(Yicai) Feb. 8 -- Debt-ridden Oceanwide Holdings, which once had a market valuation of over CNY100 billion (USD13.9 billion), was removed from the Shenzhen Stock Exchange yesterday, becoming the first Chinese real estate company to be delisted this year.

Oceanwide’s stock price tumbled to under CNY1 (USD0.14) on Jan. 20 and then failed to rise above CNY1 again, triggering the Shenzhen bourse’s delisting conditions.

But the underlying reason for the sustained low stock price, which is now 98 percent below its peak, is the Beijing-based company’s heavy debt burden.

The developer had interest-bearing debts of CNY125.5 billion (USD17.4 billion) as of June 30 last year, according to a report released by China Securities last month. And on Sept. 30, the company reported liabilities equal to 108 percent of its total assets, with net assets of minus CNY12 billion (USD1.6 billion), indicating severe insolvency.

Oceanwide has been hemorrhaging cash in the last few years, after it expanded aggressively from real estate into finance, energy and media. Although the new businesses boosted the company’s performance, its debt ratio also soared.

In the first three quarters last year, the company accrued net losses of CNY6.8 billion (USD945 million), while in both 2022 and 2021 it squandered more than CNY11 billion a year, on top of losses of CNY4.6 billion (USD640 million) in 2020. Since 2018, Oceanwide's asset-liability ratio has consistently remained above 80 percent.

The developer is also being dogged by scandal. The firm’s Chairman Luan Xianzhuo was fined CNY16.9 million (USD2.3 million) and had profits of CNY5.6 million confiscated by the China Securities Regulatory Commission earlier this month for engaging in insider trading in 2016.

And Oceanwide was subjected to administrative measures by the securities regulator’s Beijing branch in January for repeatedly failing to disclose its debt defaults in a timely manner, including defaults on money borrowed from other companies and on publicly issued bonds,

Editor: Kim Taylor