Wu Yajun, the founder of billionaire property developer Longfor Properties, has stepped down as company chairman amid an industry-wide crisis that shows no signs of abating shares in Hong Kong-listed Longfor fell as much as 38% on Monday after the 58-year-old tycoon announced his decision late on Friday.
Longfor wrote to the Hong Kong Stock Exchange that Wu has stepped down as CEO and chairman of the board due to age and health reasons, but will continue to advise the company on its strategic development.
She handed over the reins to 1-year-old Chen Xuping has been with the company since 2008 and first served as a construction manager before his promotion. But the tycoon, whose fortune fell from $1 billion to $6.1 billion in one day, is not giving investors much joy.
“Longfor’s management changes come at a time when there are many difficulties in the industry,” said Hong Kong-based securities strategist Kenny
The company, meanwhile, said in a separate announcement on Friday that the role changes were part of its leadership strategy and focused on growing senior leaders “through culture and mechanism.” The same statement showed that sales fell to 59.8 billion yuan ($8.2 billion) in the third quarter of this year, down 0.8% from a year ago.
China’s real estate industry is still in a deep crisis. Home prices fell for a 13th straight month in September as Beijing’s campaign to reduce financial leverage triggered a wave of defaults and buyer confidence is weak amid an economic downturn.
Longfor is seen as stronger than its indebted peers, such as the now insolvent Chinese Evergrande Group, because of Wu’s emphasis on financial discipline and relative caution in borrowing. The company said in the aforementioned statement that it has no debt this year and that its financial position “remains healthy and stable.” In August, the sale of $219 million of yuan-denominated government-guaranteed bonds was authorized as Beijing sought to boost market sentiment toward healthier developers.
However, the company’s shares have lost 70% of their value so far this year, underscoring investor pessimism about the real estate industry. The authorities have also announced a series of relief measures, including tax breaks and lower mortgage rates, to prevent the current crisis from getting out of control. But Fitch Ratings said in an Oct. 24 report that the changes are “selective and modest” and unlikely to boost housing demand.