Investors reacted negatively to the property developer Sunac's partnership with Yurun Group and as a result, shares fell in Hong Kong trading. But, Yurun's stock rose over nine percent following the partnership news. 

However, the ratings of Sunac remain unchanged, says Moody's Investor Services. Sunac China Holdings Limited's B1 corporate family rating and B2 senior unsecured debt ratings are not affected by the strategic cooperation with Yurun Holdings Group Company Limited or by the restructuring of the top managerial team. The rating outlook remains stable, said Moody's on Thursday (9 September).

Sunac China Holdings has entered into a strategic alliance with Yurun Group, which is engaged in food, realty, logistics, finance, tourism, etc. Moody's says that it would monitor the situation after the partnership as how much capital investment and capital outlay required for Yurun's creditors, etc. 

Sunac will be part of discussions with Yurun's creditors on debt repayment and will support the company, according to a statement from the company. 

Yurun has land bank as part of its property development division. Investors feel that most of the land lies in Tier-III and tier-IV cities in China. 

This land bank may not help Sunac business growth, feel majority of investors, who resorted to sell off. Sunac shares dropped 6.3 percent to HK$4.06.

Sunac China Holdings Ltd dropped some major deals in last year and this year also. It didn't take it off the takeover bid for Kaisa Group in 2014 May.

Another deal to pick 24 percent stake in Greentown China Holding also couldn't take off last year. 
Sunac's Chief Executive Sun Hongbin resigned from his post, but will continue as the Chairman of the group. Wang Mengde, former executive President, is replacing Hongbin. 

Sun Hongbin is known for his entrepreneurial and managerial strategies in the industry as he put the group back on the track from adverse conditions. 

Sunac China posted a two percent drop in profits to yuan 1 billion for the first half ended June. Revenues fell 40 percent on year on year basis to Yuan 5.44 billion. The sluggish market in property sales is the prime reason for the discouraging numbers from Sunac China Holdings. 

Yurun Food Group is a Hong Kong-listed firm and posted a loss of HK$724mn ($93mn) in the first half as against the HK$16.05mn profit previous year. China's economy slowdown and bleak performance of catering industry impacted the profitability of Yurun, which is anticipating such challenging situation is likely to continue second half as well. Yurun's outstanding of bank loans stands at HK$8.431bn and pledged deposits worth HK$1.124bn. 

Since 26 May, Yurun shares climbed up 27 percent and trading at HK$2.02.