(Yicai Global) June 1 -- Languang Development, once the biggest property developer in China's southwestern Sichuan province, will be removed from the stock exchange on June 6 after its low share price breached the rules, with several other listed Chinese builders likely to follow suit.

Stocks should be booted from Chinese mainland exchanges if their price stays below CNY1 (14 US cents) for 20 straight trading days, according to regulations. Shares of Languang [SHA: 600466] closed below CNY1 on April 6 and had failed to recover by May 9, when it closed at 40 Chinese cents (6 US cents) and suspended trading.

On May 23, Languang hired financial services provider Shanxi Securities to prepare its entrance into the National Equities Exchange and Quotations, an over-the-counter stock market in Beijing, after its planned removal from the Shanghai Stock Exchange.

Other listed developers, including Yango Group [SHE: 000671], Tahoe Group [SHE: 000732], and China Calxon Group [SHE: 000918] have recently reminded investors of potential delisting risks because of low stock prices.

Many defaulted developers face removal, and such a crisis was expected, according to Liu Shui, corporate research director at China Index Academy. They should reach debt restructuring deals as soon as possible and resume normal business to defuse the risk of delisting by generating operating cash flow, Liu added. 

Chengdu-based Languang defaulted in 2021. Its liabilities total more than CNY42 billion (USD5.9 billion) as of April 4.

The firm's sales rose to over CNY100 billion (USD14.1 billion) in 2019 from CNY30 billion in 2016. Its property management spin-off, Languang Justbon Services Group, went public on the Hong Kong Stock Exchange in 2019.

Editor: Martin Kadiev