Eliza Wong
Executive Summary
Key developments in the Nantong Sanjian debt crisis:
– Controlling stake in Jingyi股份 (Jingyi Shares) facing auction October 9-10 with 7.25B RMB starting bid
– 74.16B RMB in overdue debt representing -2736.53% of negative equity
– Historical 360B RMB Evergrande exposure continues driving liquidity crisis
– Multiple asset disposals including特发服务 (Tefa Services) stakes already liquidated
– Debt restructuring ongoing since April 2022 with limited progress
The Auction That Could Break China’s Largest Construction Creditor
The Hong Kong High Court’s September 16 ruling authorizing Evergrande liquidators to take control of Xu Jiayin’s (许家印) global assets worth 54.7B RMB represents just one facet of China’s property debt crisis. While liquidators pursue recoveries, unsecured creditors like Nantong Sanjian Holdings (南通三建控股有限公司) face increasingly desperate circumstances as their own financial foundations crumble.
The upcoming auction of Nantong Sanjian’s controlling stake in Jingyi股份 (Jingyi Shares) represents a critical moment for China’s construction sector. With over 300 potential bidders monitoring the October auction, the sale could determine whether one of Evergrande’s largest single creditors can survive its exposure to China’s property collapse.
Asset Liquidation Accelerates
Nantong Sanjian Holdings’ entire 75.18 million share position in Jingyi股份, representing nearly 30% of the company’s equity, will hit the auction block October 9-10 on JD.com’s asset trading platform. The 7.25B RMB starting price represents a discount to the 8B RMB market value, creating potential opportunity for investors seeking control of a profitable publicly-traded company.
Jingyi股份 has maintained profitability despite market headwinds, reporting 23.8B RMB revenue and 10M RMB net profit in first-half 2025. This makes the auction particularly attractive compared to distressed assets in China’s property sector. The company’s consistent performance explains why over 57,000 observers have monitored the listing since its announcement.
Nantong Sanjian’s Debt Crisis Deepens
Nantong Sanjian’s financial deterioration reveals the contagion effect of Evergrande’s collapse across China’s construction ecosystem. According to Shanghai Stock Exchange bond filings, the company reported negative 2.94B RMB in equity with 811M RMB net losses for 2024. These figures only partially capture the depth of the crisis.
Tianyancha (天眼查) data shows Nantong Sanjian involved in thousands of lawsuits with over 1,200 concluded cases involving more than 3.9B RMB in unfulfilled obligations. The parent company faces dozens additional lawsuits with 2.2B RMB in unresolved judgments. Both entities appear repeatedly on China’s失信被执行人名单 (dishonest被执行人 list) with high-consumption restrictions imposed by courts.
Evergrande Exposure The Primary Catalyst
The company’s current crisis stems directly from its deep ties to Evergrande Group. At their 2018 strategic partnership summit, Evergrande chairman Xu Jiayin (许家印) personally awarded Nantong Sanjian chairman Huang Yuhui (黄裕辉) the “卓越战略合作伙伴” (Excellent Strategic Partner) award, recognizing seven years of close collaboration.
By 2021, this relationship had become catastrophic. Credit rating agency联合资信 (Lianhe Ratings) reported 8.577B RMB in active contracts with Evergrande地产 (Evergrande Real Estate) plus 3.742B RMB in inventory related to Evergrande projects. Media reports indicated total overdue commercial bills and unpaid project advances exceeding 360B RMB, making Nantong Sanjian possibly Evergrande’s largest single creditor.
Historical Context: From Regional Builder to National Player
Nantong Sanjian’s origins trace to 1958 as the海门县建筑工程公司 (Haimen County Construction Engineering Company). Chairman Huang Yuhui’s father worked at the company in the 1970s, with Huang joining after technical school graduation. The company participated in iconic projects including Beijing Olympic venues, Oriental Pearl Tower, and Shanghai Jin Mao Tower, earning China’s prestigious鲁班奖 (Luban Award) for construction excellence.
The company transformed under Huang’s leadership beginning in 2012, coinciding with China’s property boom and the strategic partnership with Evergrande. Annual construction revenue reached 67.57B RMB by 2016, ranking eighth among ENR China’s top contractors. The following year’s economic output exceeded 80B RMB, positioning Nantong Sanjian among China’s construction elite.
Diversification Missteps
During its expansion phase, Nantong Sanjian ventured into financial services, investment, real estate development, and property management. Two acquisitions particularly impacted its financial stability.
In May 2018, Huang invested 700M HKD for 29.99% of Shanghai Zendai (上海证大), founded by fellow Nantong native Dai Zhikang (戴志康). Six months later, Nantong Sanjian Holdings acquired 30% of Jingyi股份 for 1.2B RMB, representing a 130% premium to market price. Both acquisitions suggested preparation for back-door public listing, though neither transaction achieved this objective.
The Road to Recovery: Limited Options Remain
With Jingyi股份 shares heading to auction, Nantong Sanjian’s remaining valuable assets appear insufficient to address its debt burden. The company previously held 20% of Shenzhen Tefa Services (特发服务), a state-owned property management company with steady revenue growth and 120M RMB annual profits. These shares were gradually liquidated through judicial auctions starting in 2021, with Nantong Sanjian no longer appearing among top shareholders.
Additional asset sales include the transfer of 9.5% of Haimen Zhongyin Fudeng Bank to government-backed江苏海润城市发展集团有限公司 (Jiangsu Hairun Urban Development Group) in December 2022. The transaction, involving 9M RMB plus premium payments, may have represented a bailout by the state-owned enterprise which had provided financing and guarantees to Nantong Sanjian.
Shanghai Zendai: The Last remaining Asset
Shanghai Zendai represents Nantong Sanjian’s last significant holding, though its value remains questionable. The company reported 205M RMB revenue with 809M RMB losses in 2024, with first-half 2025 results showing 51M RMB revenue and 16M RMB losses. With 900M RMB assets against 500M RMB liabilities, Zendai’s commercial real estate projects offer limited potential to address Nantong Sanjian’s debt crisis.
Market Implications and Sector Outlook
The Nantong Sanjian situation illustrates several critical trends in China’s construction and property sectors. First, the contagion from developer defaults continues spreading through supply chains despite government stabilization efforts. Second, state-owned enterprises appear selectively providing support, but not full bailouts, to strategically important companies. Finally, asset quality varies significantly within distressed companies, creating opportunities for investors with specialized due diligence capabilities.
The upcoming Jingyi股份 auction will test market appetite for control of profitable companies caught in broader corporate distress. A successful auction could establish valuation benchmarks for similar situations, while a failed auction might signal broader market skepticism about complex corporate structures.
Government Support Continues
Despite its financial troubles, Nantong Sanjian received the年度金牌建筑企业奖 (Annual Gold Medal Construction Enterprise Award) from Haimen district government in February 2025. This suggests ongoing government support for the employer and regional economic contributor, even as creditors face substantial losses.
The dichotomy between financial reality and official recognition highlights the challenging balance local governments maintain between market discipline and social stability. For international investors, it underscores the importance of understanding both financial metrics and political relationships when assessing Chinese corporate risk.
Path Forward for Creditors and Investors
Nantong Sanjian’s debt restructuring, ongoing since April 2022, faces renewed challenges with the loss of its Jingyi股份 stake. The company’s negative equity and massive debt load suggest significant creditor haircuts will be necessary in any resolution. International investors should monitor several key developments:
– Results of the October Jingyi股份 auction and subsequent buyer intentions
– Potential government intervention or state-owned enterprise participation in restructuring
– Progress on Evergrande liquidation recoveries for unsecured creditors
– Broader policy support for China’s construction sector
The situation remains fluid, with potential for both further deterioration and unexpected resolution. Investors with exposure to Chinese construction and property sectors should maintain cautious positions while monitoring policy developments that might affect credit recovery prospects.
For sophisticated investors, the auction presents a rare opportunity to acquire control of a profitable publicly-traded company at potentially distressed valuations. However, thorough due diligence regarding legacy liabilities and corporate governance issues remains essential before pursuing such opportunities.
As China’s property market correction continues working through the financial system, the Nantong Sanjian case exemplifies both the destruction of value and potential opportunities arising from one of history’s largest construction sector contractions. The ultimate resolution will provide important precedents for how China addresses corporate failures within strategically important sectors.
