Sunac China (01918.HK): Analysis of Market Reaction After the Dismissal of Winding-Up Petition and Completion of Debt Restructuring

This analysis is based on comprehensive reports from multiple authoritative media outlets including Jiemian News, China Business Network, and The Economic Observer [1][2][3]. Sunac China has made substantial progress on two major uncertainties it recently faced: First, in January 2025, China Cinda (Hong Kong) Asset Management Co., Ltd. filed a winding-up petition with the Hong Kong High Court on the grounds of unpaid principal and interest of US$30 million. After nearly a year of legal proceedings, on January 5, 2026, the High Court officially issued an order dismissing the petition, and the company currently has no pending winding-up petitions [1][2][3]. Second, on December 23, 2025, the company announced that all preconditions for the full offshore debt restructuring had been met and the restructuring had officially taken effect. Approximately US$9.6 billion (about HK$74.88 billion) of existing debt was fully discharged and waived, and the company issued mandatory convertible bonds to scheme creditors as consideration [1][2][4].

The combined effect of these two major positive developments directly propelled Sunac China to become a hot target in the Hong Kong stock market. On January 5, 2026 (the day the winding-up petition was dismissed), the stock price hit an intraday high of HK$1.33, surging 4.69%, and finally closed up 3.13% [1][4]. However, the stock price retreated the next day, closing at HK$1.22 on January 6, 2026, with a drop of 6.77%, and trading volume surged significantly to HK$204 million, indicating that market sentiment remains highly volatile [5][6].

The scale of Sunac China’s offshore debt restructuring is a milestone event in debt restructuring by Chinese real estate enterprises in recent years. According to a report from Wenxuan Finance [4], this restructuring involves the full discharge and waiver of approximately US$9.6 billion in existing debt, which has important demonstrative significance against the backdrop of frequent credit risks in the current real estate industry. After the completion of the debt restructuring, the company’s capital structure has returned to a sustainable level, and short-term debt default risks have been substantially resolved.

In addition to the major debt restructuring, the approximately HK$775 million debt with Chiyu Banking Corporation Limited has also been restructured simultaneously, of which HK$300.3 million was extended for 10 years, and the rest was repaid through the issuance of approximately 279 million new shares [2]. This arrangement further optimizes the company’s debt maturity structure and reduces short-term liquidity pressure. The completion of the debt restructuring has won Sunac China a valuable breathing space, but whether the company can use this window to achieve a business turnaround still depends on the overall recovery progress of the real estate market and the company’s own sales and cash collection capabilities.

Although debt risks have been mitigated, Sunac China still faces severe sales pressure. According to data from AA Stocks [5][6], the company’s full-year 2025 contracted sales amounted to RMB 36.84 billion, a year-on-year decrease of 21.8%; sales area was approximately 1.453 million square meters, a year-on-year decrease of 35.7%. Although sales in December alone reached RMB 295 million, a year-on-year increase of 68.6%, this growth is partly due to the base effect, which is difficult to reverse the trend of a sharp decline in full-year sales.

Notably, the structural increase in average sales price — RMB 25,350 per square meter, a year-on-year increase of 21.6% [5] — reflects that the company may be adjusting its sales strategy to focus on high-priced projects in core cities. However, the 35.7% year-on-year decline in sales area indicates that the company’s overall sales scale is shrinking rapidly, which will pose continuous pressure on the company’s cash flow recovery and future development capabilities. From an industry perspective, Sunac China’s sales decline is closely related to the overall adjustment of China’s real estate market. Data from the National Bureau of Statistics shows that both the sales area and sales volume of commercial housing in China showed year-on-year declines in 2025.

Sunac China’s first-half 2025 financial data further highlights the operating pressure faced by the company. According to financial data compiled by Wenxuan Finance [4], the company achieved revenue of RMB 19.99 billion in the first half of 2025, a year-on-year decrease of 41.7%; the loss attributable to owners of the company was RMB 12.81 billion. Although the loss scale has narrowed compared to the previous period, the company has recorded a cumulative huge loss of approximately RMB 99.6 billion over four consecutive years [4], indicating that the company’s profitability has not been fundamentally improved.

In terms of business structure, the property services and cultural tourism segments performed relatively steadily, with combined revenue exceeding RMB 5.6 billion in the first half of 2025, accounting for 28.3% of total revenue [4]. Sunac Services turned a profit, with revenue of RMB 3.55 billion, net profit attributable to parent of RMB 120 million, and available funds of RMB 3.04 billion at the end of the period [4]. The relatively stable performance of these non-real estate business segments provides a certain business buffer for the company, but it cannot fundamentally change the predicament faced by the real estate development core business.

The core contradiction faced by Sunac China lies in the divergence between the intensive release of short-term positive factors and the continuous deterioration of long-term fundamentals. The dismissal of the winding-up petition and the completion of debt restructuring have indeed eliminated the immediate legal risks and debt default risks faced by the company, but these positive factors are more about “stopping the bleeding” rather than “generating blood”. The company’s true revaluation still depends on the stabilization and recovery of sales performance and the restoration of profitability, which is highly uncertain in the current real estate market environment.

Looking at historical cases, although some real estate enterprises that completed debt restructuring avoided default events in the short term, if the sales side cannot be effectively repaired, they may still face the risk of cash flow disruption. Therefore, investors need to clearly recognize that the current stock price rebound is more of a short-term response to risk elimination, rather than a long-term recognition of the company’s fundamental improvement.

There is a clear divergence between market transaction data and analyst ratings. The sharp volatility of the stock price — surging 4.69% on January 5, 2026, followed by a 6.77% drop the next day — reflects extremely unstable market sentiment towards the stock [1][5]. Meanwhile, a high short interest ratio of approximately 10.6% [5][6] indicates that short sellers are still strong, and some investors are still betting on further declines in the stock price.

However, according to data from Investing.com [6], analysts generally maintain a “Sell” rating, with a 12-month average target price of only HK$1.23, which is basically in line with the current stock price range of HK$1.22-HK$1.27. The huge gap between the estimated high price of HK$1.60 and the estimated low price of HK$1.00 also reflects the high uncertainty among analysts about the company’s prospects. This divergence between market sentiment and professional institutional ratings may mean that the short-term upside potential of the stock price is limited.

Sunac China’s fate is closely linked to the overall recovery of China’s real estate industry. Since 2025, although governments at all levels have introduced a series of policy measures to stabilize the real estate market, including reducing down payment ratios, canceling purchase and loan restrictions, and optimizing provident fund loans, the market response has been generally flat, and national commercial housing sales data have not shown obvious signs of stabilization.

Against this backdrop, there is great uncertainty about whether Sunac China can achieve a sales recovery. The “volume-price divergence” phenomenon of rising average sales price and sharp decline in sales area may reflect the company’s adjustment of layout in specific cities, or it may be a strategic choice to cut prices to maintain sales volume. In any case, the continuous shrinkage of sales scale will pose continuous pressure on the company’s cash flow and debt-servicing ability, which will be a key variable affecting the company’s medium and long-term stock performance.

remains the top risk faced by Sunac China. Although short-term debt pressure has been relieved after the completion of debt restructuring, the continuous shrinkage of the company’s sales scale means weakened cash collection capacity. The net loss of RMB 12.81 billion in the first half of 2025 indicates that the company is still consuming existing cash reserves. If the sales side cannot be effectively improved, the company may face a new round of liquidity tension.

In terms of

, the continued downturn of the real estate market brings systemic pressure to the company’s business. The data that the company’s full-year 2025 contracted sales decreased by 21.8% year-on-year shows that the company still has a long way to go in sales recovery [5]. Under the policy tone of “housing is for living in, not for speculation”, it is difficult for the real estate market to reproduce the high growth of the past. As a representative of highly leveraged real estate enterprises, Sunac China needs to adapt to the new normal of the industry.

also deserves attention. The “Sell” rating and target price of HK$1.23 given by analysts [6] mean that the market still holds a cautious attitude towards the company’s prospects. The current stock price has partially reflected the positive factors of debt risk resolution. If there is a lack of more positive catalysts in the future, the stock price may face adjustment pressure.

At the

level, China’s real estate industry is undergoing structural adjustment. Some real estate enterprises have defaulted or even gone into bankruptcy liquidation, and industry credit risks continue to be resolved. This process may take several years, during which real estate enterprises including Sunac China will still face multiple challenges such as tightened financing environment and pressure on sales.

The

has won Sunac China valuable time for strategic adjustment. The company can temporarily set aside debt pressure and focus on sales cash collection and business operations. If the real estate market gradually stabilizes under policy stimulation, the company is expected to seize the opportunity window of market recovery.

The

provides a business buffer for the company. The relatively stable performance of Sunac Services and the cultural tourism segment [4] helps to smooth the fluctuations of the real estate development core business and provides support for the company’s transformation and development.

The

may be the company’s strategic choice to cope with market adjustments. The year-on-year increase of 21.6% in average sales price [5] indicates that the company may be focusing on core cities and high-value projects. If this strategic adjustment is successful, it will help improve the company’s project profitability and risk resistance.

Sunac China (01918.HK) has recently become a market hotspot due to two major positive factors: first, the Hong Kong High Court dismissed the winding-up petition against the company on January 5, 2026, eliminating a key legal risk; second, the company completed approximately US$9.6 billion in offshore debt restructuring on December 23, 2025, and its capital structure has returned to sustainability [1][2][3][4]. The stock price surged as much as 4.69% on the day the news was announced, reflecting the market’s positive response to risk elimination.

However, the company still faces significant fundamental pressure. Its full-year 2025 contracted sales reached RMB 36.84 billion, a year-on-year decrease of 21.8%; it recorded a net loss of RMB 12.81 billion in the first half of 2025, with a cumulative loss of approximately RMB 99.6 billion over four consecutive years [4][5]. Analysts generally maintain a “Sell” rating, with a 12-month target price of approximately HK$1.23, which is basically in line with the current stock price [6]. The high short interest ratio of approximately 10.6% and the sharp volatility of market prices show that there are still great divergences in the market about the company’s prospects.

From an investment perspective, the dismissal of the winding-up petition and the completion of debt restructuring are the phased resolution of major risk events, but the company’s long-term value still depends on the stabilization of sales performance and the restoration of profitability. Against the backdrop of the overall downturn of the real estate market, this recovery process is highly uncertain. Investors should closely monitor the company’s subsequent sales data, cash flow status, and changes in policy environment, and carefully evaluate investment decisions.