 30.870 |
Xinming China Holdings Ltd. | 8.9 | 29.688 |
Carnival Group International Holdings Ltd. | 17.8 | 28.474 |
Jinan High-tech Development Co., Ltd. | 418.3 | 28.456 |
Lvjing Holding Co., Ltd. | 181.4 | 27.311 |
HNA Innovation Co., Ltd. | 275.1 | 26.717 |
Tianjin Realty Development (Group) Co., Ltd. | 331.9 | 24.202 |
Zhongtian International Ltd. | 13.2 | 22.881 |
Beijing Zodi Investment Co., Ltd. | 202.0 | 22.105 |
Shenyang Public Utility Holdings Co., Ltd. | 27.8 | 21.596 |
Shahe Industrial Co., Ltd. | 221.5 | 21.525 |
Xiwang Property Holdings Co., Ltd. | 21.0 | 21.235 |
The median one-year probability of default for the Chinese real estate sector is currently 0.8%.
Analysts expect Chinese banks to exercise greater caution in the extension of credit to real estate developers in the wake of the Evergrande Group debt debacle, as well a due to weaker profitability in general.
Lending to Chinese developers accounted for 7% of total lending by the Chinese banking system as of 30 September, according to figures from Société Générale.