Annual report difficult childbirth and private housing enterprise confidence crisis

2022-05-14 0 By

In the housing newspaper reporter Zeng Dongmei Guangzhou reported this annual report season, private listed housing enterprises have faced unprecedented challenges.On March 22, another two listed real estate companies announced that they could not publish 2021 annual results on or before March 31, 2022 as required.Kaisa said the review process was delayed by the lockdown of its headquarters due to the latest outbreak in March and the subsequent city-wide lockdown in Shenzhen.Jingye state also said that due to the Hong Kong special administrative region government to implement a number of COVID – 19 outbreak measures people temporarily reduce and working environment, as a result of changes and provide requested information and bank confirmation letter to send and receive work are behind schedule, review progress adversely affected, the auditor will need more time to complete the review process at Hong Kong subsidiary.Previously, Xinli Holdings, Rongxin China, Sunac China, Shimao Group, China Evergrande has revealed that the annual report can not be released as scheduled information.Under hKEx rules, listed companies can choose to publish unaudited financial results, and if they fail to do so, trading will be suspended from April 1.So far, Sunac China, Jingye Mingbang, Shimao Group and Rongxin China have all said they will release unaudited financial results.”This is a reflection of industry-wide operating difficulties. Of course, the pressure will be greater for companies with poor governance.”Hong Kong an industry insider to China real estate newspaper reporter said.Management difficulty is a common problem really.Among the seven companies, Sunac China and Jingye Mingbang have issued profit warnings, saying that the net profit attributable to company owners in 2021 will drop by about 85% and 60%, respectively, compared with 2020.And the rest of a few housing enterprises, because of liquidity difficulties, performance is also difficult to optimistic.In addition to the impact of the epidemic, several real estate companies have announced reasons for delaying the release of annual reports, including differences with auditors.Some companies changed auditors before the annual report due to increased costs, increased workload and inability to provide information requested by auditors.For example, Pricewaterhousecoopers, rongxin’s former auditor in China, said that the provision of requested information and receipt of bank confirmations was behind schedule in relation to individual bank deposit collateral as described in the bank’s response letter of confirmation, which required further clarification from the company’s management.For these reasons, the institution was unable to complete rongxin China’s annual performance review within the agreed schedule.S&p said in February that changing auditors just before the annual report raised questions about the quality of a company’s governance.In its view, the recent departures of several developers’ auditors show that transparency in China’s property sector remains an issue.If companies delay in reporting earnings, leading to a prolonged suspension of stock trading, it may hurt investor confidence in companies, which in turn will exacerbate their financing difficulties and reduce their liquidity space.S&p could downgrade companies as a result.PWC has been asked to account for the adequacy of its work on China Evergrande as auditors come under pressure from a spate of property companies.S&p believes this extra scrutiny may have been the catalyst for the recent auditor resignations.And as auditors push back against opaque practices such as the use of off-balance sheet debt, more developers are likely to face transparency issues.Before this, most of the annual reports of the housing stock did not disclose private debt, financial products and external guarantees and other off-balance sheet debt, resulting in distortion of financial statements, and then became the trigger of the debt crisis.For example, China Evergrande recently told investors that in addition to overseas private debt, overseas entities of China Evergrande also provided guarantee for part of domestic financing, and provided repurchase commitment for part of overseas equity financing and other contingent debt.Sources say sunac China has about $1 billion of private debt outstanding, which has been triggered by the recent rating downgrade.Performance rating agencies will delay release as a window of observing company and moody’s said it will continue to focus on the development of the matter, and will be announced in the enterprise, after an audit and the audit results to review, any further deterioration of financial and liquidity position, or results of delay for a long time, will need to the company’s credit standing and reassess governance standards.Audit institutions will be housing enterprise performance audit as a hot potato.”These days we are still talking about the price of annual report audit, and the workload has increased. But the other party said that the industry is in a difficult situation and they still hope that we can lower the price.”An auditor helplessly said, fortunately, the real estate company is still preparing for the IPO stage, “if the listing, we estimate that dare not accept, too big risk.”Has announced the date of the board of directors of private housing enterprises also dare not ensure that the annual report can be released as scheduled, there is a “thunderbolt” housing enterprises blunt, annual report can be issued to also have to see the resolution of the board of directors on March 31, another said not to the last moment of the announcement, there are variables.