Sunac China (1918) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 59.4% YoY to RMB154.23bn, while gross loss widened to RMB2.50bn; loss attributable to owners narrowed 71.2% to RMB7.97bn, including a substantial restructuring gain.

• Auditor disclaimed an opinion because of material uncertainties over going concern, including overdue borrowings, liquidity pressure, litigation and dependence on financing and sales recovery.

Financial highlights

• Revenue increased 59.4% to RMB154.23bn; cost of sales rose 60.6% to RMB156.73bn, producing a gross loss of RMB2.50bn versus RMB0.82bn in FY2022.

• Operating loss narrowed to RMB1.93bn from RMB22.03bn; net loss was RMB10.41bn versus RMB29.89bn, and owners’ loss was RMB7.97bn versus RMB27.67bn.

• Other income and gains reached RMB38.53bn, including an RMB31.51bn offshore debt restructuring gain; other expenses and losses rose to RMB25.07bn, including asset impairments and fair value losses.

• Cash including restricted cash was RMB24.62bn at year-end, down from RMB37.54bn; total borrowings declined RMB20.59bn to RMB277.83bn.

Outlook and guidance

• FY2024 delivery target exceeds 200,000 homes, following delivery of approximately 310,000 homes across 101 cities in FY2023.

• Priorities include guaranteed delivery, debt-risk resolution, asset revitalisation, lower financing costs and restoring sales performance; management expects to continue seeking financing and additional capital inflows.

• Directors judged the going-concern basis appropriate based on 18-month cash-flow projections and planned measures, but execution depends on new funding, lender extensions and successful sales strategy.