Kaisa Surges 85% as Trading Resumes After Two-Year Break

Kaisa Group Holdings Ltd., the first Chinese property developer to default on its overseas debt, surged by a record 85 percent in Hong Kong as its long-overdue results showed that the company’s loan burden has decreased.

Trading in Kaisa shares resumed after a two-year suspension as the developer released its results on Sunday, the final condition it needed before it could apply for its stock to trade again. The shares traded 70 percent higher at HK$2.65 at 11:02 a.m. in Hong Kong, after earlier reaching HK$2.92. Kaisa shares fell 53 percent in the months leading up to its suspension in March 2015.

Kaisa’s 2021 notes rose 0.8 cents on the dollar to a record high of 100.9 cents as of 9:52 a.m. in Hong Kong, according to Bloomberg-compiled prices.

After a two-year debt reorganization, Shenzhen-based Kaisa reported outstanding borrowings of about 87.5 billion yuan ($12.7 billion), according to the results. However, only 7.8 billion yuan needs to be repaid within a year, compared with 61.3 billion yuan of current liabilities at the end of 2014, according to the results in 2014 and 2016.

The “material” improvement in short-term debt is solid evidence of the firm’s efforts to normalize operations and gain support from lenders, Citigroup Inc. Hong Kong-based analyst Stella Li wrote in a note on Monday. Improving liquidity and a rising cash balance helped boost the company’s debt maturity profile, which was a “positive surprise,” according to Citigroup.

The builder reported a loss of 612 million yuan last year, narrowing from a 1.1 billion yuan shortfall the previous year, when it became the first Chinese developer to default on dollar-denominated debt after failing to pay the coupon on two securities in March 2015.

Kaisa achieved record contracted sales of about 29.8 billion yuan last year, as most first- and second-tier Chinese cities saw home values surge. The builder boosted its land reserves in key cities, saying about four-fifths of its 21 million square meters of land were located in top cities, laying a solid foundation for its future.