Goldin liabilities skyrocket by aggressive bid on Hong Kong property

Goldin Financial, one of the Hong Kong-listed companies led by Chinese polo-loving property baron Pan Sutong, has aroused wide concern on its financial position, again.

After the high-priced HK$13 billion tender won on the prime site in Ho Man Tin last year, lately published Goldin Financial Annual Report 2015–16, showed that the company pledged nearly all property assets on hand for financing. As a result, the short-term bank loans soared to HK$9.27 billion, matured in the end of 2016 and March 2017 respectively, whilst the company held HK$84.9 million of free cash.

‘Goldin has been financially strapped’, judged by people in the industry, ‘any correction in the frenzied property market, dragging down property valuation, Goldin is not far from insolvency’.

As stated in the Annual Report, total liabilities of Goldin Financial until June 2016, escalated to HK$9.339 billion, more than sevenfold the level year-on-year, debt-to-equity ratio climbed up from 10.72% previous year to 89.1%, not to mention the free cash of the company on hand was under HK$100 million. In comparison, companies among the property industry, their debt-to-equity ratio generally between 3% and 45%.

In December 2016, the consortium led by Goldin Financial Holdings, won the development rights for the phase one project at the Ho Man Tin MTR station. State-owned financial enterprise Huarong International Financial Holdings, and Pan Sutong, the head of Goldin Group, would jointly invest in the luxury residential project. It would require a total investment of more than HK$10 billion, Goldin Financial would take a 60 per cent stake in the joint venture. Construction cost counted, Goldin Financial will need to ask for an additional funding above HK$10 billion, conservatively estimated.

Cited from sources in local banking industry, Goldin had already pledged the land plot at Sheung Shing Street, refinancing for nearly HK$3 billion. Goldin planned a further discussion with local banks for refinancing.

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