Zhu Mengyi Family's Eventful Autumn: Bank of China and Shang Gang Securities Face Zhujiang Investment Bond Default

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Since early 2026, multiple outstanding bonds under Pearl River Investment have fallen into a cycle of extension and default, such as “H21 Pearl Investment 4” and “H21 Pearl Investment 2.” Once a major player in South China’s real estate circle, this veteran property developer is experiencing its most severe liquidity test in over thirty years.

In this game involving billions of creditors, the lead underwriter China Securities (601696) and the co-underwriter Shen Gang Securities are also under intense scrutiny.

Debt Snowball and Underwriters’ Dilemma

Pearl River Investment’s debt problems did not emerge overnight but became fully apparent in early 2026.

According to the company’s announcement on January 29, 2026, and related trustee management reports, as of December 31, 2025, Pearl River Investment failed to make timely payments on a total of 651.65 million yuan of publicly issued corporate bonds, and on non-public market debts such as bank and non-bank financial institution loans totaling 2.49 billion yuan, with overdue debts exceeding 3.142 billion yuan.

This includes the investor-focused “21 Pearl Investment” series bonds. Specifically, as early as October 2024, the company announced defaults on principal and interest payments for “H21 Pearl Investment 1” (5.615 billion yuan) and “H21 Pearl Investment 5” (about 900 million yuan). By February 2026, although the bondholders’ meeting for “H21 Pearl Investment 2” approved a restructuring plan, it essentially extended the maturity date from February 19, 2026, to February 19, 2029, while maintaining a coupon rate of 3.50%. Similarly, in March 2026, after bondholders’ approval, “H21 Pearl Investment 4” was extended to March 29, 2027, with a coupon rate of 7.50%. Market and investor perception view these as desperate measures to buy time, with credit already damaged.

In this debt crisis, the role of brokerage firms as intermediaries has attracted attention. Data shows that China Securities was the lead underwriter for multiple public bond issuances by Pearl River Investment, with Shen Gang Securities as co-underwriter. As bonds defaulted and extensions occurred, underwriters were forced to shift from “sales agents” to “risk managers.”

In February 2026, Shen Gang Securities issued a temporary trustee management report on Pearl River Investment’s debt repayment situation. The report confirmed the issuer’s failure to make timely payments and warned investors of risks. As early as November 2025, the Guangdong Securities Regulatory Bureau issued a warning letter to Pearl River Investment and its actual controller Zhu Weihang, pointing out failures to disclose major events such as asset sales, changes in supervisors, overdue debts, and inaccuracies in previous annual reports. As the bond trustee, whether underwriters fulfilled their due diligence obligations at that time has become a focus of market discussion.

High Leverage, Slow Turnover, and the Old Renovation “Black Hole”

Pearl River Investment’s decline reflects a typical failure of the old real estate development model.

First, there is a severe mismatch of funds and liabilities. As of June 2025, Pearl River Investment’s total liabilities reached 120.526 billion yuan, with a high debt-to-asset ratio of 72.8%. Additionally, its short-term non-current liabilities amounted to 11.993 billion yuan, while cash on hand was only 2.248 billion yuan, creating a nearly 10 billion yuan funding gap. This extremely fragile cash flow makes the company vulnerable to liquidity risks if market sales slow down.

Second, the “stuck” old renovation projects. As a “hidden land reserve giant” of the Zhu Mengyi family, Pearl River Investment holds numerous old renovation projects in Beijing, Shanghai, Guangzhou, and Shenzhen, such as Beijing Minzhen Temple and Shanghai Ankang Garden. While these land reserves are valuable, old renovation projects have long cycles and require significant capital. In the land development phase, local governments’ receivables are large, but their collection is uncertain and cannot be converted into cash to pay debts.

Third, the internal cross-impact within the “Hopson system.” Among Zhu Mengyi’s family businesses, Pearl River Investment is not the only one facing debt issues. Hopson Development (00754) saw its revenue halve in the first half of 2025 and failed to repay HKD 847 million, triggering cross-defaults on HKD 7.563 billion loans. Another platform, Zhuguang Holdings (01176), is also heavily indebted, with reports of unpaid wages for 22 months circulating on social media. The “aircraft carrier fleet” once proud of the Zhu family now appears to be dragging each other down.

The Struggles and Self-Help of the “Zhu Family”

In the face of crisis, the Zhu Mengyi family has not remained passive.

In January 2026, Zhu Mengyi personally attended a strategic meeting of Hopson, Pearl River, and the Investment Management Group, emphasizing “unified thinking” and attempting to revitalize assets through internal integration. Hopson has begun to take over core projects of Zhuguang Group, and organizational restructuring has been carried out between Hopson and Pearl River Investment to promote synergy. Additionally, under the banner of ensuring delivery, Hopson Pearl River Guangzhou plans to deliver over 6,500 residential units in 2026, aiming to stabilize cash flow through sales.

However, these measures are limited compared to the massive overdue debts, and the company admits that “the short-term negative impact cannot be fully eliminated.” Bondholders of “21 Pearl Investment 1” and “21 Pearl Investment 5” are still waiting for a clear repayment plan; for China Securities and Shen Gang Securities, helping to resolve this crisis and avoiding a lengthy legal process will be a greater challenge than issuing bonds.

As the real estate tide recedes, the problems masked by high leverage are surfacing one by one. The “extension” saga of Pearl River Investment may just be the beginning of a long, dark period for this veteran Guangdong-based developer.