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Proposed fine of RMB 7.7 million! Former Fujian richest man Xu Rongmao and his son held accountable as Shimao struggles to survive

Produced by | Bullet Finance

Author | Wu Lei

Editor | Egg Chief

Art Direction by | Qianqian

Reviewed | Songwen

A preliminary administrative penalty notice has once again thrust Shimao into the eye of the storm.

On the evening of June 26, Shanghai Shimao Co., Ltd. (hereinafter referred to as 'Shimao Shares') disclosed that the China Securities Regulatory Commission (CSRC) has concluded its investigation into the company’s alleged violations of information disclosure regulations and intends to impose a fine of RMB 105 million on the company. Simultaneously, the CSRC plans to fine the company's actual controller, Hui Wing Mau, and his son, Hui Shih Tuan, a combined total of RMB 77 million.

Since defaulting on debt obligations in 2022, Shimao Shares has been trapped in a debt repayment vortex and was delisted from the Shanghai Stock Exchange in June 2024. If this penalty is finalized, it will undoubtedly be another severe blow to the company.

Like many other Fujian-based private real estate developers, Shimao Shares and its parent company, Shimao Group, aggressively expanded using high leverage. In 2020, Shimao Group’s contracted sales surpassed RMB 300 billion, briefly overtaking state-owned developers China Resources Land and China Merchants Shekou.

In just over five years, Shimao Group has lost its former glory—its contracted sales for the first half of 2026 amounted to only RMB 8.2 billion. Currently, its share price on the Hong Kong Stock Exchange stands at HKD 0.069 per share, less than one Chinese cent.(Editor’s note: The Hong Kong-listed entity 'Shimao Group' was formerly known as 'Shimao Properties.')

Under the leadership of second-generation heir Hui Shih Tuan, Shimao Group has embarked on a rocky path with no end in sight.

1. Hui Shih Tuan may face severe penalties from the CSRC, including a six-year ban from the securities market

Shimao Shares, now at the center of this storm, was not originally part of the Shimao group.

In 2000, Hui Wing Mau took control of Shanghai-based listed company Wanxiang Group, later renaming it Shimao Shares, which focused on commercial property operations.Shimao Co., Ltd. remains a non-wholly-owned subsidiary of Shimao Group, a company listed on the Hong Kong Stock Exchange.

In 2024, Shimao Co., Ltd. was delisted from the Shanghai Stock Exchange in June after its share price traded below RMB 1 per share for 20 consecutive trading days.

However, the controversies surrounding Shimao Co., Ltd. did not end there.

In November 2024, the China Securities Regulatory Commission (CSRC) announced it had launched an investigation into Shimao Co., Ltd. for suspected violations of information disclosure regulations.

Following an investigation lasting over a year, the CSRC concluded that between 2020 and 2022, Shimao Co., Ltd. failed to disclose or omitted material information in its financial reports concerning debt, related-party transactions, debt defaults, related-party guarantees, and litigation or arbitration matters.

This period coincided with a critical turning point for China's real estate sector, during which debt crises erupted across numerous property developers, including industry giants like Evergrande and China Fortune Land Development, each with liabilities exceeding RMB 100 billion.

Over these three years, Shimao Co., Ltd.'s operational performance deteriorated rapidly.

Financial statements show that between 2020 and 2022, Shimao Co., Ltd.'s revenue plummeted from RMB 21.7 billion to RMB 5.7 billion—a cumulative decline of more than 70%—while net profit attributable to shareholders swung from a gain of RMB 1.55 billion to a loss of RMB 4.531 billion.

(Chart / 2022 Annual Report)

Risks long hidden off the balance sheet were thus brought into the open:

Internally, one director voted against and three independent directors abstained on the proposal regarding the 2022 financial statements. Wang Ying, then a director, stated that it was necessary to further verify whether there were undisclosed off-book matters and noted that the company had four unrecorded bank accounts.

(Image / Shimao Co., Ltd. announcement)

Externally, the auditing firm Zhongxingcai Guanghua issued a qualified opinion on the 2022 financial statements and an adverse opinion on the internal control report.

The auditors pointed out that Shimao Co., Ltd. and certain subsidiaries were involved in multiple lawsuits in 2022 and had been listed as judgment debtors, with some of these enforcement-related matters not reflected in the financial statements and the company having failed to fulfill its required disclosure obligations.

By this time, Shimao Co., Ltd.'s cash flow had already broken down—by the end of 2022, the company had cumulatively failed to repay principal debt amounting to RMB 4.6 billion on schedule.

Meanwhile, the company's indirect controlling shareholder, Shimao Group, was also struggling financially. In July 2022, Shimao Group announced that it had failed to make timely payments on USD 1 billion of offshore debt and was likewise under severe liquidity pressure.

In response to Shimao Co., Ltd.'s long-standing violations of regulatory thresholds, the China Securities Regulatory Commission (CSRC) planned to impose severe penalties.As previously mentioned, in June this year, the CSRC proposed to order Shimao Co., Ltd. to rectify its actions, issue a warning, and impose a fine of RMB 10.5 million.

Simultaneously, warnings were proposed for six former senior executives involved in the matter, with a combined proposed penalty of RMB 18.9 million. Of this, Xu Rongmao and his son Xu Shitan alone faced a proposed fine of RMB 7.7 million.

Furthermore, the CSRC proposed to bar Xu Shitan from participating in the securities market for six years.

(Image / Shimao Group announcement)

If the penalties are imposed, how will Shimao Group and father-son duo Xu Rongmao and Xu Shitan respond? Will they file a defense? If Xu Shitan becomes unable to fulfill his duties, who will take over? And will these penalties further complicate debt resolution efforts? In response to these questions, 'Bullet Finance' attempted to reach out to Shimao Group for comment but had not received a reply as of publication.

2. Short-term debt exceeds RMB 100 billion; cash-cow hotels put up for sale

Shimao Group is under severe pressure across the board, and its indirect controlling shareholder—the core listed platform of the Xu Rongmao family—is also struggling amid turbulent conditions.

As of the end of 2025, Shimao Group’s total borrowings amounted to RMB 182.266 billion.Of this, short-term borrowings stood at RMB 118.561 billion, with approximately RMB 111 billion due for repayment within six months.

(Chart / 2025 Financial Report)

As of the same period, Shimao Group held cash and bank balances of approximately RMB 12.07 billion, including restricted cash of about RMB 3.622 billion and presale-related escrow funds of roughly RMB 3.59 billion.Excluding restricted cash and presale escrow funds, the company still faces a short-term funding gap exceeding RMB 100 billion.

(Chart / 2025 Financial Report)

As a former top-10 property developer in China, Shimao Group is not without resources. As of December 31, 2025, the group owned approximately 192 projects, with total land reserves (before equity adjustments) of around 34.16 million square meters and inventory valued at RMB 163 billion.

However, the problem lies in the difficulty of quickly liquidating its vast land reserves. After contract sales peaked above RMB 300 billion in 2020, Shimao Group’s sales have steadily declined, falling to just RMB 23.953 billion by 2025—less than one-tenth of its peak level.

This also dragged down overall revenue performance. In 2025, Shimao Group reported revenue of RMB 28.418 billion, a 52.6% year-over-year decline—effectively halved. Property sales revenue plummeted 65% year-over-year to RMB 16.539 billion, and its share of total revenue dropped sharply from 79.9% in 2024 to 58.2%.

(Chart / 2025 Financial Report)

Bullet Caijing noted that Shimao Group is accelerating the reduction of its property development workforce.As of the end of 2025, the group had a total of 41,300 employees, of whom only 621 were engaged in property development—a 33% reduction from 924 in 2024.

It should be noted that in 2020, Shimao Group had only 24,300 total employees, with 6,364 working in property development. In just five years, the number of property development staff has declined by over 5,700, representing a 90% drop.

Under these circumstances, the hotel business—which continues to generate cash flow—is playing an increasingly important role.

In 2025, hotel operating revenue amounted to RMB 2.185 billion, roughly flat compared to RMB 2.225 billion in 2024, making it one of the few businesses at Shimao Group that consistently contributes cash flow.

However, under heavy debt pressure, two of Shimao Group's core hotels have been 'forced' onto the market.

On June 24, Shimao Group announced that the Sheraton Hong Kong Tung Chung Hotel and the Four Points by Sheraton Hong Kong Tung Chung Hotel are being sold as collateral for a loan, and receivers have appointed real estate agencies to assist in the sale of both hotels.

In 2025, revenue from both hotels grew, totaling RMB 496 million—second only to the Shanghai Conrad Hotel—and they rank among the top three 'cash cow' hotels.

(Chart / 2025 Financial Report)

According to Xinhua Finance, this move stems primarily from Shimao Group having pledged the two hotels as collateral for a HKD 4.5 billion syndicated loan, which it is now unable to repay. In 2023, Shimao Group initially listed the two hotels for sale at HKD 6.5 billion, but lowered the asking price to HKD 4.5 billion by the end of 2024; however, no buyers have emerged.

Whether proactively or passively, as long as overdue debt remains outstanding, more and more of Shimao Group's assets will end up on the auction block.

3. Veteran executives are leaving one after another, and the share price has fallen below HK$0.10.

Four years trapped in a debt repayment vortex seem to have caused the outside world to forget Shimao Group’s former glory days.

In January 2019, founder Hui Wing Mau stepped down as Executive President of Shimao Group, handing the role to his son, Hui Shih Tuan, who assumed responsibility for overseeing all of the group’s projects, including operations, sales, administration, and management.

After Hui Shih Tuan, the 'second generation' leader, took the helm, Shimao Group accelerated its growth trajectory. In 2020, the company achieved contracted sales of RMB 300.307 billion, ranking eighth on CRIC’s full-口径 sales chart and firmly securing its position as the leading Min-based property developer.

According to the Hurun Global Rich List, the Hui Wing Mau family’s net worth reached RMB 105 billion in 2020—surpassing CATL founder Zeng Yuqun’s RMB 97 billion—and made them Fujian’s wealthiest family. Media reports also indicated that the Hui family had previously claimed the title of Fujian’s richest.

(Image / Hurun Global Rich List)

At the time, observers widely praised Hui Shih Tuan as surpassing his father, calling him one of the most outstanding second-generation successors in China’s real estate sector.

In September 2024, Hui Wing Mau retired, stepping down as Chairman of the Board and Executive Director, and Hui Shih Tuan once again succeeded his father—this time as Chairman—leading Shimao Group through its ongoing debt restructuring efforts.

To this day, father and son Hui Wing Mau and Hui Shih Tuan rarely appear in public, and the company’s veteran executives have also chosen to depart.

On July 14, Shimao Group announced that Shao Liang resigned as a non-executive director due to personal business arrangements and the need to devote more time to family matters. Concurrently, Shao stepped down from his roles as executive director and president of Shimao Services, the group’s property management subsidiary.

It is reported that Shao Liang joined Shimao Group immediately after completing his undergraduate studies in 2001 and had served the company for 25 years.

(Image / Shimao Services financial report)

One month earlier (June 5), Xie Kun resigned as an executive director of Shimao Group, citing the need to dedicate more time to his personal affairs and family.

He joined Shimao Group in July 2010 and successively held positions including vice president, president of the Central-South region, chairman and president of the Zhejiang regional company, senior vice president, and chairman and president of the Zhejiang and Central China regional companies—a veteran who rose steadily through the ranks internally.

If the China Securities Regulatory Commission (CSRC) enforces its proposed six-year ban on Xu Shitan from participating in the securities market, will he continue to lead Shimao Group? With two core executives who have served the company for many years stepping down in succession, is the current management team stable?

In this regard, 'Bullet Finance' attempted to seek clarification from Shimao Group, but had not received a response as of publication.

In fact, the exodus of long-serving executives cannot be simply attributed to the group’s debt pressures. For a real estate developer, the only lifeline to 'stay alive' is a steady stream of sales proceeds—and Shimao Group’s sales are visibly and rapidly shrinking.

On July 10, Shimao Group released unaudited operational data for the first half of 2026. In June 2026, the group recorded contracted sales of RMB 1.257 billion, a 46% year-on-year decline;For the first half of 2026, cumulative contracted sales totaled RMB 8.208 billion, down 39% year-on-year.

(Image / Shimao Group Announcement)

In the capital markets, Shimao Group's share price has plummeted dramatically.On July 22, Shimao Group’s stock closed at HK$0.069 per share, with a total market capitalization of HK$717 million—starkly contrasting its peak market value of over HK$120 billion in 2020, a gap as vast as heaven and earth.

Under Xu Shitan’s leadership, Shimao Group went from aggressive expansion to being mired in debt, and from a trillion-HKD market cap to penny-stock status—in just over five years, it rapidly tumbled from its zenith to rock bottom.

As the old saying goes, it is easier to conquer a kingdom than to hold onto it. Now facing the downturn resulting from its earlier aggressive expansion, it remains to be seen how the second-generation leader Xu Shitan will turn things around.

*The featured image in this article is sourced from SheTu.com under the VRF license.

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