Chinese Builder Wongtee Declines as Key Asset Heads to Auction at Reduced Price

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Shares of Wongtee International Enterprise took a hit after the struggling Chinese commercial property developer announced that its key revenue-generating asset was scheduled for a judicial auction at roughly 40% of its original valuation.

As of midday in Shenzhen, Wongtee’s stock declined by 1.5% to CNY2.72 (approximately 38 US cents), having opened with a 10% drop. The previous day, the shares hit the daily trading limit of the 10% decrease imposed by the exchange.

The company revealed that Wongtee Plaza, along with its related facilities, will be auctioned on September 9 at a starting bid of CNY3.1 billion (about USD425.1 million). This represents a roughly 60% discount from its initial asking price of CNY7.5 billion back in 2022, according to a statement issued late on August 11.

The shareholder of Wongtee Plaza, Shenzhen Rongfa Investment—a subsidiary of Wongtee—defaulted on a CNY3 billion (USD417.7 million) debt in March 2021. Wongtee, which guaranteed that loan, became embroiled in legal proceedings when the default occurred.

In an effort to resolve the debt crisis, Wongtee listed Wongtee Plaza for sale at CNY7.5 billion on the Shenzhen United Property and Equity Exchange platform in March 2022. When there were no takers, the company reduced the price to CNY5.6 billion just a week later.

Both attempts to sell Wongtee Plaza failed, leading to its placement for a judicial auction at progressively lower prices.

The auction is expected to significantly affect Wongtee’s financial health. Last year, the property generated CNY369 million (around USD51.4 million), accounting for about 56% of the company’s total revenue, as stated in the 2024 earnings report. At the end of 2022, Wongtee Plaza’s book value was approximately CNY5.8 billion, representing nearly 72% of the company’s total assets.

Situated in the heart of Shenzhen’s central business district, Wongtee Plaza is the city’s first large, high-end shopping mall, spanning roughly 138,000 square meters. An industry insider told reporters that the mall benefits from a strong pedestrian flow due to its prime location.